All Forum Posts by: Ken Wicks

You have a lot of what iffs and with no margin of safety and no experience I would read up and save up a little more. The only affording the home IF you have renters and putting only 3.5% down on an FHA worries for me. You need to have everything go well or else the whole thing falls apart. You want to have some sort of margin of safety in there in case something goes wrong. I am going to have to replace a heat pump and furnace this year that will run 5,600. Would you have the ability to get this done if it happens day 1.

Finding "perfect" tenants is also tough for a first time investor.  My first tenant was AWFUL and it sounds like if I were in your position the whole thing would have blown up.  Imagine if you will have to evict and they trash the unit you are looking at thousands in lost income.

They way you are talking is that you are trying to FORCE this to happen.  Going for it is great but jumping into the unknown without knowing what you are doing could be hazardous.  Not saying it wont work.  You talk about knowing that there is a book on how to invest with low and money down I see you haven't read the book.  I would recommend reading it as it not only gives you explanations on how to do it but also the risks associated.

You cant pull in a partner on an FHA or a 203 loan.

I'm laughing at the original shower with the window in it.  Who thought that was a good idea?

This looks great though!

If I were you I would read up a little on how to rehab, not for specific knowledge but to at least know that a contractor is not taking advantage of you.  The biggerpockets book written by J. Scott does a very good job at this.  With contractors you have to be VERY SPECIFIC about what you want done in your scope otherwise they will not know what you need done or they will creep the scope and you will end up blowing your budget.

You don't need to know how to do the specific updating but I wouldn't go blindly with no knowledge.  Don't rely fully on others for this information either.  A good home inspector is great but no one will take your property as seriously as you do.

Knowledge is power.

Investment Info:

Single-family residence buy & hold investment in Atlanta.

Purchase price: $78,500
Cash invested: $12,000

Bought a single occupancy studio apartment that will be rented out.

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

The property is the same as my first rental. I bought this one as well because the numbers worked out and I can keep an eye on it as I learn the property management business.

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

Same as my first property, it was off-market and I found it from a friend of mine.

How did you finance this deal?

Conventional loan

How did you add value to the deal?

Bought undervalue, planning on doing some improvements to the property as the years go by.

What was the outcome?

Good so far

Lessons learned? Challenges?

Just bought, fees expanded a little when my partner and I purchased so our immediate profit eroded a little.

Investment Info:

Single-family residence buy & hold investment in Atlanta.

Purchase price: $74,500
Cash invested: $12,000

Single studio apartment. Did not work out with the first renter however, I have found my stride and now have a great renter.

Looking to hold this long term as it is a great value within the city of Atlanta which lacks affordable single-occupant housing lacks.

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

It was a great deal and since I lived so close to the unit it made sense. Being in an apartment community I felt that the maintenance would be easy. This unit was essentially investing with training wheels.

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

Found it from a friend who was renting in another unit that the owner had. I ended up buying this unit as well.

How did you finance this deal?

Conventional

What was the outcome?

Great so far

Lessons learned? Challenges?

Our first renter I did not background check enough. It was easy to get them to leave as I offered cash for keys.

I have purchased a unit in my complex from someone who owned two.  The owner has run out of options and wants to sell me the second unit.  Only problem is that my cash is a little strapped on account of buying the first one and a couple big personal purchases.

The unit works out financially but I am wondering if anyone has a suggestion on how I can buy this thing.  The owner has deep pockets and just wants the unit off his balance sheet.  I have thought about owner financing but I don't know how to approach him about this.

You mentioned that you were planning on using an FHA loan to purchase. It is my understanding that in order to qualify for an FHA there is a live in requirement that you must adhere to. My primary residence is an FHA so I am only considering conventional ones for my rentals.

This might be something you want to ask about before you get too involved.

I will be turning over a unit in the next couple of months for the first time.  Does anyone had a suggestion for a cleaning company in the area that they have used in the past.  The unit is in great shape and will just need a new coat of paint and cleaning.

Is there anything I am missing?  This is my first time and I want to make sure everything is lined up for the transition.

 I have some of the same thoughts just looking around BP but you have to remember that this is a little like going to the gym and seeing all of the in shape people and assuming the world is in shape.  You have to consider your sample set.  If you go to an open house for a property fit for investment you're going to get people looking at and talking about the property as an investment.  How many people on this site have actually done a deal?

Try bringing the idea of purchasing a rental to some of your friends who have expressed no interest and real estate.  When I start to have acquaintances investing in real estate whom you look at and go THEM?!?!? that's when it is time to run.  Mellinals right now are holding 40% of their assets in CASH!!!  IMO we have some runway with that generation.  I am worried about is boomers and Xers that are trying to catch up with their retirements and spending irrationally.  A sense of panic could fuel them to make dumb decisions.  I also like that there are no shows about real estate buy and hold investing, there are a lot on flips and they have great ratings and a divorce will make headlines, I think that market is overheating.

A problem that I do see with some peers that I have is they want to buy where the market has already gone up.  The money in that case has already been made.  I like to remind myself that the money in a deal is made on the buy, not on the sell.

"Be greedy when others are fearful and be fearful when others are greedy"

First off start with a city planner so you can check the zoning of the property.  They may not let you build a multi family on it if it isn't zoned that way.