All Forum Posts by: Landon Bleau

Short answer is yes, you'll still be able to invest without making as much money, but you'll have to get more creative.  My suggestion to you is take out as many 30 yr fixed loans as you're able to while you have a W2 before you go into 1099 work.  Banks will likely require you to have 2 years of tax returns from your 1099 job in order for you to get financing, of course, there are some exceptions to this.  If you stay at your W2, it's much, much easier to get loans. If I were in your shoes, I'd continue full time work at your W2 while building up your agent business on the side.  

I would look for an Agent/CPA/Lawyer who are VERY familiar with 1031 exchange and can walk you through this process.  I would go as big as you feel comfortable with, if that's a 20 unit, go that route, if it's a 4plex, do that.  Assuming you keep $100K cash on hand for repairs/maintenance, that gives you $1.2M buying power assuming 25% DP, which can buy a lot in Cincinnati! 

You will likely have to wait till the leases expire, leases continue on with the new owner due to tenant rights. Don't believe you'll be able to evict them unless they break their lease.  If they are month to month, you can give them a notice that they'll have to move out by X date, in which case you could then go in and rehab and rent the properties out at a higher rate.  

Did you ask the sellers if they'd consider seller financing yet?  If not, that would be the first place to start, making sure they are open to it, understand that most are not and just want their money now.  Explain to them the benefits, earning interest on their money, decrease the amount of taxes they'll have to pay as it'll be spread throughout more years, etc.  There are numerous ways to structure it, the most common is a 1-5 year balloon payment where you'll pay them the balance you owe by refinancing with a bank, but you can get as creative as you want with it!  

Have you talked to your lender about your intentions with the property? Just want to make sure that they'll allow you to get an owner occupant loan with these intentions. Seems like it's a great idea though, especially since you'll get the highest occupancy and rent during the weekends. Just keep in mind restrictions such as local government and HOA, each has their own set of rules so just make sure to check thoroughly before buying!

Dwight, congrats on getting started!  Just curious why you're choosing to start in a year rather than now? 

Quick answer: no. A SFH that is 2725 sq ft that cost $100K to rehab does not mean a duplex that is 2725 sq ft would cost $200K to rehab. It would likely be more expensive than a SFH as you'd need double the amount of kitchens, bathrooms, etc, but you're still only remodeling 2725 sq ft. A space that is double the size could potentially be double the cost, but just because you have double the units doesn't mean it's double the cost.

I'd be careful of it simply because you don't want them to expect it in the future.  You obviously seem to have great tenants, so you should be a great landlord back.  This doesn't mean knocking off payments they owe you, it means fixing things that break right away, being responsive to all requests, taking care of your property, etc, not knocking off payments, just my opinion!  

Jeff, just wondering what the cost of building looks like compared to buying? Obviously your CapEx will be much lower in years to come, but have you ran the numbers of fixing up an existing duplex rather than building a new one?

Do the numbers still work to make this a good deal with all the updates and fixes you're talking about?  If I were you, I'd attend the local meetup and talk to some other investors about the project and ask them if they would want to partner/lend on it. As far as getting financing on it, I have a hard time thinking a bank would want to finance that, so hard money could be a great option too, just make sure you have enough equity after fixing it up in order to pay them off though.