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All Forum Posts by: Kyle Clevenger

Kyle Clevenger has started 3 posts and replied 6 times.

Post: Should I do this????

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

Thank you all for the comments on this post!

I am doing my best to clearly explain all of the options to my client. She may be interested in a hassle-free transaction with a cash offer. I will update this post, or create another when we reach a conclusion.

Thanks again!

~Kyle

Post: Should I do this????

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

Hello BP Community!!

I am a licensed realtor in Indiana, I currently only have one rental property, but I also manage a couple of others for my family. I have had a potential opportunity present itself to me from a family friend, and client I am assisting in the purchase of her new home. Details to follow, the numbers are not exact:

My client owns her current home, which has a little bit left on the original mortgage. She has elected to purchase her new home NOT CONTINGENT upon the sale of her current home. She has told me she would be happy with around $100,000. I explained to her we would likely be able to list for around $140,000 due to comparable houses listed in her market. I also explained that listing could take some time, due to buyers, the current interest rates, etc.

I may have an opportunity to purchase this property myself using a private investor. The private investor is family, very cooperative, and not charging an obscene amount of interest. Based on the current condition, I estimate about $15,000-$25,000 worth of work needs to be done (depending on the quality of materials we could use as well as the possible layout changes). Market rents for the area are between $1,300 and $1,700. (Large gap I know, but some additional factors influence this). 

I think I may be interested in BRRRR(ing) this property for my own portfolio, but I obviously want to make sure I am taking care of my client first and foremost. I have not done much due diligence yet, other than some preliminary looking around and discussing the listing of her property.

To be more clear, if there is not a problem with me presenting an offer to my client for myself to purchase, the opportunity would resemble the following:

Offer owner $100,000 cash- which she could utilize in the purchase of the new property.

Extend the date of possession to allow her ample time to move.

Follow a budget of $15,000-$25,000 for renovations/repairs. ARV estimated to be around $150,000-$175,000.

Either sell the updated house for $150,000-$175,000, or implement BRRRR for rents between $1,300-$1,700.


I apologize for the sloppiness of this post, I had only short time to create. I do look forward to hearing what the community thinks!

Best regards,

~Kyle

Post: Campground in Northern Indiana

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

Hello, 

I have a unique opportunity and have access to a campground in Northern Indiana off-market. I have never ventured into this space. My team and I have considered investing in it ourselves or finding someone who knows the industry better than us to pass off the opportunity. We are considering partnering with someone to grow and learn as well.  However, I am curious to see the opinions of others on this type of asset class. Would you look further into it? Or focus on finding a buyer?

Post: What do I do with my Rental!!??

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

@Chris Merchant

Great advice! Thank you for commenting

Post: What do I do with my Rental!!??

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

Thank you Eric!

I agree, I thought the removal was a bit high. I talked to the guy a little more and he said there was evidence of raccoons and bats as well. So the price was removal and mitigation. Does this make the price a little better??

Thank you again for commenting!

Post: What do I do with my Rental!!??

Kyle Clevenger
Pro Member
Posted
  • Indiana
  • Posts 6
  • Votes 1

Hello BP!

I house-hacked my first rental by buying it as a primary residence first then upgraded into my new home after 2 years of living in the first one. We have now owned the new property and lived there for about 1 year. The house (Rental) was built in the '50s and there has been little upgrading throughout its life. When we lived there we had an incident with a tree and received a new roof covering the main portion of the house. The rest of the roof looks fine with little wear or damage. 

Now this is where things get tricky. I placed a tenant in the unit in a hurry to help me just cover the expenses while I was deployed, big mistake! they ended up not paying rent (for almost 5 months) and leaving me with some small repairs after they willingly moved out. When we got our new tenants picked out, they said they love the area and look forward to staying there for several years if possible, and with the new tenants we are cash-flowing about $450/ month... At least that's what it looks like on paper. On January 1 this year my well dried up, and because I was not collecting rent and bleeding money (not to mention earning about half as much income as I am used to Stateside) we borrowed money from my mom to replace the well ($10,000). She is very generous and not charging me interest and letting me make small payments to her. The next thing that happened was over Memorial Weekend, received a call saying the AC Condenser stopped working. I was able to leave base and go home to meet with a tech and they hit me with another nearly $10,000 quote. luckily I have a buddy who's in the field, and he said he is confident he can get it condenser working for at least this season. I hope this works! Then, while I was walking through the property, after not seeing it for over a year, the tenants pointed out bird nests and said they were hearing squeaks and little feet in the roof and walls... UGH! Well, I got a quote to remove the pests and seal the entrances for $2,850. 

Finally, I'll get to my question for you all.

With putting out close to $15,0000 for a rental property this year alone (and potentially another $10,000 for HVAC) should I hold on to it?

Cash flowing $450 is not too terrible in my opinion, but it seems like almost all of the major expenses are happening right now and it's hard to justify keeping the house when it only makes about $5,000 profit in one year. It will take us between 3 to 5 years to recoup the funds we spent on the house this year alone, and that means taking no profit. I aspire to get to 10 to 15 units in the next 5 years through more house-hacking and purchasing dedicated rentals, but it is very hard when this first rental is bleeding money. I have about $70,000 in equity (Maybe more or less) but I have a 3% interest rate. I was looking into a HELOC, but the first lender we talked to (my local credit union) said they would not count my rental as income for another year or two, and that put our DTI in a bad place (with 2 mortgages).


Any tips or advice you provide will be greatly appreciated and considered!

Thank you for reading.

Respectfully,

Kyle D. Clevenger