All Forum Posts by: Julie Hill

Investment Info:

Duplex in the southside of Birmingham, AL

Purchase price: $120k

Bought from a wholesaler through networking where we live (in Denver, CO) end of December last year. I had never been to Birmingham but the #'s for STR on this property were just too good so decided to jump on it. One side of the duplex had hoarders living in it with about 18 cats, and the other side was burned out and vacant due to a kitchen fire (which then became extra storage for the hoarders next door)

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

STR is our favorite RE model and after our city made it almost impossible to do, we were looking for opportunities elsewhere. This property was interesting because it was commercial-zoned so even if Birmingham starts regulating STR (they are not currently), the property is actually zoned to be a legal b&b.

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

A wholesaler brought it to us

How did you finance this deal?

One of my best friends who is extremely risk-averse but has seen us do some deals and said yes in about 2 seconds!  She funded the purchase + 50k of the renovation, we funded the rest ($70k) of the renovation ourselves.

How did you add value to the deal?

We rehabed the property basically from the studs (to the tune of $120k). The burned-out side of the duplex was a 1 BR / 1 Bath and we changed the floorplan to be a 2 BR/1 bath.  We did this during COVID, and without knowing the city at all.  

What was the outcome?

The outcome? Incredible. The only negative is that we had to leave everything we invested in the deal after we paid the original lender back because a) it's a commercial property thus a commercial loan, and b) banks did not want to work with us since we live out of state. I don't think this would have been the case if it was residential property, but commercial was HARD. The property ended up being appraised for 320k. We were originally planning to STR both sides of this duplex but due to Covid we decided to turn the 2 BR into a long-term rental at $1200/month and STR the other side (3 BR / 2 bath) and see how it went. WELL... we started airbnbing this unit mid August and it has netted $2500/month so far. Our costs are $1900/month including mortgage and all utilities for the STR side. The long-term tenant is great but if things go well with the economy, we will turn that side into a STR when her lease is up next year. We already have the furniture sitting in storage. And even though it was a bummer not being able to pull any cash out, we have a ton of equity in it and our mortgage payments are low. We would love to find another property in this area to buy and do the same thing but they are hard to find at this price point. We got so lucky and are so thankful of our awesome investor community here in Denver!

Lessons learned? Challenges?

OMG so many... how much time do you all have lol?  Challenges:  getting hoarders out when their lease didn't end until June, working with a contractor who was amazing but could not remember anything about any conversations, trying to figure out what was going on when I couldn't go visit the rehab for 3 months during the early times of COVID, working through structural issues, and I continue to have to work through issues with the neighbor who technically owns the driveway (fun!)  Main lessons learned:  hold contractors accountable with software like hubstaff, etc.  Make sure to communicate with contractors that they need to TELL ME when there needs to be a change order vs. do something on the cheap which then has to be changed later.  Most of all, I could have saved a ton of $ if I could have trusted my contractor to follow through but instead I had to go down there 1-2 times a month (and flights to Birmingham are not cheap!) I also learned that Birmingham is an AMAZING city!!  The people are amazing and it's a beautiful town.  Plus the food is incredible :) 

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

Not really.  The only person I would refer is the wholesaler who showed me the deal!  PM me if you want his name because I don't think he's on BP

Here are the Matterports of both sides of the duplex when done and check out some of the before photos!  

2BR / 1 BATH (with backyard) - long term rental

3BR / 2 BATH - STR

Hey all,

Sorry for the long post but this deal is an interesting situation and would love some insight on the best way to pay for the renovation:

Our town (Arvada, CO) just made STR legal for up to 3 properties. We love the STR model and our place is situated just a block from the action so we know it will do well. As soon as it became legal, my husband and I started looking for a new house to buy to move into for a few years until we buy our next one, etc. so we can STR our current one. Obviously, we were looking for a value-add opportunity and found an incredible house in the area of Denver we've always wanted to live in & are currently under contract on it (owner-occupied conventional loan). Although the market is INSANE in Denver, we got a pretty good deal on this property but there is a lot to do on it because it was single owner since the year it was built in 1951. Currently, it has 3 BR's on the main floor and 1 Bath. The basement has a separate entrance right on the street and is already fitted with 3 rooms that could be BR's and 1 Bath. We will have to come in and make those bedrooms conforming with egress windows and 1 needs a closet but the rest of the basement needs an entire makeover (new floor, new bath, add a kitchen, add a 2nd bathroom etc. etc.). We can also add a bathroom upstairs and extend the kitchen a bit for a better footprint. When we are all done, it will be a 6 BR, 4bath house and will be beautiful in one of the hottest areas of Denver. Not only that, but we will be able to live in the top and STR the basement all day long (legal in Denver when it's your primary residence). Once we move out in a few years, we will rent both units as long-term rentals.

Where am I going with this? Well... I am self-employed (high-end wedding & corporate video production) and obviously, 2020 has not been kind to my biz. Our lender is currently using our 2019 P&L. We will be able to add $200-$300k of appraised value with the renovations so ideally, I would love to refinance when done in order to pull out the cash we spend on the renovation (and more) and put that towards another purchase in Birmingham where we also invest (we want to stay in this Denver house for 3-4 yrs before moving because the STR income will more than cover the mortgage and be quite profitable). Our lender says we can keep using my 2019 P&L until Oct next year when we will have to submit tax return which will show a not so stellar income. However, this house closes end of Nov. which means traditionally we wouldn't be able to refi until NEXT Nov (which is too late because then we will have to go off of 2020's income). I really don't want to leave the cash in this house (it will not be a cheap renovation). So here are my questions:

1) Is there a lender (who services CO) who is willing to refi after 6 months vs 12?  They would need to be self-employed friendly!!

2) If there isn't a lender that would work for us, then the next option is to finance the renovation instead of paying out of pocket for it. Any great programs for this?  We just refied our other investment properties so not sure I could get a heloc on them (even though there definitely is equity).  I have never applied for one so I just don't know and have heard these are hard to get right now anyway.  I keep seeing commercials for Sofi home renovation loans - any insight on their program? 

Thanks in advance!!!

Hey @James Carlson!  Is this going to be online and recorded?  I'm so bummed but I have plans tonight that I can't get out of and can't attend but I live in Olde Town Arvada and dying to hear this info.  Please let me know!  Thanks! 

I would love to refi my primary home (and if possible do a cash out refi on another property) but I'm self-employed and of course most of my 2020 income has moved to 2021 since my main job is in the wedding industry.  So while 2020 sucks, 2021 is going to be a ball buster (hopefully).  My regular broker thinks he can get the refi done on my primary but at 3%.  That's great of course, but a friend just got 2.75% and I called her broker and he was like "nope - not doing anything for self-employed right now even if you have stellar credit".  Are there other options that are actually doing loans for people like me right now?   I'm in Denver. 

We are still learning so sorry for the newbie question!!   FINALLY almost done with a project and getting lien waivers signed by the main contractor and the main subs.  The GC didn't have a General Contractor License so in the contract, it is worded that he is operating under another company's license.  I just told him I need that company to sign a waiver as well (because I don't know what kind of deal he made with them) and he's literally telling me he doesn't know how to get a hold of him.  Ummmm... huh??  Is this a big deal if I don't get someone from this company to sign this doc?  It sounds like he literally just put some company's name.  He said he talked to him ONCE awhile back.  WTF?  This is obviously my fault for not asking more questions.  I mean if the guy doesn't even know that my contractor named him, I would hope it's not a big deal.  Especially now that we are DONE

After all the education we've done and a few projects under our belt, I think I have a nightmare on my hands.  We are renovating a duplex out of state.  It was purchased in December (from a wholesaler) and I was very hands-on in the beginning, visiting the site every 2 weeks or so.  Then covid hit.  My contractor has been updating me along the way and of course, it is way past deadline.  I finally drove down this week to check on it (instead of flying) - it's a 2-day drive.  I am freaking out because now that the house is close to being done, it is very apparent there may be significant foundation issues.  Now before anyone yells at me for not knowing this before the project got started (or buying the place), know that we did check for basic foundation issues.  there were no cracks or anything in the brick or walls.  One side was completely burned out by a kitchen fire, and the other side was occupied by hoarders so there wasn't much we could "check" anyway.   The flooring is now installed and my contractor didn't bother to tell me "hey Julie.. the floors are sagging, are massively uneven (especially on the 2nd floor), and the brick pillar holding up the roof outside is crooked".  This house was built in 1948.  I am scared that if we don't fix this, the bank won't refi it (we are going to keep this as a rental).  I feel like the issue is "beyond" normal old house floors.  Does anyone have experience with this?  I will have a few structural engineers come out and look at it this week but I'm sure it would cost 30-40k to fix it.  I'm just guessing after having to do it in other properties.  But those were flips, not buy & holds.  Just not sure what the bank will say. Ugh :(   

Hopefully this post is allowed...  my real gig (besides RE investing) is wedding video production.  That is obviously not happening right now so one way we've diversified is by offering RE media (photos, matterport, drone, etc. etc.). This space is already so competitive where I am (Denver) so I wanted to ask you realtors... what sort of email subject or "deal" would you actually click on in your inbox when. you get slammed with this stuff every day?  THIS IS NOT A POST ASKING FOR BUSINESS BTW - I already have a list to email.  I know 100% I can produce this stuff better than anyone else but I understand that is not usually the criteria... it's usually some sort of price or special.  So I'm asking... what would make you click on my email?  Be honest!  And thank you! 

@Matt M. small 2 BR / 1 Bath house.  All of the big stuff is done.  A 2 person team could knock it out in a few weeks. 

We have a flip in Denver that is 80% finished.  Luckily most of the materials have been purchased and are at the house.  Our contractor is totally unresponsive now and no one is working at the house.  We need to get this done asap.  And yep, it's going to cost more money :( we've used this guy on other projects and he's been great but at this point, we are not willing to put any more trust in him (especially since he's not responding).  Would love recommendations in the Denver Metro Area.  Please PM me! 

@Jason Cory I doubt that's the case with this one.  it's surrounded by other homes the same age (and all commercial) and there are duplexes on the block behind it.  It's not like developers are knocking down doors to buy up property to build stuff in that area. I do have a couple of refi options but just looking for more because it's definitely limited, that's for sure!