All Forum Posts by: John Whitfield

@Sophia A Pierre Hello, and welcome to the community.  I live in St. Louis and have started investing here.  I've only been at it for a year or so and am certainly no expert, but I'd be happy to give you my thoughts on the market and the area.  

We have certainly seen prices go up over the past year, but I wouldn't say the market is overpriced.  Price is relative to the value any deal can bring to you.  STL is a good area for cash flowing properties, but I think it's a weaker market in terms of appreciation.  

I bought my first duplex in February of this year. It was pricey at $300k, but it was nicely updated and didn't need much work. It's cash flowing $600/month, and that's with fairly conservative allocations toward future repairs and CapEx (it's an older property).

Feel free to reach out and connect!

Hi Jess, and welcome!  I'm living in St. Louis currently, and I've started investing here with small multifamily.  I've only been at it for a year or so, but if you'd like any info or have any questions about the STL market, I'd be happy to connect.  Best of luck to you!

Personally, I'd avoid something this rehab heavy for a first deal.  

Congrats @Paul R. I missed my window of opportunity to house hack many years ago.  Great job on getting yours!

Thanks @Dmitriy Fomichenko and @Alexzandria Bennett!  Happy to share my experience.  Hoping this is the first of many investments.

Did anything ever come of this thread?  Do you guys have a club going?

Investment Info:

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

Purchase price: $306,000
Cash invested: $94,000

First investment property! This is a duplex located in Southampton. I found this as an off-market deal. It had been well tended by it's live-in owner and required very little rehab prior to being rent ready.

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

I've invested in one syndication, but I wanted to take a more active approach. I decided to look at small MF properties for my first deal. This seemed like a good entry point into the world of REI.

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

This was an off-market deal. I was looking at the duplex across the street listed on the MLS for $250k (wound up selling for $280k). As my agent and I were discussing things, the gentleman across the street asked if we were looking and mentioned that he was thinking of listing soon. We started chatting, asked to see his place, and found a good deal! He stated his asking price, I ran the numbers, and agreed that it worked for both of us. We were under contract the next day.

How did you finance this deal?

I financed this using a traditional 30 year mortgage with 25% down.

How did you add value to the deal?

This was a very well maintained property that had not been previously used as a rental. We did some light cosmetic repairs (new paint job and touch-ups to the sunroom), added dual laundry machines in the basement, and it was ready to go.

What was the outcome?

I closed on this in mid/late February, and it will be fully rented by the end of April. With reasonable values for maintenance, capex, PM, and fixed expenses, it should generated an NOI of a little more than $20k. After debt service, looking at cash flow of around $8k/year, yielding a CoC return of about 8.5% for the first year.
Huge shout out to BP and the rental property calculators for helping me with my analysis!!!!

Lessons learned? Challenges?

This entire process was a lesson learned. Everything was new: deal analysis, estimating rehab costs, all of it. The calculators were great, and my realtor was also very helpful. One of the bigger challenges (not to mention the current white hot market) was the price point. It initially appraised at $290k, but we were able to use 2 comps that closed the week of our closing to get a new appraisal of $310k. This helped with financing a lot.

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

Mike Maupin with Frontier Mortgage was my lender. The last comp closed the day before my scheduled closing, and they pushed underwriting through after the last comp with the new appraisal, and we were able to close 48 hours later.
I used Ryan Koppy with ReMax as my realtor. He helped me find the deal, get the deal, rehab the deal, and he's providing PM at a good price. Great experience from start to finish.

@Tammy Wiggins I think you are smart to focus on the numbers.  The recent podcast with Mindy and Scott really does hit heavily on the importance of solid deal analysis and avoiding eraser math.  I recently bought my first duplex, but I was lucky enough to find an off market deal.  Assuming it rents for what I think it will (bottom unit is rented, just doing a bit more work on the top before it rents), it'll hit the 1% rule and cash flow appropriately.  Had it gone to market, I think it would have gone for 10% more than I paid.

The crazy part is how I found it. I was looking at an MLS listed duplex across the street for $250k. I had run the numbers based on current rents, and it worked. I never submitted an offer; they had who knows how many offers in 3 days, and it sold for $280k; the numbers definitely did not work at $280k!!

My point is that listed properties right now are like a bucket of chum tossed off the coast of Amity Island.  Better to avoid the frenzy and hunt for off market deals.

Sounds good @Jerell DeCaille.  I need to be better about doing the virtual meetups as well.

Hi @Jerell DeCaille, and congrats on the duplex.  House hacking is a great start.  St. Louis has a boatload of meetups.  Check out the events section under the network tab.  I've only done one so far (I definitely need to do more), so I can't speak to all of them, but there's a mix of network focused and sponsor focused events.