All Forum Posts by: Joshua Kemp

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $130,000
Cash invested: $35,000
Sale price: $165,000

3/2 home house hack with modified house hack/nanny option

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

My fiancé came up with the creative idea to house hack this house with a local college student as a “nanny” for our daughter. She basically is responsible for taking her to school in the mornings and, in turn, gets a discounted room in a nice neighborhood! Win-Win!

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

My fiancé and I decided to do the house hack in the first year of owning our home. Truthfully, I was hesitant about the situation because I was afraid of having my daughter taken to school in the morning by a stranger. But we treated it as a business deal and “another tenant” for our home, did background checks, interviews and checked references. It’s worked out great.

How did you finance this deal?

We financed the home originally through a conventional loan with a local bank.

How did you add value to the deal?

We had replaced the carpet in our nanny’s room with tile in that room. Repainted and did new trim in that room prior to marketing the room.

What was the outcome?

Well, I would say it was a very successful outcome. Our Bluff’s Hack has been paid off in two years. We now own this property free and clear.

Lessons learned? Challenges?

The road was not without bumps, though. We learned more than we ever want to know about FEMA flood insurance, and the costly price of not doing due diligence on flood insurance premiums in certain areas.

@Nicholas Aiola

Makes perfect sense.

Yes, I did forget about deducting land value. Thank you again.

Wow Nicholas Aiola, I just spent about an hour reading through ball of your posts of the last two years!

If I may, I have a question:

I purchased a home in 2011, for 84,000. I lived in the house until last year when my fiancé and I moved in together. My name alone is on the house that I purchased in 2011. We rented my house out at the beginning of this year. Jan 1. I believe the rental property is FMV about 130,000 currently, but have no current appraisal on the house. The rental house will be completely paid off in about August this year as we are paying at an accelerated rate with our income from the real estate and from our ‘normal jobs'. I plan on getting a HELOC on that house to purchase another rental property, so I'm certain I will have to get an appraisal at that time anyway.

My ultimate question is this: In my scenario, at what number would O depreciate the rental property starting this year? Would I be using the 84,000 for the original purchase price and try to figure out if I have any other expenses (new HVAC) that I would be depreciating from? Or would I depreciate from the new appraisal/FMV?

@Nathan G.

Hey Nathan G. I charge a flat fee 5% or $50, whichever is greater, not to exceed 10% of monthly rent on the 10th day late. Then eviction notice to follow if I have not been contacted by the tenant to setup payment options. I have not had to setup eviction yet, so I cannot speak on that matter. I do believe, however, it is important to stick to the contract when it comes to late fees. I have heard stories, and I do listen to them, but we can arrange for payment, to include the late fee as soon as possible. I want to be fair but firm.

Secondly, all that being said: I believe that, in Texas, you can charge up to 12% after 2 days late in a residential (4 units or less) and 10% after 2 days late in commercial (5+ units), but don’t quote me on that.

@Katie Miller

Hey Katie! My two (3 ACTUALLY) BIG GOALS FOR 2020 are simple but BIG:

1.) My fiancé and I are $55,000 away from paying off our second investment property. Goal one entails completely paying it off this year. Projected payoff month was September at the beginning of this year. We are now looking at getting it paid off in July.

2.) Purchase our 3rd investment property in San Angelo, TX. Now this goal being set, we have been running numbers in nearby markets, Abilene, Midland, Big Spring TX as all of this area is similar markets; heavy oil field traffic markets.

3.) Spend time together and take our first out-of-state vacation! Yes, in three years of us being together we have been working hard to pay off our two houses and have not taken a single BIG vacation... so this year is the year!

Good luck everyone on y’alls big goals... and HAPPY HUNTING in 2020!

@Tyler Henry

Great analogy from a real life scenario! It’s exciting that you have taken the plunge and hopefully you will keep on building. With every single call/request you get, you’ll gain more little tools (knowledge) for your landlord toolbox!

Hello BP Community!

I am excited to be a part of this community and to see what building good relationships and networking on BP has to offer. I am a Fire Fighter by trade, so I have really enjoyed hearing stories, podcasts and the sort from @David Greene. I am looking forward to reading the book, Buy, Rehab, Rent, Refinance, Repeat: the BRRRR Rental Property Investment Strategy Made Simple. I am enjoying running the numbers on several properties in my area, San Angelo, TX, and trying to use the LAPS Funnel, as @Brandon Turner has coined, to find the best deals. I want to Work (Way) less, but Accomplish (Way) more in 2020 and in doing so, I want when people refer to me say: "Of course he is successful and finds the best deals, he analyzes like 100 properties a week!" I am OK with that! I am left in AWE at the number of resources that BiggerPockets.com has to offer and at the commitment to the success of others of this community. The first webinar I attended was with @Matt Faircloth, "How to build Win-Win Wealth by Using Other People's Money." Guess what I learned? In this market, everyone CAN BE HAPPY with the deal! You do not have to be out to get the other guy. If I use private money to fund an investment property, they are getting INTEREST on their monetary investment. The seller, whether a private seller, bank, wholesaler, or whomever, is making a deal on a property that they WANT to sell. The contractor that I use is EARNING money on the deal by doing great work on the property. The RE agent gets a COMMISSION on the property paid for by the seller. The tenant gets a FULLY RENOVATED HOME that they can be PROUD of to live in, and for a fair price. Lastly, I get to earn a CASH FLOW that I can be happy with because part of my commitment to all of these people is doing my research and to become the best that I can be at what I do; Investing in Real Estate! As a bonus to everyone being happy with their part in this deal: I have also built great relationships and I am fine tuning the pump to get the best optimal business flow.

My fiance and I currently own outright one home, which before getting connected with BP, we unknowingly did a modified "House-Hack." We lived in a 3/2 with our 3 year old daughter and found a local college student willing to live with us AND be a nanny for our 3 year old. She rented out one of the bedrooms (currently still does), and is responsible for taking our daughter to school every morning. My fiance put an add in the "job listing" of the local college and included in the description that we were looking for a "Live-in-Nanny" with a discounted rate for housing. We had a TON of applications. After looking through the list, we found our nanny/tenant, and we both had a WIN-WIN DEAL! Her obligation was to take our daughter to school in the morning and the rest of the time was hers to go to college or work. She has since graduated college and now has her own financing job, so she still has the win of inexpensive housing, plus still has the time to have a full-time career.

We are also currently within paying off our second home this year (which was my first home). But we have not have had to pay a single penny of our own money on that home for at least the last 7 years. For the first few years, my sister lived in the home and all I had her pay was the mortgage, utilities, taxes, insurance. It was a win for her because she was able to stay in a home as if she were purchasing the home, but did not have to have the stress of repairing things when they broke, plus, it was still significantly less than renting the home would have been. It was a win for me because at the time, I had just got a divorce and was unable to pay all of the expenses on my own. Now, for the last about 4 years, this house has since been rented out to other tenants and I am managing the property myself.

Our goal is to finishing paying this house off and be able to use our own money to invest back into more properties via a HELOC (thanks @Matt Faircloth for the information on the webinar on how to accomplish this) and use the BRRRR Strategy to supercharge my success. I am excited to meet some of the local BP members in the local meetup that we have coming up at the end of this month. I am also excited to network with others here in the BP community and build strong, long lasting relationships. I am glad to be FINALLY HOME!

Happy Hunting BP Community,
Joshua Kemp