Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Laura Johnson

Laura Johnson has started 11 posts and replied 35 times.

3 years ago, we bought a our sfr to house hack. The basement had been finished by the previous owners who didn’t know Jack about remodeling.   As we walked into each and every room in the basement with our home inspector, he said aloud, “this room is a butcher job”. 

We ripped down the ceiling drywall so that we could add rock wool insulation for noise dampening. We are about half way through with the great room (~400 sq ft) when the drywall suddenly became very heavy duty and wouldn’t rip down. Turns out they installed 6 sheets of 3/4” osb board to the ceiling. Textured it to look like drywall. That was a beast to remove because all the screws were full of mud so we had to cut it down. 

In the windowless storage room they had built a second wall all around the current walls and then glued large office ceiling tiles to all the walls. AND, they left a power strip plugged in to the original wall, so it can’t be unplugged now because it’s plugged in INSIDE the wall! 

They claimed to have a kitchen in the basement. It was an oven, fridge and utility sink with an ikea bookcase turned sideways and screwed to the wall. They did go the extra step to add crown molding to the top of the bookcase. You know, trying to class the place up a bit with that crown. 

We added a laundry closet in what was a weird shaped closet that had hot and cold water lines already that were capped off.  We later found out from a neighbor that those lines used to go to a urinal for the college aged son to use. But mind you, there was only 1 set of lines, so there was one urinal and zero sinks for hand washing!!

It's there a recording available of last months meeting?  I would love to hear more about the topic!

This next Wednesday, July 1, is the next one, correct?

Post: 20% down with cashflow or 5% without?

Laura JohnsonPosted
  • Utah
  • Posts 36
  • Votes 17

We plan to do option 1 with our kids, but not a condo. We are thinking multi. Something we can buy together, add value through updating/renovating, have them live there for a few years, then we can cash out refi to get them money for their own down payment on something else, or we can sell and split the profits. Something to help them start out. 

We are still 5 years away from this situation, but time flies. 

We also live in Utah. 

Originally posted by @Armin Nazarinia:

@Laura Johnson- I would say the numbers are a bit tight to go forward with it. It is definitely possible to make money on it but it might not make sense for a first deal. I would keep looking personally for a better deal. You can sell it with Seller Financing if you make sure there is a provision allowing you to pay the loan off early without penalty then when you sell it you'll just pay the owner and the bank back. On a flip you'll end up having to pay higher taxes since it's earned income so after realtor fees, rehab costs, holding costs it probably doesn't make sense.

I hope that helps, feel free to reach out if you want to chat more.

disclaimer: I am not an attorney and do not provide legal or financial advice

 Thanks. We decided to pass on it. 

Each town is different in their registration process, so beware. 

So when we put our offer on this home, I went to the city and asked to see the building plans on this house. The basement was not professionally finished, and the previous owners are diy hack jobs. I wasn't going to buy this if they didn't permit the work. The city records said the house had been built with a finished basement 🤷 So no permits where needed because they were included in the original building. Lol.

So after we had it rented, I filled out out city paperwork. I used a copy of the Platt layout I had gotten from the city at our first meeting to show where the apartment was and parking was. We had to sign a document stating that we were the owners and that we wouldn't rent out both levels separately (big no no here). And that was it. No inspection, nothing.

But...I have friends in town that have had nightmares registering their adu because someone before then finished the basement without a permit. They had to tear stuff down, fix things, wait on inspections, lots of time and money. 

Do your due diligence and talk to the city! 

We still had to tear stuff down, but for us not the city. Everything was a diy disaster. Like for instance, half our basement ceiling was 3/4 osb board textured to look like drywall!? What?? Crazy people. 

Advice wanted on a possible Utah county off market deal.

I have a 3850 sq ft house, 7 beds, 3.5 baths, built 2001, great neighborhood. The average house at 3150 sq ft and 5-6 beds, in this neighborhood sells for $440k-$470k. Another one the same size/layout but with better updates (hardwood floors, updated cabinets, etc, but no option to househack) appraised at $505k in January. 

The house is in great shape. It needs the entire interior including doors painted. The entire house has picture window wainscoting throughout. Nice window casings. Very classic details. To flip I would paint the honey oak cabinets. To rent I may not, they are in decent shape just outdated color. It has solid surface countertops in the kitchen. Carpet is in good shape just needs cleaned. The basement has been soundproofed between floors and has a nice full size kitchen, it's nicer than the upstairs kitchen with granite. And a ground level walkout. It would make a fantastic househack. The yard hasn't been taken care of in several years, just bare minimum. It makes the house look crappier than it really is. 

I am new to RE investing and don't have lots of cash to invest. I am going to approach them with a seller finance deal. They have already moved and don't need the money right away, they just want to be done with the house.  I can't househack as I'm currently househacking and we are starting our refinance to drop pmi, and they ask if you are staying in the home for a year as owner occupied. 

So I'm looking at my options with this house. The owners paid $395k in 2015. It's definitely went a little downhill since they bought it. I'm leaning towards offering 405k-410k with owner financing. We would pay for a RE attorney to draft paperwork. Can I flip a property if we are doing the owner financing? I'm not sure a 7 bed is a good buy and hold: most everyone who rents it will have LOTS of kids which can be a lot of wear n tear. 

I know it doesn't meet the 1% rule, nothing does in Utah. It also doesn't meet the 70% rule for flips, but is that happening in Utah either (I would need to pay $350 for a $480 house, that's a huge spread for something that only needs paint)? The only downside to flipping that I see is the realtor costs (6% of $480k would be almost 29k, that's a large chunk). I just need someone that is looking to house hack that I can flip this deal to 😂

So, are the numbers too tight? Is this even a viable deal? What are my options to do with this house? 

Thanks for reading my long post! 

Originally posted by @Amy Kendall:

You did it!  Congratulations!

Thanks Amy! Our lunch together at IKEA really got my husband thinking and better on board. 

We still talk about what a great PM you are. If we ever need a PM you are the one we want!!

Originally posted by @JC Leach:

@Laura Johnson

Love it! House hacking is the best! Wish I could get my fam on board with it!

 We love it. I do occasionally hear them downstairs, talking or music. We added sound deadening insulation so it's muffled noise. But what I REALLY hear is "half my mortgage, half my mortgage" haha. 

Showing my husband the $$ is what finally got him to be ok with it. Good luck!

Investment Info:

Single-family residence buy & hold investment in Cedar Hills.

Purchase price: $391,000
Cash invested: $33,000

Basement apartment househack.
We added a 1 bed 1 bath apartment for approximately $13,000. It rents for $1000 and is 27% of the sq ft. We are a family of 6 and live in 73% of the house for $1200/month (soon to be $950/ month after refinancing pmi away).

We bought the house under value with 5% down. Within a year we had 20% equity.

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

We wanted renters to pay half our mortgage, but needed separation between tenants and our little girls. So yard sharing duplexes were out of the question. We spent a long time looking for the perfect househack with an entrance on the side of the house and not in the backyard. Plus we needed enough room for our large family.

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

Found the home on the MLS. I had looked at it when it first came on the MLS but told my husband no way, it needed way to much work for the price. After 2 months and 2 price drops he suggested we go back. Because the neighborhood is upscale, the house is located on a super nice forested walking path and creek, and the layout is right, we decided to offer a low bid and see what happens. They came back a little higher but paid closing costs and paid off the solar panels.

How did you finance this deal?

5% down conventional.

How did you add value to the deal?

By adding a registered adu to our home, we increased the value at least $40k plus we had instant equity from buying under value. A house around the corner, same size, style and year but without such a nice lot or adu just sold for $470. We paid $391.

What was the outcome?

We are starting a trend in our neighborhood! Haha.
2 other families have since approached asking about our apt and both are currently working on their own basement apartments.

Lessons learned? Challenges?

We should have hired better contractors. I used thumbtack which I will never do again. Contractors were hard to come by because of the massive home building explosion in Utah. I need better contacts!

I have no opinion on if paint will get you more rent per month or not, but if you do decide to paint, the restore sells their own mixed brand. My local restore has a color called Muddy, which is right between Revere pewter and edgecomb Gray. I used it on my single-family rental, and also my basement apartment. It's lovely, on-trend, and only $40 for 5 gallon bucket.