All Forum Posts by: Joshua Granberg

@Stuart Udis There's certainly truth to what you shared. I certainly appreciate the word of caution. You need to know what you are doing to get into the larger space. Seminars and educational programs are helpful but you do need the personal experience. So many people get stuck in the 'learning' phase and never 'do'. You also have to have a strong financial foundation! Without that, you are taking on far too much risk. Investing is about managing risk and return. You have to know your numbers on both sides of that equation.

Hey @Christian Vito, I do have a few developers/contractors I can get you in touch with. I think the contractor avenue would be better in this area. The developers are more focused on the middle-zone, high-density, work that opened up with the new zoning. I think mid-sized GCs would be more interested in this type of thing. One of the big challenges, as you may be aware, is the permitting for this type of community. Also, many of the ADU/DADU companies in the area (MyKabin is the first that comes to mind) are starting to go out of business. I would look into them and try to figure out what their biggest roadblocks were. I have a friend in Vancouver (Luke Shaffer) who does ADUs. He owns MyADU.com. He would be a good resource as well.

Hey @Roger Garner, were you able to find a good contractor? Is this for your personal residence, flip, buy and hold? I have a few contractors I can refer but it will depend on what you're looking for.

Hey @Jim Blumenthal, That's an excellent question but, unfortunately, I don't have a bulletproof reply. What I have done is get connected to other owners in the area that own similar properties to you and ask who they use. I try to find three good PM candidates and interview all of them. Pick the 'best' one but realize that you will probably only get about 18-24 months of good service out of them before they will start to slack. Then you can rotate to your second choice on the list. You can keep rotating through the three. After a few years they will figure out what you are doing and one of them will view it as an opportunity to improve their service to keep the contract while the other two get offended. That's how I've managed it. It doesn't feel great, but it does work. On a similar note, one thing to pay attention to with PMs is the security deposits. Make sure you get regular statements of that account to make sure they are not tapping into the deposits. Once they do, that usually means they are a sinking ship. I hope that helps! Anyone else have input?

Agreed, that seems high. I owned a 14-pad mobile home park in Puyallup, WA for about 12 years. Honestly, it was a great investment only because we bought it at the right time. They are a special asset class that take some deep knowledge. With the prices, I can see why they are tempting, but, personally (after having owned a park), I would stay away if I were you. Same with condos in my opinion. I think you would be better off getting a small multifamily to start with. Find a partner if you can't do it on your own. I'm in the Seattle area (Lynnwood) if you'd like to sit down and chat more about it.

Hey Jim,

If you're still interested...I would suggest a different approach. Yes, it is good to get a deal or two under your belt. There is SO much to be learned. But, from my personal and professional experience, larger deals are much easier to do than smaller ones. I would recommend doing one or two small SFH or 3-4 plex deals, and then jump up to the 20-40 unit apartment buildings. These are small enough that they are still operated by ma-and-pa operators but they are typically easier to find funding, operators, and contractors for. There is a lot of opportunity in that space. Yes, that may seem scary, but it is what I have found to be true.

If you have any questions, please, reach out and we can chat!

Investment Info:

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

Purchase price: $19,000
Cash invested: $42,000
Sale price: $120,000

This property was originally a SFH with a detached garage. I gutted the main house and rebuilt it. All new electrical, plumbing, flooring, kitchen, bathroom, walls. I then tore down the detached garage and built a studio with a loft. It was an expensive and extensive remodel project but it worked out great because of the AMAZING purchase price!

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

This was a house hack. Once the main house was finished (well, almost) we moved in and then began the studio build. It was just a fun project my wife and I wanted to tackle together.

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

It was a repo home. I found it through local connections.

How did you finance this deal?

Cash purchase. Refinanced after main house was finished and used those funds to build the studio.

How did you add value to the deal?

Complete remodel and converted to duplex.

What was the outcome?

Almost 50% ROI in 2 years.

Lessons learned? Challenges?

Probably should have bulldozed the building and started from scratch. :-)

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

Evolve Bank and Trust

@Nick 

@Nick Ruffini, I second @Brian Adams. The best person to ask is the operator. They should have a spreadsheet with all the information you are looking for. As far as benchmarks go, the group I work with, Sage Investment Group, looks for a 15% IRR, 2.5x multiple, and 12-15% Cash-on-cash return. Just make sure you understand the numbers and go with what they say. And don't be afraid to ask questions! Getting into real estate investing can be intimidating, but the more questions you ask the faster you will learn.

Investment Info:

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

Purchase price: $19,000
Cash invested: $62,000

Purchased this SFH for $19,000. Invested $62,000 in a complete remodel and added a second studio. Cashout refinanced for $120,000. Now it has an infinite ROI and $650 positive cash flow after all expenses. It's been quite a project!

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

I knew I would be living in the area for a couple of years and wanted a fun project to work on.

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

Network. Through a real estate agent I know that works with Repos.

How did you finance this deal?

Purchased for cash and invested about $20,000. Then did a HELOC for the rest of the rehab. Once it was finished, I did a cashout refinance, got back all my money and paid the HELOC.

How did you add value to the deal?

Complete remodel of the main house. There was a detached garage that I turned into a studio apartment with a full kitchen and full bath with a loft bedroom.

What was the outcome?

I turned the SFH into a duplex. Once all was done I had removed all of my initial investment and it still cash flows about $650/month.

Lessons learned? Challenges?

It ended up being a much more extensive remodel than expected. The hardest thing was getting good contractors. I went through SO many! It's just so hard to find good work.