All Forum Posts by: Mat Lewczenko

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $50,000
Cash invested: $40,000

Originally bought for a flip. However, a Property manager suggested a 4th bedroom and shared with us the rent increase which made it a BRRRR. Total gut rehab and had some contractor challenges at the beginning. Added a 4th bedroom and that significantly increased our rents. Went 3 months over schedule, had a contractor ghost us, regroup and go 30% over budget and yet it still cash flows. Able to refi and pull out 100% of my funds to repeat. ARV is $145k right now and rents for $1250-1350/mo.

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

This was a 3 bed 2 full bath with 40% more square footage than other 3/1.5 and 3/2 comparables. Saw the opportunity to add a 4th bedroom and still have a lot of living space.

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

This was on MLS investor owned.

How did you finance this deal?

Used a HELOC/Cash

How did you add value to the deal?

Full gut rehab.

Lessons learned? Challenges?

Bad contractors will double your timeline and cheapest cost most.

1 strategy:

BRRRR 4 properties a year, creating $50k in equity from improvements. That's $200k per year in net worth, x5 years, $1million net worth and 20 cash flowing properties. If you average $200/door net cashflow that's also $4k/month. If you also work to get 100% bad debt free in the same 5 years, most people can cover necessities with $4k/month so you could also become financially free in the same time. Double bonus.

Is this over concrete?

This may seem counter-intuitive, but DON't use the cheapest bid just because. Having to do it over or going back over someones works ends up being more than a better reputable bid almost every time.

"No one has the time or money to do it right the first time, but they always seems to find both when they have to do it over."

@Bill Gulley Once I posted, I knew that I was going to get that response :)

I guess I need to go back to my business plan and measure the two. Now I don't need the funds to eat at all, but I want to make sure and maximize highest and best use. These funds, after tax, would allow me to do a nice bread and butter flip here without a partner, which has always been the goal. So I am leaning towards that, but don't want to do something stupid if I can save tax and still accomplish the goal.

I always like to bounce the situation around here to get a couple different angles of ideas. I'm a big fan of the BP mastermind if you will.

I'm receiving a contract on my multifamily (6unit) that we have had now for 10 months. It was a dump, fixed it up and now it is 100% occupied, stable and cash-flowing. My cashflow after all expenses, debt service and capital reserves is about $700/mo.

I currently stand to make about $60k on the deal - with $40k taxable above my basis in the property. So my I'm reaching out to BP for some pros and cons of either eating the tax and using those funds to flip a couple properties, or 1031 the funds into another deal.

Thanks in advance for the feedback.

One thing not mentioned yet is your Sphere, your current contacts. Your friends and family need to know what you are up to. Come from contribution and don't be sales-ey. What do I mean by that: If you haven't spoken to someone in 6 months you don't deserve to just call up out of the blue and ask if they have any referrals. My favorite sphere call script goes something to the effect of (feel free to adjust for yourself) "Hey JOE, It's Mat, it's been a while, how's work? The Fam? (they will tell you all about their life and then most will then reply with, so how's things with you?) Hey things are great, actually I'm glad you asked, I am now a licensed agent and in fact one of my big goals this year is to GIVE OUT 200 referrals to my friends and family. What I mean is that, I now have access to the areas best contractors, electricians, handymen etc, so you no longer need to hit the yellow pages, you just have one number to remember, mine. So if you or anyone you know need anything to fix up there house please call me or send me their info."

Again, the basic premise here is you connect, create relationship, and offer value. No one wants to get a cold call from someone they know that goes right after a referral.

The other number one differentiation between top producers and everyone else is follow up. Anyone can call once, Pro's have a system for follow up.So calling expired, cancels, withdrawns and FSBO's all require a follow up system. 90% of all FSBO's I listed took 4-6 weeks to convert and I would "touch them" twice a week (phone call and mailer).

If you are new, and want biggest bang for buck my suggestions would be in this order:

1:Sphere Calls

2:Open Houses for other agents (Buyers walk though, Buyers who need to sell, and neighbors doing homework for their own home to list in a couple months)

3: Pick one - FSBO/Expireds

4: Craigslist to drive traffic to your capture site - you can create ads for HUD properties.

Why these 4 strategies to start? They are free. Once you start converting commissions you can put aside 10% of each sale into a marketing budget and then leverage adwords, direct mail, etc. In the meantime, lead with revenue!

All the best and have fun!

Yes, they do have expirations "$1500 buyer agent bonus for contract effective by 1/31/2014" etc.

The bonus is not subject to company dollar splits, so they can be better than an additional percentage.

I think this all was already said, I just wanted to reiterate that we also do this with fair results.

Welcome to BP, I also jsut sent you a PM with a contact in SE KS for what you are looking for.

find the top 4-5 offices in your area, call and ask for broker or office manager and see if they can recommend an agent in their office that deals with mainly investors. They will know who is doing what kinds of deals. If you called my office, I have 238 agents, but I would have 2 names at the tip of my tongue, because I know who does what types of business.

You should have several referrals with a half hour of calls.