All Forum Posts by: Kevin Nichols

I recently bought an underperforming duplex at an online auction (regional auction house...not one of the big ones.)  I paid $25K and the contract is "as is," we are to close by April 7th.

I went by the duplex today and spoke to the current property manager on Friday. Both sides are vacant with evictions happening this month.

There's a lot of junk still laying around, plus furniture, etc.

With the "as is," clause, we're on the hook for moving the old tenants stuff out?

Kevin

@Jay Hinrichs

The city just put a moratorium on new construction of multi-family, except in a very concentrated area in downtown. They are basically pushing builders to either build in their new "Knowledge Park" area or wait.  

So existing multi-family is doing well in this area.

I looked at a 4-plex in a really nice college neighborhood only blocks from the school. Long term tenants, nice brick structure, on a beautiful tree-lined street. I ended up not making an offer after another bidder offered. I kick myself for not.

There are not many multi-family deals to be had here.

@Jay Hinrichs

You're absolutely right.  There are basically 3-4 rental-grade neighborhoods in this town and then a very bad class "c" hood that only a few landlords would touch.

Since December, I've been called out 3x to 1 duplex because of issues. 

I don't mind it. I live 15 minutes from all my rentals. For a $53K duplex, we're getting $1100/month (gross) and a $37K SFR, $700/month.

There's nothing over $900/month in this area.

There is plenty of landlord competition to buy rentals. Lots of folks with cash burning a hole in their pockets.

If you drive 25 minutes north to Charlotte, the rental market starts out at $900/month and increases from there.

@Chris Lynch

I just started buy & hold in my area and have bought 3 homes since December. ($37K, $53K, and $28K) Two were duplexes and one was a SFR.

They are very hands on. We have good tenants, but still we did quite a bit of rehab, etc. to get them up and running.

Of course we do all our management ourselves.  The ONLY way I would suggest that out of state is to purchase them and make sure you are onsite to get rehab done properly, then hand off to a property manager.

I've seen out of state owners in our area who get horrible rehabs.  Bad roofing work, sub par hvac work. There are few houses in the area that are half way rehabbed because the out of staters couldn't get the projects completed. Now they are on the market.

Onsite, you get things done faster and you can inspect the work.

We just got an offer on our 2nd buy and hold accepted. Our first, a duplex, cycled through both tenants since December and this 2nd SFR has a month to month tenant.

My goal with each property purchased is to receive 18%+ cash on cash and to meet the 50% rule. What are some other "goals" you try to meet when purchasing?

Kevin

In a termite inspection prior to closing on a buy & hold property, our inspector found termites in "debris" under the house, but the house is not infested.  According to the inspection, the house has no prior evidence of infestation.

Our realtor suggests the course of action: We ask the seller to remove the debris.

Is this enough or should we ask for more?

Kevin

@Stacy Eisenberg I just had something similar happen on Friday. One of our best tenants (a tenant who plants grass and fertilizes it!), texted me on Friday and said he had to go back to Mexico for a family emergency. 

So...I went over to this duplex Saturday and they were completely cleared out. They had 8 more months on their lease.

I asked my other tenant if they had any friends looking and within 3 hours, I was meeting a potential new tenant....just like that.  

Keep your tenants happy and they'll keep you happy. We're all blessed.

@John Doyle I just bought a duplex last December and it's my only rental for now.  I bought it with a partner.

I use Quickbooks in my web design firm and thought it best to do the same for my rentals.

I used Landlordaccounting.com to get me started with a sample QB file. It works great.

i like it to because I can run reports and share with my partner and accountant. 

Kevin

@Adam Moyer Congrats. I bought my first duplex in December. We do most of the minor rehab ourselves, but the occasional HVAC or gas issue has popped up already.

You need:

HVAC guy
Plumber
General handyman (fixes the roof, etc.)

Initially, I used the HVAC company who I use on my primary residence, but then I had to get a quote from them on a blower motor for my HVAC air handler. They wanted $650 to put in a $100 part.

So...my best source was basically other landlords. I asked a few and got some local suggestions.

That worked out great. It was cheaper and now I have a resource list that I can go to.

Kevin

@Brandon Duff I have the same issue.  I own a web design firm and try to keep my W2's low.  In 2012, I sold a mobile app for a nice sum. So, last year I went to get pre-approved for my 1st investment property.

Unfortunately our DTI was too large. We had recently refi'ed our primary home to a 10 year mortgage and my wife is a school teacher.

I ended up finding a partner who could get the mortgages and I backed the LLC partnership 75/25. That was a good option for me. My partner is hands on and we do a lot of the rehab ourselves.

This year, I was able to secure a line of credit that is backed by my investment portfolio. So I can make cash offers and pay the LOC at a prime minus 0.25%, with no mortgage fees.

Other options are to pitch owner financing. I just sold a small office condo and financed the whole deal. The buyer was happy she didn't have to pay all the mortgage fees and I've got a decent passive income. Some owners are open to that.