All Forum Posts by: James P Laurens

Investment Info:

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

Purchase price: $227,000
Cash invested: $40,000

3/2 2000 sqft 1930’s Craftsman Bungalow, 2/1 1950’s Ranch, Studio Loft over a 2 car garage. Rent out garage bays separate.

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

One of my mentors early on pointed out the security in multi family properties, one loan with multiple people paying it, generally cash flows better and helps insulate from vacancies.

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

MLS. I'm an agent and noticed it had been sitting for 6 months on the market.

How did you finance this deal?

FHA owner occupant loan. 3.5% down. Used my commission for most of the down payment, seller paid all closing costs.

How did you add value to the deal?

Only painted the interior of the big house, the small house for new wiring, central hvac, and a new kitchen which allowed the laundry to be inside instead of on the back patio. Finished out the loft over the garage.

What was the outcome?

100% rented with happy tenants.

Lessons learned? Challenges?

Everything costs more and takes much longer than anticipated.

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

I represented myself as a licensed agent.

The seller and the listing agent negotiate a commission at the time of listing and it is "paid by the seller" from their proceeds at closing, and at closing the commission is split between the listing agent and the buyer's agent at their agreed upon split. So while technically it's not coming directly from the buyer, it's part of the price of the property. It's all detailed on the HUD statement at closing.

Pick a consistent theme and try to stick with it, you're trying to appeal to 90% of the market, light colors, brushed nickel, stainless, etc. Once you have a good "set" of basics to use, you can apply them to the majority of your properties and scale up or down when needed. Places like Home Depot and Lowe's are good because you can often find collections of fixtures that match to keep a design consistent. One of my biggest suggestions, especially when you have a small property, one type of flooring is going to help it feel more spacious. One of my biggest clients likes to do tile throughout and it makes his typical 1200 sq ft houses look huge compared to one buyer that wanted carpet in the bedrooms and living room, it chopped up the spaces and the house "showed its true size"

Direct mailers, when you're targeting the right people with the right message, you're going to get much stronger results than a sign placed out, especially if you're in a "sign heavy" area advertising all sorts of junk.

I've been in the business for 10 years and the worst mistake I made was spending my first two years with a company that had no training, no support, no real lead generation. I developed a lot of bad habits, then due to the broker needing a lifestyle change all the agents were let go and I went to a Coldwell Banker franchise and got such a huge amount of knowledge, support, and decent lead generation. I'm now on my own and making the most I've ever made. I can't stress enough how important a strong foundation is to build your business. Unless you're used to commissioned sales with very little structure, you're going to flounder some while you get your footings, a strong training system at a brokerage can keep that from happening, and keeping you from wasting a lot of time and money.

As a real estate agent, I can tell you in my market about half the agents are going to tell you what they think you want to hear, a quarter don't know what they're doing, and a quarter will actually take the time and do as good of a valuation as they can, but again it is ultimately an opinion of value. It won't be as detailed or anywhere near as thorough as an appraisal done by a licensed appraiser, you get what you pay for.

it's my understanding that not all Fannie Mae properties qualify to be a Homepath property, I may be mistaken, but I think there are minimum requirements that must be met (condition, finance ability, etc)