All Forum Posts by: Matthew Krickeberg

@Dave Carpenter

This is a great thread as I’m considering a carwash as an investment.

Do you find that the cashless/mobile pay upgrades are adding value from the customers POV? The unit I’m considering is a dated cash/coin operation and I’m wondering if that and other tweaks in service (subscriptions, etc) are a reliable way to increase profitability.

We’ve out grown our current home (3bd, 1 bath, basement, 2.5 car garage) and are looking to upsize. We estimate having about $100k in equity, $72k remaining mortgage ($375/mo) and an estimated value of $170k+, granted, in this insane market.

Comps in our area are renting for $1500+ per month (we’re within walking distance of a university and booming downtown area).

I feel like we’re in a great position to convert to a rental and leverage our equity but I’m not sure how to approach the conversion of our current home and acquisition of our next. Our equity puts us in a great position (?), I’m just not sure how to use it to maximum efficacy.

We have cash on hand for a down payment, but is it best to not touch it in this case?

(I’ve spoken with our insurance broker and I’m comfortable with those numbers. I would have a PM handle the tenant screening and take a shot at doing the rest of the management myself.)

Thoughts or experiences?

@Tony Gunter

No doubt, as I said I'm just planning for the worst. I wouldn't do anymore than is necessary to make it safe and profitable for the long term.

@Lien Vuong

Thanks for the insight, I hadn't actually been considering a tear DOWN, but its something to think about. A project on the scale of what I may have here is definitely beyond my comfort zone. I'll be attending my first local REIA meeting in the next week and hopefully I can get a few names of reliable GCs, flippers/rehabbers and lenders to help me assess what I may have here.

And I've been careful to keep the address and names out of the conversations!

@Greg Dickerson

That makes sense, but if I go into it assuming a complete "tear-out" then by definition there is nothing (or very little left) to miss. No?

(As I write this it occurs to me that foundation or serious structural issues wouldn't be included in an estimate like that...)

Another option, in many cases with a 401k you are able to take out a loan. My plan allows up to 50% of my vested account balance for a max term of 5 years @ prime +2, all of which is paid back into the account. Typically there is also a one time fee ($150). And the funds are deposited in less than a week. 

Depending on how you plan on investing the funds and how quickly you can repay, this can be a great way to self fund a real estate deal. Obviously these terms can vary depending on your provider so check with them for the specifics!

Best of luck!

Situation:

There is a home in my neighborhood that has been unoccupied for approx 7-8 years but has been maintained (landscaping, taxes paid, etc) minimally and so is not noticeably so. The next door neighbors are friends of ours and knew the previous occupant, the elderly mother of the son (lives out of state) who now owns the property and have been informal 'stewards' of the property since. They have been inside the property several times in the last few years and have noticed burst water pipes and accompanying damage, mold, pests, etc. 

My question is does the likelihood of a complete tear out (down to the studs, new wiring, plumbing, drywall, flooring, windows, appliances, etc) make the project easier to estimate for a GC? My thought is that this situation does away with the nuances of a typical rehab, like determining what can stay or be fixed versus what must be replaced or refinished. Would simply having the square footage, floorplan/bedroom and bathroom count be sufficient to get a reasonable estimate sight unseen? I have been in contact with the owner and believe I have a chance at acquiring the property from him, but I have no idea how much a rehab on this scale would cost and thus have no idea what a fair offer would be to effectively BRRRR this property. We all know how difficult it is to get a GC to show up for a newbie investor who doesn't own the property!

Thoughts? Experiences?

@Michael Albaum

This. All. Day.

I have used this very strategy to bring my wife around to see the value of REI! "This deal pays for Juniors daycare, every month. And when he's out of daycare that money now goes into our pockets, every month."

Or "Purchasing this one property with a 15 yr mortgage means Juniors college tuition and living expenses are paid in full, and it pays US in cash flow every month until then."

I even motivate myself by thinking about what monthly expense(s) this investment will ELIMINATE forever! (My personal definition of financial independence is basically running out of monthly expenses to offset)

@Jeremy Mattson

Just coming across this thread now and wondering how it all turned out? It would be great to get a post-mortem on the whole situation (what you would have done differently, how valuable was an attorney, what was the court procedure like, etc?)

It seems likely my first multifamily will be occupied upon purchase and preparing for these worst case scenarios is at the top of my list of things to get my head around. The cash for keys idea is intriguing and very counter intuitive, but the best ideas usually are! Assuming we have a solid tenant screening process of our own to replace these kind of tenants, it seems like the best way to remove the band-aid. How do you plan to (or how have you since) screen tenants?

Hoping for good news...!

MK

@Bill Plymouth

Great question, I'm right there with you. New to REI and stumbled on to an opportunity to wholesale a local vacant property. I've been making progress with the out of state owner and am beginning to realize this deal could happen soon. I've been poring over Brandon Turner's No/Low Money Down chapter on wholesaling to get up to speed.

(I'm not interested in wholesale in the long run, but it was an opportunity I couldn't pass up to create some funds for my first buy and hold rental!)

It seems to me you can add a contingency for financing and/or finding a buyer (or just about anything else you both can agree to), but I'd like to hear from some experienced wholesalers to verify.