All Forum Posts by: Jacob Wutke

Thankfully this is a small city and the inspectors were very willing to work with me. I think they were just glad someone cared enough to finally take care of this property that had been neglected for years.

Investment Info:

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

Purchase price: $67,000
Cash invested: $65,000

This property was our first investment and was quite an adventure. Big lessons were learned on rehab budgets and how things can just "come up". We knew going into the property that it was going to need everything. What we didn't know was that the property was also completely infested with termites. The entire property had to be re-framed one section at a time. While the process was tedious we now have a property that is like new and will cashflow for years to come.

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

This one was nearby and needed considerable work. On my first few properties I wanted to do most of the work myself to have a better awareness of the overall process when working with contractors.

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

This deal was found on zillow and negotiated with the seller

How did you finance this deal?

We had initially paid cash and refinanced into a traditional 30yr loan

How did you add value to the deal?

The property was completely gutted and rehabbed from the ground up

Lessons learned? Challenges?

Renovations will always throw curve balls at you. Getting good at "rolling with it" and just dealing with things as they come up is very important. Adapt and overcome.

Working on my first property and currently have one under contract. The inspection revealed some things I didnt notice the severity of at first. I think the property still has potential just at a reduced rate. I expect the ARV to be somewhere in the range of 100k I currently have it for 70K but believe it will need about 40K in work and intend on reducing my offer to somewhere in the range of 30-40k. I believe after these renovations the property will get $1500 a month in gross rents based on other units in the area. I believe the current owner likely just wants it gone and may consider a lower offer, the property has been vacant for years. Below is a table with my expected expenses, I intend on completing all the work myself other than the electrical panel and the asbestos flooring abatement. The property is right across the street from a college making it a great place to be for steady tenants. The area surrounding overall is good. I have also attached a link to some pictures I have taken of the property to help better paint the picture of the condition the property is in.

[https://imgur.com/a/yy0y5nt]

|Asbestos tile abatement|$5000|

|LVP flooring install|$2400|

|New kitchen Appliances both units|$4000|

|HVAC replacement|$3000|

|Water heater replacement|$1000|

|200A electrical panel install|$3500|

|kitchen remodel both units|$3000|

|Concrete patio removal |$2000|

|repair rot back wall houser|$2500|

|Bathroom remodel/ both|$5000|

|Washer/dryer|$1000|

|Paint whole house|$500|

Working on buying my first investment property and have concerns specifically surrounding code violations and that sort of thing. I haven't ever dealt with a property that wasn't a primary residence and given it will be rented out I am expecting to need to be much more strict about the property in relation to keeping everything up to code. The property I am looking at was built in 1965, so things have changed a good bit since then. After some quick reading I was lead to believe that in general these are not the sorts of things home inspectors look for though some may know the codes well enough to point things out. Just looking for some recommendations on inspectors that may be able to help with this or other things I should be aware of in regards to how to navigate building codes as a landlord.

I drove by some of these properties this weeked. There is definitely value add potential. These seem to be properties that have been run for years with very little inflow of cash to keep them up to date and such.

 Zach, these properties are in Richmond MO. I suspect there is potential since some of the similar properties in the area are closer to 100k and these are 7 properties in the 300k range total.

Thanks Brett, I wasn’t factoring appreciation into the deal at all because I suspected as much. Wages are a decent bit lower than in the city at 39k median.

Rhoda, thanks for sharing. Looks like this deal tentatively works out to %8 cap rate. The main thing I have going for me here in particular is that I may be able to get into this for very low money down making the CoC return decent.

Eric, Thanks for the advice. I will see if I can track down a realtor. The population there has been flat for the last 10 years or so, I dont live in the area but it doesnt look like there is any significant reason to believe the population will make a big swing one way or the other.