All Forum Posts by: Kyle Reece

I always say call the police for 2 reasons. 

1. If its a false report, telling me doesn't get them in trouble. False reporting to the police is a crime. One of my tenants got arrested for filing a false police report about someone breaking in the window to her apartment and stealing things. I had to call the police for her, she refused. But it holds them accountable, if they don't feel the issue is that important then they should be worried so much about it.

2. If they are that worried and call them. The police will explain to her is a more stern manner, they are both adults and to work it out. The noise they are complaining about its a realistic nuisance. Or the police will confirm the noise. either way helps solve the problem. Public service use them. 

I've had similar issues with tenants that seem to forget they live in an apartment with shared walls. Most of the time they are coming from living in a SFR and forgot what its like to be that close to your neighbor. Quiet enjoyment is to an extent, harassing neighbors and leaving nasty notes violates that. Having a small child or dog scamper across the floor is normal living noises. You cant tell the 1 yr old to stop crawling on the floor cause its too loud or prevent that family from living on a second floor. Family status is a protected class.

I agree with what others have said, advise both that you have documents the complaints and explained what is and isn't allowed. If they have further issue CALMLY address the issue with the other tenant or call the police. If we continue to get unwarranted complaints or are made aware of harassment, paperwork will start.

Hello Matthew,

To start off, whenever I am analyzing a deal If I don't have the exact numbers or its not a fixed expense. I always weigh on the high end for expenses and low end for income. I.e. if rents range between 600-800 run with 600 and if electric for utilities or trash go with the high number. That way you your not surprised if any of your number turn out be too optimistic. 

So to get into the calculator, vacancy rate, every market is different. I do 6% for mine but I've seen some run 10%. Is 5% pretty standard for your market?

You said "no other expenses as the tenants pay for those." Did you mean utilities? I don't know how the property is set up but does each unit have individual heat. Is there no common area lighting that you would need to pay for. water and sewer? Just to clarify, this is a 6 unit building and each tenant pays their own water, sewer, trash, heat, lawn care, snow removal, etc.. I know some municipalities require the landlord to pay the utilities then you can put in your own secondary meter but that costs money and sometimes a monthly service charge. Just want to make sure your not missing some expenses. I've seen a lot of real estate agents put utilities paid by tenant on the listing when that wasn't entirely true.

You didn't put down a management fee. Will you be managing it yourself? Its a good rule of thumb to still include a number here.

As far as your cap ex and maintenance numbers go, Its hard to put a number here without knowing the condition of the property. How old is the roof? Are you doing any repairs off the bat? When was the last repairs/improvements done?

You are putting down a huge down payment(over $200k) your COC return(with the numbers in your report) is 14%, $2548 month cash flow. Personally I don't believe it is that high, I think you are missing some expenses. You should get the actual rents during your due diligence. Whether this is leases or statements showing rents are being collected. If you don't get those, its a red flag.

This may still be a good deal but the numbers are off somewhere. If you look at the 50% rule calculation in the report. The difference in your expenses vs the 50% rule expenses is $2678, that's big. Under that rule your cash flow is $965 or $160 per door. Why are your numbers so different? If you did the COC with that cash flow now your looking at %5.

Hope this helps.

thanks, this is my second fha house hack. The financing takes awhile even it's it's not directly part of the transaction. I sold my SFR to a cash buyer but the cash was from when they sold their house which hadn't closed yet and their buyer was using financing.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $238,000
Cash invested: $2,198

House hack duplex, apartment brings in $900 when purchased market rent is $1200 for that unit currently raised to $1000. Will increase over next couple years unless tenant moves out. Main house would rent for $1500 if we were not living in it. Currently renovating main house to add some equity and pull out some money

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

Buy and hold is my preferred strategy. Needed to buy for family, decided house hacking to also increase portfolio.

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

MLS and normal negotiations. Multifamily in my market was not subject to inflated covid prices. Seller weaseled out of contract to try and get other offers. After one money they came back to my original offer.

How did you finance this deal?

FHA 3.5% down

How did you add value to the deal?

house hacking ROI after we move out will be over 200%

What was the outcome?

awesome investment with barely any money done

Lessons learned? Challenges?

lesson learned: always expect a long closing with financing. Challenges: This deal took an extra month to get locked up under contract because the estate attorney signed the contract as the executor and then 3 days later rejected the contract as the sellers attorney. They wanted to try and get more buyers to make offers but received nothing after 30 days and accepted my original offer. Make sure time frames have a buffer to account for unknowns.

Investment Info:

Single-family residence fix & flip investment in Peru.

Purchase price: $65,769
Cash invested: $10,000
Sale price: $150,000

Accidental flip, primary residence that we never intended to sell. COVID made it more expensive to renovate into the house we wanted vs buy a new one that was already renovated. SFR market jumped plus buying under value created a better oppertunity to sell and buy a Large Duplex with a small apartment above the garage.

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

Wife wanted a SFR instead of house hacking anymore.

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

MLS from flipper purchased "as-is"

How did you finance this deal?

Conventional loan 5% down

How did you add value to the deal?

purchased below value

What was the outcome?

$80k profit

Lessons learned? Challenges?

underestimated rehab costs turned primary residence into flip. Challenges? COVID -19 effects on construction costs.

Thank you for the reply. I have been considering  investing out of state. I've have also found a remote PM services. Hemlane and caretaker. 

Aside from local market information it looks like you put the numbers in correctly. How accurate the numbers are would be a different question. You have agent commission at $6,000 for the sale but if you ARV is $200k the commission would be higher.

Do recent comps support the $200,000?

How did you come up with the repair estimate and rehab time frame?

You say your interest rate is high but your rehab time frame is 5 months, have you looked at other financing options?

These are the questions I would be asking, it looks like the numbers are in the right place but more information would be needed to help fully analyze the deal. When you asked about maximum allowance, did you mean maximum allowed offer? That if the most you would want to purchase the property for to make a profit, I believe the calculator puts in a profit margin of 15% of the ARV.

So far my investing has been a solo act and I'm working to changing my frame of mind to turn it more into a business and outsource the jobs I'm doing. So in past deals I was the real estate agent, property manager, handyman, etc.

I've been looking into deals where I can wholesale, BRRRR, or flip. And I'm finding opportunities but I'm finding it extremely difficult finding people to outsource the jobs I was doing. My area is small and doesn't have a huge selection of professionals and I quickly go through the list once I start filtering out what I've learned to look for in these positions from the books and podcasts on here. I'm left with no one.

There are deals in my area and money to be made but everytime I turn to look for someone to work with the quality or price or mindset isn't there and I feel like I need to create companies in all these areas to get what I need. Does anyone have any advise?

Just to add my 0.02 since no one has mentioned it yet. You can ask for seller concessions with FHA up to 6% to help with closing costs. I've done this twice when house hacking. If the deal is thin, it may not be worth it. But if you have strong cashflow it will work great.