All Forum Posts by: Jack Luzecky

Samantha, do you have a mortgage on the property? If so, check with your lender to see if you can transfer it to an llc. Most loans have a "Due on Sale" clause that will typically state something along the lines of "if ownership transfers under the same mortgage then we the lenders can call the loan due". From personal name to LLC typically falls into this. Will they call your loan due? Probably not. But they can if they want to! Just check with your lender first before getting too deep into weighing the pros and cons.

Working for a large property management company, we supply kitchen appliances about 98% of the time, but most times we do not supply washer/dryer. It seems most people in st. louis are okay with purchasing a w/d set. As for kitchen appliances most tenants are looking for them to be included in the lease. When providing appliances we state "not to be repaired or replaced by landlord". 

Hey Roberta, great question. If i were in your position i would take care of the minor cosmetic work. This will help you achieve a couple things. The tenants will ultimately be happier in the long term and hopefully take pride in living in a well taken care of house. Another pro, when the tenants move out they will have less of an argument when you are assessing damage and disbursing the security deposit accordingly. If they move into a place that is rough around the edges it makes it easier for them to argue that some of THEIR damage was already there prior to moving in. But, even if you do not fix the cosmetic work, at least compile a pre move-in report with pictures of the entire house.

Spanish Lake can be a rough area as Lee mentioned. But, I know plenty of investors who are okay with buying in similar areas. You just have to be a bit more conservative on your numbers. Prepare for at least 1 eviction every 2-3 turnovers. Depending on the house I would stay below $850/month. The more affordable the home is listed at will widen your tenant pool. This will help procure the most qualified tenant. If you're due dilligence is counting on $900+ per month then I would forget areas like Spanish Lake. 

@Eve Oliver do you have any records of employment from tenant screening? Are they still working there? May be a good start.

@Patrick OToole you are correct on lending regulations when it comes to occupying the property and vacating. The only “loop hole” I know of is that when buying with a low down payment, you must have the intention to occupy the property. If something were to come up that would inhibit you to occupy the property then you’d have a legitimate reason for vacating the property. Whatever you do, just don’t bend the rules. Will they figure out? Probably not. But if they do, is it worth the costly fines and/or the inability to purchase another home down the line?

@Joe Polyak Propertyware is great in my opinion. Has handled the management, accounting, and maintenance requests for 1,500+ units just fine.

@Matthew Konkel I had looked at a few MF dwellings in a small college town in Midwest this spring. Ultimately, we did not move forward, but the one thing that worried me and that you should take into account is that many students have their housing figured out for the fall semester already. With this in mind I personally would build in a larger near term vacancy reserve.

Great advice above! Figure out your strategy! Personally, I would lean towards a flip right now because St. Louis is extremely low on inventory. Decent properties are flying off the shelves and great deals are going way over priced turning them into not so great deals. If your end product can be listed at an affordable price for the end buyer, while also bringing you your desired profit then I'd lean towards a flip. Right now I'm seeing a lot of appraisers in the St. Louis area adjusting their methods of appraising. I've seen appraisal reports where the appraiser doesn't even walk into the home. Personally, i would not want to rely on an appraiser to make or break my BRRRR. BUT, it also depends if you would need all your cash back out of the deal. If you only need 50% of your cash back out then it would take a lot of pressure off the refinance on the back end.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $205,000
Cash invested: $41,000

Purchased my first duplex to "house-hack"! Currently living for free while making subtle updates to maximize cash flow upon vacating. I live on the 2nd floor with a roommate, rent out the 1st floor to a young couple, and rent out the garage to a mechanic. I couldn't be any more happy with my decision to house hack. Onward and upward!

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

After reading Set For Life by Scott Trench, I realized I had an opportunity to eliminate 30-40% of the average housing expense per American. YES PLEASE!

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

I wrote a letter to the owner and called them after a week of no response.

How did you finance this deal?

I went conventional, Freddie Mac, 20% down.

How did you add value to the deal?

I bought the property at a ~10-15% discount, DIY Renovate Kitchen, and increase rents upon vacating my owner-occupied unit. Its a generic 2-family for the area and in overall good shape for the age. A pretty straight forward deal.

What was the outcome?

I am still in the process of the live-in renovations, but they are going great! Sometimes you start a project not know what you're getting yourself into but to me that's the fun part. "I already started...now I have to finish"

Lessons learned? Challenges?

As a realtor, i represented myself in the purchase. Looking back i wish i would have had a realtor friend represent me so I could keep some emotion out of it during negotiations.

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

To close on this deal I worked with my favorite lender from Guild Mortgage and the most spectacular closer from Title Partners Agency in St. Louis.