All Forum Posts by: Lance La Croix

@Lance La Croix

Don't forget to estimate for changes to you HVAC system

@Jonathan Feliciano

I am currently doing a full reno on a lake house and converting the garage to a kitchen/dining area with an open concept to the rest of the living areas.

A couple things to remember is that your conversion costs will need to include framing, insulation, and siding to remove the garage door.

Where I am, it was almost $2,000 just for a Change of use permit. Also, depending on your area, you may have to add more outlets to make it suitable for a bedroom and most garages are sloped slap on grade and are not sealed verywell to the elements. For us, it is definitely worth it but we have a second garage so the house will still have covered parking available.

My wife and I will be moving to the Sioux Falls area soon. We just completed our first Live and Flip and we are looking into purchasing a rental property and a new primary home. I will be looking into that group--thanks! 

Investment Info:

Small multi-family (2-4 units) other investment in Jordan.

Purchase price: $255,500
Cash invested: $1,500
Sale price: $356,600

We purchased our first primary residence in February 2019. It had 3 bedrooms (2 main floor, 1 basement), 3 bathrooms (1 3/4 main floor, 3/4 basement), a bonus room in the basement (no windows. Surrounded by a porch, garage, and interior walls), and a three-season room on the main floor.

We planned to finish the three-season room, add a kitchen to the basement, and divide the home into two separate units.
Main floor: 3BR 1.75BA
Basement: 1BR .75BA

We ended up flipping the home instead.

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

The idea of house-hacking a duplex has always appealed to me; the thought of converting a single-family home into a duplex sounded like a fun challenge.

BUT--It turns out, we enjoy living alone! We strategically purchased this home knowing we would have multiple exit strategies. We decided NOT to convert the home to a duplex (which was plan "A") but perform a live-and-flip instead.

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

We were looking for a single-family home for quite a while. My wife showed me this home even though it was outside of our preferred price range. This home was being sold through Opendoor LLC. so we were able to walk through the home before we even spoke to a realtor. There were several aspects of the home (including entire rooms) that had not been mentioned in the listing and that made it a great match (and a great deal) for us.

How did you finance this deal?

We used a USDA Rural Development loan to purchase the home. We used a rebate program to find our lender and she covered her side of the closing costs as a result. We made an offer after watching the house decrease in price over time and then plateau at $255,000; we offered to pay the asking price as long as the seller covered closing costs. Again, our lease was ending, and we wanted to get into this house with as little out of pocket as possible. They countered, we didn't budge, they accepted.

How did you add value to the deal?

I updated the kitchen from original 1980's stained wood cabinets and laminate countertops by reconditioning the cabinets (white, slate, and gold), hand-pouring a white with black marble-type epoxy over the existing countertops, installing white subway tile with black grout, and removing a large section of cabinets and replacing them with floating shelves.

I also added a 250 sq. ft. bedroom by heating and insulating the three-season room/office.

What was the outcome?

Recently, we decided to move from Minnesota to South Dakota. We contacted Opendoor LLC. (the company from which we purchased the home in 2019) and they made a cash offer of about $335,000 gross, $314,000 net. A local realtor estimated that, after a few more cosmetic improvements, 2 weeks of ads, and 2 consecutive open house weekends, we would likely gross $336,000 to $355,000. Zillow offered us about $356,600 gross, just over $350,000 net.

Lessons learned? Challenges?

1. We learned we like our privacy. A duplex hack isn't for us.
2. Gaining a conditional use permit can take A LOT of time and the zoning office doesn't like people telling them they're wrong.
3. After working for someone else 6 days a week, the last thing I wanted to do was sand and paint cabinets. It wasn't the cabinets that got to me; it was knowing I spent so much time working for someone else that quality time with my wife and investing in my future had to be crammed in at the end.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We cut a $2,500 check for earnest money and used Team National to find our realtor and our lender. As a result, the lender covered her side of the closing fees. That, in combination with the seller covering their closing costs, meant we walked from the closing table with a $2,000 earnest money reimbursement check. A month later we get a realtor rebate check for just over $1,500. We got paid to buy this house!

Investment Info:

Small multi-family (2-4 units) other investment in Jordan.

Purchase price: $255,500
Cash invested: $1,500
Sale price: $356,600

We purchased our first primary residence in February 2019. It had 3 bedrooms (2 main floor, 1 basement), 3 bathrooms (1 3/4 main floor, 3/4 basement), a bonus room in the basement (no windows. Surrounded by porch, garage, and interior walls), and a three-seasons room on the main floor.

Our plan was to finish the three seasons room, add a kitchen to the basement, and divide the home into two separate units.
Main floor: 3BR 1.75BA
Basement: 1BR .75BA

We ended up flipping the home instead.

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

The idea of house-hacking a duplex has always appealed to me; the thought of converting a single-family home into a duplex sounded like a fun challenge.

BUT--It turns out, we really like living alone! We strategically purchased this home knowing we would have multiple exit strategies. We decided NOT to convert the home to a duplex (which was plan "A") but perform a live-and-flip instead.

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

We were looking for a single-family home for quite a while. My wife showed me this home even though it was outside of our prefered price range. This home was being sold through Opendoor LLC. so we were able to walk through the home before we even spoke to a realtor. There were several aspects of the home (including entire rooms) that had not been mentioned in the listing and that made it a great match (and a great deal) for us.

How did you finance this deal?

We used a USDA Rural Development loan to purchase the home. We used a rebate program to find our lender and she covered her side of the closing costs as a result. We made an offer after watching the house decrease in price over time and then plateau at $255,000; we offered to pay the asking price as long as the seller covered closing costs. Again, our lease was ending, and we wanted to get into this house with as little out of pocket as possible. They countered, we didnt budge, they accepted.

How did you add value to the deal?

I updated the kitchen from original 1980's stained wood cabinates and laminent counter tops by reconditioning the cabinates (painting the uppers white with crown moulding, slate for lowers, and installing gold hardware), hand-pouring a white with black marble-type epoxy over the existing counter tops, installing white subway tile with black grout, and removing a large section of cabinates and replacing them with floating shelves.

We insulated and heated the former 3-seasons room and converted i

What was the outcome?

Recently, we made the decision to move from Minnesota to South Dakota. We contacted Opendoor LLC. (the company from which we purchased the home in 2019) and they made a cash offer of about $335,000 gross, $314,000 net. A local realtor estimated that, after a few more cosmetic improvements, 2 weeks of ads, and 2 consecutive openhose weekends, we would likely gross $336,000 to $355,000. Zillow offered us about $356,600 gross, just over $350,000 net.

Lessons learned? Challenges?

1. We learned we like our privicy. A duplex hack isn't for us.
2. Gaining a conditional use permit can take A LOT of time and the zoning office doesn't like people telling them they're wrong.
3. After working for someone else 6 days a week,the last thing I wanted to do was sand and paint cabinates. It wasn't the cabinates that got to me; it was knowing I spent so much time working for someone else that quality time with my wife and investing in my future had to be crammed in at the end.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We cut a $2,500 check for earnest money and used Team National to find our realtor and our lender. As a result, the lender covered her side of the closing fees. That, in combination with the seller covering their closing costs, meant we walked from the closing table with a $2,000 earnest money reimbursemnt check. A month later we get a realtor rebate check for just over $1,500. We got paid to buy this house!

@Ryan Guffey

If you are struggling to save, I would highly suggest listening to or reading the book Profit First. I apply the concepts to my personal budgeting and it has really helped kick my savings into gear!

@Mark S.

What qualifies me to be a financial coach is the same thing that likely qualifies you to be a real estate investor: continual education and improvement. I am certified as well but in all reality, holding a certification is not what makes a quality professional in most fields.

My clients are generally in their early 20s to mid 30s and are realizing they cannot go through life without a plan. I teach them how to develop a zero-based budget and how to eliminate consumer debt. I also help them set their financial goals and chart a map to get there.

@Brian Van Pelt

Thank you for your suggestion. I did in fact "figure this out" but I am looking for best practices from those with more experience than me. I know there are several ways to do it. I am looking for what people have found works best for them. Even coaches need to learn, grow, and seek advise when entering new fields. I do not see anything wrong with that

Hello! Being a personal finance coach, I am very experienced in writing and following budgets that have my best interests in mind. That being said, I am brand new to real estate and I am unsure the best way to manage the finances of our soon-to-be owner occupied duplex. Taxes, mortgage, and utilities are all part of our personal budget however, part of these expenses will be covered by the tenants rent. 

Generally, when coaching a business owner, I advise them to have 100% separation between business and personal finances. How does one do that if they are living in their business? 

Any words of wisdom would be appreciated!

Investment Info:

Small multi-family (2-4 units) other investment in Jordan.

Purchase price: $255,500
Cash invested: $1,500

We purchased our primary residence in February 2019. It had 3 bedrooms (2 main floor, 1 basement), 3 bathrooms (1 3/4 main floor, 3/4 basement), an extra room in the basement (no windows. Surrounded by porch, garage, and interior walls), and a three-seasons room on the main floor.
Our plan is to insulate, heat, and cool the three seasons room as well as add a kitchen to the basement and divide the home into two separate units.
Main floor: 3 bedrooms, 1 3/4 baths kitchen, dining room.
Basement: 1 bedroom, 3/4 bath, one extra room (office), small kitchen, large living room with fireplace.

We need to get a conditional use permit before we can convert the home. It has been hard to get in contact with the local zoning office so we are trying to figure out the proper order in which to complete the process.

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

We wanted to purchase a home and I have always wanted to be in real estate. Converting a single family home to a duplex seems like the perfect opportunity to get our feet wet without having to worry about closing on a home and a rental property. Also, we made sure we could comfortably cover the mortgage without a tenant so, after the conversion, the rental income will be gravy but we will not have to sweat about possible vacancies.

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

My wife and I had been looking at homes for over a year. We had specific wants and needs: I wanted a decent seized office where I could meet with financial coaching clients and where I could work in peace. We wanted a yard large enough for our two dogs. We needed a home that could be easily decided into two units and which had separate entrances. We needed a home that was zoned properly for a duplex conversion. Our list went on and this house matched our list perfectly.

How did you finance this deal?

We used a USDA Rural Development loan with 0% down. We negotiated a few points with our mortgage broker and are sitting on a 4.5% 30 year fixed rate mortgage. Our plan is to refinance in a few years (market permitting) in order to drop the USDA program fee which is about $75 per month.

How did you add value to the deal?

Our conversion will add an extra use for the home. Although it will be a duplex, the two units will be split by a hidden two-way locked security door. When we sell the home, the door will be opened and it can be a functional single family home with a mother-in-law suite. During our project we will also be adding a bedroom by insulating, heating, and cooling the three-seasons-room which is now my office.

What was the outcome?

We closed on the home in February and have been doing small repairs here and there. During the thaw, we discovered a major ground water leak in the basement bedroom. I patched the leak and we will be replacing the drywall and flooring soon.
We are waiting to hear back from the zoning office to make sure we do things in the right order. Inspection, permits, construction, inspection? Permits, construction, inspection? What do we need permits for vs. what can we do without permits?

Lessons learned? Challenges?

I mentioned a few challenges earlier. Because we were not purchasing this home primarily as an investment, we did not choose this property based on cashflow. On our next deal, I would pick a property that was in a better rental market and I also would use a conventional loan to avoid the program fees and the need to refinance in the future.
Also, If I were to do it again, I would wait to find a duplex that had already been converted or hire a contractor experienced in duplex conversion.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes! I worked with a local realestate agent who I found through a membership program I am part of. He was amazing. He was always punctual, easy to reach, and provided a lot of insight during the home buying process. He recommended a quality home inspector and even negotiated a $750 seller paid closing cost credit due to a minor window issue. The best part was that we got over $1,500 back in a rebate check by using the program to find him!