All Forum Posts by: KC Pake

Hello, all!

I'm a first-time real estate investor! Hoping to make some connections here. After watching my dad and uncle flip houses growing up, it's time for me to step up to the plate. I have about $75k in the bank. I make around $160k a year at my current job, but I dislike it.

I currently live in Charlotte, NC. I've been using BiggerPockets' resources for a few months and I've found a property in Maine ($260k) that my wife and I love. The goal would be to use it as a short-term rental because of its location near the coast. I've run comps every which way to Sunday, and even with cutting in a property management company for 25% to run it from afar, considering the renovations and furnishing costs, we'd still be able to make a positive annual net yield and c-o-c at about 57% occupancy.

That's the option we get excited about. There are some upfront costs, but nothing nuts. My head, however, thinks we should probably just look for a multi-family unit here in Charlotte, put the 5% down, live on one side, and rent the other, but it just doesn't hit the same. There are a few near Madison Park and another few in Elizabeth we could choose from. We could get some steady income, but there isn't much supply for multi-families in Charlotte at the moment.

For STRs, I have also looked extensively at Madison, WI (my hometown) and the Ozarks (wife's home state) as other potential opportunities for us. I would love to hear any opinions, advice, or suggestions about STRs vs. multi-family home hacking as a first-time investor. Thanks so much for reading, and have a great day!

Hi David,

First off, congratulations on starting your journey into real estate investment! It's great that you're bringing in experience from your family and have done your homework.

The Maine property for short-term rental (STR) sounds like a fantastic opportunity, especially since you've done the math and it seems financially viable even with a property management company. The coastal location could indeed be a strong draw for short-term renters. Given your positive outlook on its potential and the fact that it excites you and your wife, it aligns well with investing in something you're passionate about.

However, the idea of purchasing a multi-family unit in Charlotte is also a solid strategy, particularly for a first-time investor. This approach could offer more stability and ease of management, especially if you're living in one of the units. While it might not be as thrilling as the Maine property, it's a lower risk and could serve as a good starting point to build your portfolio and gain hands-on experience.

Regarding STRs in Madison, WI, and the Ozarks, these locations could offer unique opportunities as well. It's important to consider the local market demand, regulations around STRs, and how these locations compare in terms of potential rental income and growth.

In summary, both strategies have their merits. The Maine property offers a potentially exciting and profitable venture but comes with higher risk and management complexity. The multi-family unit in Charlotte is more conservative, offering a steady income and a great learning opportunity in the field of real estate.

Since real estate investment is as much about numbers as it is about personal goals and comfort levels, consider what aligns best with your long-term objectives and risk tolerance. It might also be helpful to consult with a real estate advisor or mentor who can offer personalized advice based on your situation.

Best of luck with your investment, and keep us posted on your journey!

2 Votes

Portland, Maine

Quote from @Jason Crowe:

To subdivide a property or split in 1/2, what are the steps in doing this. This is just a single split in half for the property no more. Can this be done through normal channels of zoning, appraiser and title company? Or does someone need a more experienced representative. The split would leave road frontage adequate and side to side requirements met.

Hi Jason,

Subdividing a property, even if it's just a simple split in half, involves several key steps and considerations. Here's a general outline of the process:

Check Local Zoning and Planning Regulations: Before anything else, you need to confirm that the subdivision is permitted under local zoning laws. This includes checking if the intended split complies with the minimum lot size, road frontage, and other requirements. Local zoning and planning departments are the primary sources for this information.

Engage a Surveyor: If the subdivision is permissible, the next step is to hire a licensed land surveyor. The surveyor will create a plat, which is a detailed map of the new lot boundaries. This is an essential document for legal and regulatory purposes.

Apply for Subdivision Approval: With the plat in hand, you will need to apply for subdivision approval from the relevant local authorities. This typically involves the planning department or a similar regulatory body. They will review the plat to ensure it meets all local regulations.

Address Utilities and Access Issues: Make sure that both new parcels have access to necessary utilities, roadways, and easements. If new utility connections or road accesses are needed, this can add complexity and cost to the process.

Legal Considerations and Title Work: You'll need to work with a title company or a real estate attorney to ensure that the title is clear and to handle the legal paperwork involved in officially creating the new parcels.

Record the Subdivision: Once approved, the subdivision must be recorded with the county recorder or similar entity. This officially updates the public records to reflect the new parcels.

If the process becomes difficult...

Consider Hiring a Professional: While it's possible to manage this process on your own, particularly if it's a straightforward split, it can still be complex. Hiring an experienced real estate attorney or a consultant who specializes in land development can help navigate the intricacies of local regulations and ensure the process goes smoothly.

Initially, it seems like a daunting process, just go one step at a time. Good luck!
KC

1 Vote

Jacksonville, Florida

Quote from @Sharon Supera:

Hello everyone,

I’m seeking your advice on whether I should continue holding or sell a property I purchased last May 2023 in Windsor, Ontario, a city next to Detroit, Michigan. I acquired the house for $350,000 with 3 bedrooms and 1 washroom, investing $30,000 in rehab. The downpayment stands at $108,000, and I have a mortgage at 4.9%, costing $1450/month. Additional expenses include property management at $142/month, property tax at $1700/year, and other costs like insurance and maintenance. Currently, the property is rented at $2100/month.

The house, built in the 1900s, requires significant renovation, and the tenant frequently requests various repairs and maintenance, such as duct cleaning and appliance upgrades. I’ve heard about recent developments in the city, including Stelantes battery establishment, an Amazon warehouse, a new bridge, and the construction of a mega hospital.

Considering the property’s condition, ongoing expenses, and potential development in the area, I’m contemplating whether to sell, especially since the property is not cash flowing and needs substantial renovations. The renovator mentioned the house is in poor condition, requiring a ground-up renovation, which would demand additional funding.

I’d greatly appreciate your insights and advice on this matter. Thank you so much!

Hi Sharon,

It sounds like you're in a situation that requires careful consideration of various factors, both financial and related to the property's condition. Here are some key points to consider:

Local Market Trends: Windsor's real estate market, particularly with the new developments like Stelantes battery plant, Amazon warehouse, and the new bridge, could be on an upswing. This might increase property values in the area. If these developments are likely to enhance the neighborhood's appeal, holding onto the property could be beneficial in the long term.

Cost of Renovations vs. Return on Investment (ROI): You mentioned that your property requires substantial renovations. It's crucial to estimate the total cost of these renovations and weigh them against the potential increase in property value or rental income. If the ROI seems low or if the renovation costs are prohibitive, selling might be a more practical option.

Cash Flow Analysis: Currently, your property isn't cash-flowing positively when considering your mortgage, management fees, taxes, and other expenses versus your rental income. If this trend is likely to continue, it might be financially straining to keep the property, especially if you need to invest more in renovations.

Financing Options for Renovations: If you decide to renovate, consider how you'll finance these renovations. If the cost is high and you're not getting sufficient ROI, it might not be worth the additional debt or investment.

Tenant Considerations: Frequent repairs and maintenance requests from your tenant indicate that the property might be challenging to maintain. If these issues are persistent, it could affect your rental income and tenant satisfaction.

Long-Term Investment Goals: Reflect on your long-term investment goals. Are you more interested in immediate cash flow, or are you willing to wait for potentially higher returns in the future? Your decision should align with your overall investment strategy.

Consultation with Real Estate Professionals: It might be beneficial to consult with a real estate agent or a financial advisor familiar with the Windsor market. They can provide a more detailed analysis and advice based on current market conditions and future projections.

Cheers,
KC

0 Votes

London, Ontario

Quote from @Mike Deneys:

Hello everyone. This will be my first of many questions. I have just secured a $35000 HELOC. I intend on purchasing my first rental (Single family or duplex to fourplex). I don't understand how people are buying then rehabbing properties to raise the rents. I don't know how I would be able to do that with only $35k available of my own money. Would anyone like to explain a few options other than just turn key properties? Thank you

Hello Mike, and welcome to the forum! Congratulations on securing a $35,000 Home Equity Line of Credit (HELOC). It's a significant step towards your goal of purchasing a rental property. Your question about how to utilize this fund for buying and rehabbing properties is quite common among new real estate investors. Here are a few strategies you might consider:

BRRRR Strategy: This stands for Buy, Rehab, Rent, Refinance, Repeat. You buy a property, make improvements, rent it out, and then refinance it based on its increased value. The refinance part is where you get most of your initial investment back, which you can then use for your next property.

Partnering Up: Consider partnering with someone who has more financial resources or different skills. For example, you could use your $35,000 as part of a joint investment where both parties contribute either money or expertise.

Creative Financing: Look into seller financing or other creative financing methods where the seller of the property helps to finance the purchase. This can sometimes allow you to buy a property with less money down.

Focus on Less Expensive Properties: Consider markets or property types that require less capital. For instance, purchasing a smaller single-family home or a property in a more affordable area might fit your budget better.

House Hacking: This involves buying a multi-unit property, living in one unit, and renting out the others. Your living expenses can be significantly reduced or covered by the rental income, and you can use the savings to fund rehab work.

You are at the beginning of a fun journey with real estate investing. Don't hesitate to reach out to the BiggerPockets community with questions. There is a wealth of information and experience on this website.

All the best,
KC

0 Votes

Classifieds

Post: Unlock Your Investing Potential: Try Our Free Funding Estimator Today

KC Pake

Posted December 07, 2023 13:31

Investor
Orange Park, FL
Posts 169
Votes 108

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0 Votes

Quote from @Hariharan Elavarasan:

I bought my first rental property earlier this year. Cash flow after I move out (house hacking) and renovating should be 200-300. 30 yr fixed mortgage @ 6.625% with about 76,000 left. Over time, I'll end up paying 96k in interest payments. I had originally planned to buy 9 more properties, hopefully around or below 150k with a 200 cash flow. Then I wanted to snowball pay off all 10. Of course these are approximate numbers and anything can happen, but I anticipated it taking 25-30 years to do this process. At one point, I'd approx. be 1 million in debt, and it will always be hinging on all 10 rentals' tenants paying on time, and no major major problems.

Into my Youtube feed comes ye olde Dave Ramsey (surely you know where this is going). I'm wondering if I should just pay off this property in full before moving to my next one. I'm young, and I make a very good salary for my age. By summer I should have a good emergency fund, and even if my future share of rent when I move in with my partner is $1,800, I could still have an extra $1,100 to contribute to the loan. I could go from making a $780 payment to a $2000 ($780 from tenant rent - cap ex, utilities, prop mgmt etc, $200-$300 from cash flow, $1100 from personal). I could get this paid off by late 2027/early 2026, and save 90k in interest.

I'd then be sitting on $900-700 cash flow without considering rent increases. Then I'd pick up another mortgage and do the same thing. I'd be snowballing these one by one, but at any given time have 100-150k real estate debt (not considering personal home debt, personal car loan)

What makes more sense? The payoff method sounds slower, I'd probably only get to the same 10 properties in 35 years (I haven't considered how quickly it'll snowball, maybe the last 5 may take only 10 years to do with all the cash flow from 5 paid off properties), but I'm not desperate for real estate cash flow. Without it I can very comfortably live and retire. Just doing this to help my parents in retirement, and help my future children get through college debt free as my parents did for me.

For context, during this time, I'd always be maxing out my company match for 401K, maxing out my Roth IRA, have 15k for emergency fund. I'd have to cut back on my travel budget for the month, pay off the car I bought my parents (50k loan in Sep 2022, 28k left to go, my dad and I pay it together), and ensure that lifestyle doesn't change as rapidly. I understand that I'd probably only get my dream home when I'm 50, and that major things like changing budgets, children, health will impact this timeline, but it seems like a low risk real estate method, that will have a similar enough payoff due the fact that I'm fortunate to be making a good salary.

Apologies to anyone reading this thinking I'm trying to brag in anyway. We all come from different walks of life and I'm incredibly fortunate/grateful to have hard working parents that were able to get me to this position. And I respect those of you who aren't as fortunate and have had to work hard to claw their way up to where you are today, that definitely is and always will be a bigger achievement then where I may end up. Just looking for the advice of those hard workers if they could start over in my position. Thank you all!

Greetings Hariharan,

Congratulations on your first rental property!

Given your stable income and the ability to set aside substantial funds for loan repayment, the payoff method could save you significant interest expenses. However, it will likely slow down your portfolio expansion. It's crucial to consider factors like market conditions, interest rates, and your long-term financial goals.

Balancing your investment strategy with other financial commitments, such as maxing out your 401K and Roth IRA, maintaining an emergency fund, and managing personal debts, is also important. Remember, real estate investment involves risks, such as reliance on tenant payments (like you mentioned) and potential, unexpected, property maintenance/repair issues.

In conclusion, both strategies have their merits. The payoff method offers a more conservative, lower-debt approach, potentially reducing financial risk but slowing down portfolio growth. Your initial strategy allows for faster expansion but carries higher debt and interest costs. Your final decision should align with your comfort level with debt, investment goals, and personal financial situation. I understand this is not a definitive answer, but hopefully, it adds some considerations to your thought process.

Best of luck with your future investments,
KC

1 Vote

Quote from @John Marlin:

Hey KC! Thank you for the kind words. I'm looking to take on more projects down the road, would love to talk lending sometime!

John,

I would be happy to chat with you anytime. Feel free to reach out with any questions, or just to brainstorm. Talk to you soon.

KC

0 Votes

Buying & Selling Real Estate

Post: Tenant request to split cost of an 'upgrade'

KC Pake

Posted December 06, 2023 13:21

Investor
Orange Park, FL
Posts 169
Votes 108

Quote from @Dan B.:

I've hot an interesting proposal from a new tenant. They asked me about splitting the cost of installing gas logs in the fireplace. Total cost $1200. They would pay 600, if they ever leave, they would leave it. Propane tank will be on the outside and professionally installed by watsons.

I'm looking for some opinions on whether this a good idea or not. Anyone have any thoughts? Would gas logs increase the value of the property? Would it present undue risk with a negligible value add?

Hi Dan,

Interesting proposal from a tenant to install gas logs in your property's fireplace, with a cost-sharing arrangement. Here are some points to consider when evaluating this proposal:

Property Value Increase: Gas logs can be an attractive feature for future tenants or buyers, as they offer the ambiance of a fireplace without the mess and maintenance of wood burning. This could potentially increase the value of your property or make it more appealing in the rental market.

Installation and Maintenance Costs: Ensure that the installation cost quoted includes all necessary work and conforms to local building codes. Regular maintenance will also be required to ensure safe and efficient operation.

Safety and Liability: Professional installation and regular maintenance are crucial for safety. Ensure that the installation company is reputable and that the system meets all local safety regulations, sounds like you should be fine if installed by Watsons. Consider checking with your insurance provider to determine if this addition might affect your coverage and liability.

Energy Efficiency and Cost: Gas logs can be more energy-efficient than traditional wood burning, and propane is often less expensive than electricity. However, the cost can vary based on local propane prices and usage patterns.

Aesthetic Appeal: Gas logs can enhance the aesthetic appeal of the property, which might be a selling point for future tenants or buyers.

Tenant Satisfaction and Retention: Agreeing to this proposal could increase tenant satisfaction and potentially lead to a longer tenancy, which is valuable in itself.

Exit Strategy: Since the tenant has agreed to leave the gas logs if they move out, this becomes a permanent improvement to your property without additional cost to you when they leave.

Market Trends: Look at the trends in your local real estate market. If energy-efficient or modernized homes are in demand, this upgrade could make your property more competitive.

Environmental Considerations: Gas logs are generally more environmentally friendly than wood burning, as they produce fewer emissions. This aspect might be appealing to environmentally conscious tenants or buyers.

Contractual Agreement: If you decide to proceed, ensure that the agreement is documented in writing, including aspects like maintenance responsibilities, what happens if the system is damaged, and any other conditions.

In summary, installing gas logs could be a good investment in terms of property value and tenant satisfaction. However, it's important to consider the installation and maintenance costs, safety and legal compliance, and potential impacts on insurance.

KC

0 Votes

New Member Introductions

Post: Greetings! New investor looking for some starter advice.

KC Pake

Posted December 06, 2023 13:00

Investor
Orange Park, FL
Posts 169
Votes 108

Quote from @Mason Osato:

Hi!

I'm new to bigger pockets and real estate investing. My Finance and I had a son a year and a half ago and want to build a real estate business to spend more time as a family and have a business to pass on to our children.

Right now, I am in the early stages of saving money and learning as much as I can. Then I plan to buy a duplex or triplex as a house hack to start. I listen to the podcast daily and am currently reading Rental Property Investing by Brandon Turner and have Investing in real estate with no (and low) money down and Pillars of Wealth on the shelf ready to go next.

Some questions I have are I have a new child, so I am not able to save much from my w2 job and looking to do a side hustle to supplement. Any suggestions on flexible hour side hustles? Also, should what I save go into a basic saving account or an investment account?

Looking forward to continuing this journey with all of you!

Mason Osato

Hi Mason,

Welcome to the Bigger Pockets community! It's fantastic to hear about your commitment to building a real estate business, not only for your financial growth but also for creating more family time and a lasting legacy for your children.

Your approach to learning through resources like podcasts and books by Brandon Turner is commendable. As you're in the early stages of saving and learning, exploring house hacking with a duplex or triplex is a smart strategy. It can significantly reduce your living expenses and simultaneously build your investment portfolio.

Regarding your questions:

Flexible Hour Side Hustles: With a new child, flexible side hustles are key. You might consider freelance or remote work that aligns with your skills. Platforms like Upwork or Fiverr offer opportunities ranging from writing, graphic design, to virtual assistance. Alternatively, gig economy jobs like Uber, DoorDash, or TaskRabbit can provide flexible hours. Another option could be to leverage any hobbies or skills you have, like photography, tutoring, or crafts, to create a small business.

Savings vs. Investment Accounts: This decision largely depends on your financial goals and risk tolerance. Savings accounts are safer and provide easier access to funds, which is crucial for emergencies or short-term goals (like saving for a property down payment). Investment accounts, on the other hand, offer higher potential returns but come with greater risk and usually are better suited for long-term goals. Since your immediate goal is to save for real estate investment, a high-yield savings account might be the most practical choice. It’s always a good idea to consult with a financial advisor for personalized advice.

Your journey in real estate investing is just beginning, and it sounds like you're on the right track. Remember, every step you take now is building towards a brighter future for your family. Feel free to keep asking questions and sharing your progress. The community here is always ready to help and support each other.

Best of luck, and here's to your success!

0 Votes

Minneapolis, Minnesota

Real Estate Technology

Post: Seeking Input: Automating Real Estate processes

KC Pake

Posted December 06, 2023 12:45

Investor
Orange Park, FL
Posts 169
Votes 108

Quote from @Richard Telva:

Hey, so I used to do real estate wholesaling but decided to learn code and other tech stuff. I now specialize in automation and was looking into automating processes for Real Estate. But besides that, I guess I'm here for insights

I need your insights:

• What parts of your process need automating?
• How much would you pay for effective automation tools?

For Example:
• A tool that scrapes Bank REOs (so live data not old stuff) and gives you the info/jump on them.
• An automated CRM that prioritizes and updates lead info, ensuring you never miss a key follow-up --> (I've done this a few times🤦‍♂️)
• A real-time valuation tool that aggregates data for quick, informed property assessments. ( Basically, a far superior version of Zestimate that tells you hot markets and the value of a house right now, not just what it was worth last week or last month)

There are a lot more use cases, but let me know y'all.

Hi Richard,

It sounds like you're on an exciting path, transitioning from real estate wholesaling to specializing in automation with a focus on the real estate industry. Your experience in both fields likely gives you a unique perspective on the needs and pain points in the industry.

Regarding your questions:

Parts of the Process Needing Automation:

- Lead Generation and Management: Identifying potential property deals, tracking interactions, and maintaining up-to-date contact information.

- Property Analysis: Automated tools for assessing property values, understanding market trends, and evaluating investment potential.

- Document and Contract Management: Automating the creation, signing, and management of various legal documents.

- Communication Automation: Tools for streamlining communication with clients, investors, and other stakeholders.

- Marketing and Advertising: Automated solutions for creating and managing marketing campaigns, listings, and social media presence.

Willingness to Pay for Automation Tools?

The investment in automation tools would depend on the value and return on investment (ROI). If a tool significantly reduces time spent on tasks, minimizes errors, or increases deal flow, I might be willing to pay a premium but would need to ponder more before committing to a number.

For specific tools, you mentioned:

- Bank REO Scraper: Given the potential for high ROI by getting early information on properties, users might be willing to pay a substantial fee, especially if it consistently provides accurate and timely data.

- Automated CRM: This could be a game-changer for many realtors. If it demonstrably improves lead conversion rates and customer relationships, a monthly subscription model could be quite lucrative.

- Real-time Valuation Tool: A sophisticated tool like this, offering more accuracy and insight than existing solutions, could command a high price, especially if it provides actionable intelligence for investors.

Your ideas have a lot of potential, especially since they address specific, commonly experienced challenges in the real estate sector. I am going to keep an eye on this post for other feedback!

0 Votes

All Forum Posts by: KC Pake

KC Pake has started 17 posts and replied 166 times.

Post: Single-family from afar or multi-family in-state?

Post: Land Splitting/Subdividing Jacksonville

Post: To keep or to sell

Post: HELOC for first property

Post: Unlock Your Investing Potential: Try Our Free Funding Estimator Today

Post: Paying Off 1 by 1 vs Waiting and Leveraging

Post: First primary rental

Post: Tenant request to split cost of an 'upgrade'

Post: Greetings! New investor looking for some starter advice.

Post: Seeking Input: Automating Real Estate processes

KC Pake has started 17 posts and replied 166 times.

Biggerpockets Logo Post: Single-family from afar or multi-family in-state?

Biggerpockets Logo Post: Land Splitting/Subdividing Jacksonville

Biggerpockets Logo Post: To keep or to sell

Biggerpockets Logo Post: HELOC for first property

Biggerpockets Logo Post: **Unlock Your Investing Potential: Try Our Free Funding Estimator Today**

Biggerpockets Logo Post: Paying Off 1 by 1 vs Waiting and Leveraging

Biggerpockets Logo Post: First primary rental

Biggerpockets Logo Post: Tenant request to split cost of an 'upgrade'

Biggerpockets Logo Post: Greetings! New investor looking for some starter advice.

Biggerpockets Logo Post: Seeking Input: Automating Real Estate processes

Post: Single-family from afar or multi-family in-state?

Post: Land Splitting/Subdividing Jacksonville

Post: To keep or to sell

Post: HELOC for first property

Post: Unlock Your Investing Potential: Try Our Free Funding Estimator Today

Post: Paying Off 1 by 1 vs Waiting and Leveraging

Post: First primary rental

Post: Tenant request to split cost of an 'upgrade'

Post: Greetings! New investor looking for some starter advice.

Post: Seeking Input: Automating Real Estate processes