All Forum Posts by: Hansel Akers

@Jonathan Shepard - I just found your post and wanted to see how everything went!  I see you didn't get any responses but love hearing about first BRRRRs.   The numbers look good to me - I think you were smart to budget contingencies (conservatively).  Cash flow looks a bit low than my typical appetite for target properties, but curious to see how it played out.  Are you assuming 10% maintenance and 5% vacancy?  

Even if you leave money in the deal, I think the lessons learn likely far exceeded the money you could have pulled out. Screw college, first BRRRR is your capstone course!!

Look forward to hearing about it.  Hopefully all went well. 

-Hansel

@Nico Savoia - I say go to college AND invest in real estate.

I know schools around Pittsburgh have great opportunities for real estate investing (and low prices) which can be incredibly lucrative for house hacking... buy a place at school, rent out all the additional rooms. You’ll be able to hold onto that place forever after you leave!

Just my .02.

You are miles ahead of how I was thinking at 18. Congrats on your grind and good luck (you won’t need it).

-Hansel

Aaron, 

I completely disagree with Carl. I located this post because I am looking into how to properly partner with different people (even sometimes one deal at a time) so my situation is a bit different than yours. I do think an LLC would be a great "first" step for your professional RE relationship, make sure to lay out contributions and roles in your operating agreement as well.

I have two pieces of advice related to your post. 

1) If you do not think you can do this alone... 100% partner with someone on deals (as long as you can trust each other). This will create accountability and it seems like you both have pretty impressive complementary skill sets. 

2) Start your LLC ASAP (if you plan on working together on multiple deals). The sooner you start your LLC --> the sooner you can start generating business credit --> the sooner you can leverage business LOCs, more creative financing!

Good luck!

-Hansel

@Elijah - I know this is probably tough to answer on a blog post but... how have you been structuring these deals since you have raised money and originated deals with a variety of different folks from different professional and personal relationships? 

Very impressive growth! Nice work -- keep it up.

-Hansel

@Michael Loza I have done it twice. It’s a great method to acquire a first property (and others for that matter). You pay yourself back interest which comes directly out of direct deposit (tax deductions!). But it’s really straight forward and a great way to break into home ownership, and snowball into investing.

Let me know if I can provide any more info.

-Hansel

@Ryan Copeland congrats! What do you think the ARV will be? What about long term rents?

Congrats! What a way to end 2020 strong.

@Jake Pinto,

Awesome news. Congrats on getting the ball rolling.  I live here in center city Philadelphia, am a real estate agent and investor as well. 

I would definitely try to narrow your search to some specific neighborhoods which can be highly dependent on budget, appreciation expectations, cash flow, etc.  One other tip is to start identifying contractors that you trust to do high quality, reliable work so you are ready to attack when the perfect property lands in your lap.

Shoot me a message if I can help in any way.  Best of luck to you! 

Hansel Akers -- Real Estate Agent

Sent you a direct message with two lenders that have been invaluable resources for myself and my clients!  Best of luck to you; this sounds like an amazing opportunity for your family!  Way to step up to the plate - I love it.

Ika,

I was just as stressed going in and was relieved at how much easier the process was than it sounded.  Don't be discouraged. 

I would suggest acting quickly after you sell the investment property.  That way you don't even have to identify the 3 like-kind properties and commit to closing on one of those.

To give you an idea of what I did:  I sold my condo around the end of June and while I was wrapping up the closing process for that property, I started really looking hard at some properties in the new location.  Once the other property sold, I was ready to put an offer in on some of those properties that checked all my boxes and were still available. 

The property that was still available hit all my numbers (1% rule, turn-key, location, low property taxes but great school district - rare I know!).  So I put an offer in on that place one week after I sold my previous property.  Since that offer was accepted, I didn't have to take any of the "additional" steps of declaring the 3 properties and didn't have to adhere to the 90 day timelines that are set forth. 

My 1031 company and they took care of all the hard legal stuff.  They spun up the bank account, deposited the funds and communicated directly with both closing tables and wired funds both ways.   Best part - the 1031 costs are tax deductible!   

My other suggestion, don't lose closing on the first home you love by trying to split hairs on a couple thousand dollars (which in this climate is like $2-3 higher monthly payment per $1K increase in sales price).  Put in a strong but fair offer and you won't have to worry about deadlines or declaring target properties or anything like that. 

I know that was a lot of info, advice, suggestions.  I am happy to answer any other questions you may have.  Feel free to reach out directly!

Investment Info:

Townhouse buy & hold investment in Lancaster.

Purchase price: $165,000
Cash invested: $35,000

Sold condo in Reston, VA and used a 1031 exchange to purchase SFH townhome in Lancaster, PA.

Current property is being rented for $1725.
Mortgage $825 p/m. Includes Prop Taxes of $150 p/m.
$95 landlord insurance.
Assuming 5% vacancy rate.
$100-150 p/m maintenance (conservative)

What made you interested in investing in this type of deal?

Cash Flow margins much larger than previous property

How did you find this deal and how did you negotiate it?

I used a Real Estate agent to locate and negotiate (MLS). I now have my own real estate license to locate and negotiate deals.

How did you finance this deal?

20% down payment, all funds except $5K were from 1031 exchange. "True" cost ~$5-7K.

How did you add value to the deal?

This property was basically move in ready. I added a new dryer to the property and replaced a ceiling fan. Other than that, I just prepped the property for renters: shovels, lawn mower, fire extinguisher, trash cans, etc.

What was the outcome?

Great property for cash flowing! Great margins, relatively low maintenance thus far.

Lessons learned? Challenges?

Buy lower, rehab myself. 1031 was super smooth and easy!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I did all of the work for this deal although I used an agent.