All Forum Posts by: Jason Runkel

Investment Info:

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

Purchase price: $125,000
Cash invested: $25,000

Buy and hold investment creatively financed via land contract.

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

The ability to finance without a traditional mortgage. It has been difficult to get traditional financing on a second deal being self employed.

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

This deal was found on Facebook. We met the homeowner and explained what attracted us to it and our situation as it pertains to financing. We made an offer and hashed out the details from there.

How did you finance this deal?

We financed this deal via land contract. We put 20% down on a 4% loan amortized over 30 years, with a ballon payment in 3 years.

My partner and I are doing the same thing right now in Racine, WI just a half hour or so south of Milwaukee. Our particular property we are working on was purchased for $65k through a wholesaler in the area. We are looking at a 5 week rehab (total gut job) on an 890 sqft home with a budget of right around $20k for the rehab. 

Originally our goal with this property was the same as yours, to get our feet wet, and ultimately to learn and build systems that are replaceable in our own market as well as others. We were fortunate enough to link up with a skilled contractor looking to build a business (which we have done, we own a successful local painting company) and were able to form a partnership that has propelled us years in advance (on the contracting/renovation side) and allowed us to focus on building our acquisition business. As anywhere, deals are not the easiest things to come buy these days so this partnership has opened up massive doors of opportunity for us to build and ultimately grow exponentially. 

Now I will admit, I am a bit of a newbie when it comes to flipping (we do own other buy and hold investments but this is our first flip experience), but my advice from my experience so far is to look for partnerships with driven individuals who want to build and grow with you. It's a major benefit for us that we found this deal in our home town market so we are right down the street to be able to monitor and analyze what is going on through the process, but I strongly believe that with the system we have already build with our contractor we could replicate this model in any market... with the right people. Its all about getting yourself and your goals out there so that like minded individual are gravitating towards your message and goals, building and implementing systems, and growing and improving them along the way. 

Good Luck!

I was looking for some good examples of investment packets surrounding a specific deal that someone would present to a lender or maybe a potential investor. I found one good example in BP files which included:

- Cover sheet

- Project financial overview

- Project capital

- Financing costs

- Comps

- Scope of work estimate

- Photos

I was just looking for some further examples to compare this example to. The idea would be to have a packet to present to a lender for the purpose of refinancing the asset after the flip. We would also like it to serve as an example for potential private money lenders on future deals as part of a credibility packet. 

Any examples, experiences, thoughts you could share would be greatly appreciated!!

Hey BP,

I've been searching for a good baseline spreadsheet to help track rehab costs. I have and find many that are used for the estimating process but am having trouble finding any that would help with the tracking of the real costs of a project. Does anyone have anything they are willing to share?

Thanks in advance! 

I had a question pertaining to pulling permits on a potential rehab project in Wisconsin. 

Say we decide to move on this deal and decide to reconfigure the floor plan, adding a bedroom, and changing the flow of the house while keeping the same square footage. If we did this work without pulling a permit, what are the risks we are running? I'm sure we would be running the risk of fines if caught, but what risks are involved if the city were to not catch you in the building process? 

Say we decided to reconfigure the kitchen and move where the cabinets were and didn't pull permits. What about a smaller project like this? 

 What if we were to pull permits for changing the floor plan and adding a bedroom, keeping the same square footage, and subsequently decided to rearrange the kitchen moving things like cabinets and counters, but no walls, and didn't pull permits for this part of the project. What are the risks we are running? 

Say you completed a rehab, adding a bedroom but not modifying square footage. What risks are you running when preparing for sale down the line? 

Sorry for all the questions but any advice helps! Thanks!

@Connor Rice I’m not 100% sure, but the WRA has WB-11 Residential Offer to Purchase contract. That could be useful. I’m sure a local agent would be able to help you out on either for sure pointing you in the right direction or maybe helping you fill it out.

@Michael Henry Yeah, i can definitely understand that. This would be our first larger rehab, my partner and I have done light stuff on our buy and hold investments, as well as for other investors in our area but have yet to take on a rehab project that we aren't planning to house hack. Being in this position I can for sure see it to be valuable to really evaluate how we would present the deal and like people stated above, who we are presenting the deal to and the relationship we have with them.

What do you think about the calculators here on BP for a packet? I had been using calculators created in Excel by other local investors that have been shared with me over the last year or so, and they're relatively easy to use and understand but I feel like the ones here are cleaner, more presentable, and easier for someone to understand. What other things would you recommend for a packet that would help exemplify the point that this is a good deal and money will be made? I really like the ideas on the creative structuring for higher ROI to get someone excited to invest in the project. Thank you for your feedback I really appreciate it! I will definitely be thinking outside the box more!

Congrats on the first property Matt! Hope all goes well for you. I also purchased my first duplex this year in Racine as a house hack, and its definitely been a great learning experience so far. I was lucky enough to not have tenants in place at the time, so I got to experience finding and vetting tenants for the property. With that being said, I didn't personally have to cover my bases in the same way as of yet, but I will for sure be following the post to learn more! 

Personally, I am looking to move more into BRRRR investing in the Racine and Milwaukee area. I live between my duplex in Racine and my girlfriends house in Walkers Point so I'm lucky to be familiar with both areas. The biggest challange I had with finding my initial property and even more so in trying to find a BRRRR project has been working with RE agents who weren't particularly investment minded, and it seemed not many I had found were, so I am also working on pursuing my license. Would love to meet up some time to chat!

I was just curious about peoples experiences with private money lenders. 

A partner and I operate in SE Wisconsin (Racine, Milwaukee, Kenosha area) and have been working with an out of state investor, originally from the area, who was interested in helping us out in acquiring a BRRRR deal weather through private money, a cash purchase on their end and subsequent land contract to us, or a partnership deal. We have brought many intriguing deals his way in the past months but he always seems to get cold feet at the last second, being that this is the first time he has participated in this kind of deal, and letting great opportunities pass.We have been working diligently on finding deals, creating a rockstar team, and even working on obtaining RE licenses, all in attempt to execute on a BRRRR project but it just hasn't come to fruition yet..

A couple questions I have for BP members:

1) What are the most common concerns, objections, etc. you've gotten from private money lenders? Especially new ones? How did you overcome?

2) Have you ever used a first time private money lender? If so, I would love to hear your experience. 

3) How did you find your first private money lender? I have heard of some people starting with hard money, but we haven't found a deal yet that we feel would be worth taking on with hard money due to the cost and risk involved with the current uncertainty in the market, especially with what is going on right down the road from us currently. 

4) How did you get into your first BRRRR or flip deal? How was it structured? How did you finance?

Any other feedback is obviously welcome and appreciated! 
 

Great plan man! I'm 24 and bought my first house hack this year in Racine, WI just south of Milwaukee. It's a duplex that I rent out both units and have built another small unit in the basement that I live in. It's been a great learning experience so far and has definitely left me hungry for more! 

I also plan to move more towards the single family rentals using the BRRRR method. My business partner and I have been working to get into a property using OPM where we can handle the small rehab using our team we have been creating and really get the ball rolling.

One thing I've found is that it can be difficult to find truly investment minded real estate agents, because of this I've been working on getting my license to become an agent in Wisconsin and in turn be able to help myself and other people who run into the same problem. 

Good luck to you on your investment journey!

- Jason