All Forum Posts by: Milton Johnson

@Paul Defngin As of right now, the plan is the fifth unit that is currently being worked on. The initial plan was to occupy one of the 3 units that were month to month as one had indicated that they planned to move out. However, after closing, I spoke with them and they let me know their situation had changed and couldn't move at that time. Since I wasn't in a rush to move in, I allowed them to stay at the new rent rate and decided to work on the 5th unit to move into.

There's also still the option of the last unit if they choose not to renew. I'd actually prefer this as I need a little more space than a 1br/1ba. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $495,000
Cash invested: $12,000

4-unit, townhomes in Bellevue near the military base. All 4 units were rented when the property was purchased - 3 of the 4 units had already been renovated within the past 2 years.

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

After my first house hacking deal, I learned a ton about what's needed to manage a property on my own. As long as I still had entitlements on my VA loan, I figured this was still my best option to continue my RE journey.

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

This was another FSBO deal that I found through Zillow. Put in an offer below asking, but we negotiated making the price contingent on the appraisal. The property ended up appraising over asking price and we settled on the asking price with $8K seller concession. The sellers also took care of all of the inspection items.

My opinion: didn't think it would appraisal at value, but personally feel like the appraiser fluffed values using future value instead of current value.

How did you finance this deal?

VA Loan: Since this was the second use of my VA loan and it was over my remaining entitlements, I ended up having to put in $8K as a down payment – after downpayment and seller concession, total cash in deal was about $12K.

How did you add value to the deal?

The previous landlords left rents significantly below market rents. Since 3 of the 4 units were on month-to-month agreements, those unit rents were raised to fair market rent for our local area with new leases. The last unit will receive notice of rent increase prior to their lease ending in a few months.

There is also a 5th unit that was gutted and unused when purchased that could be a 1 bedroom/1 bath or efficiency unit; hoping to have this done by summer.

What was the outcome?

Rents raised to fair market rent allowing this property to cashflow significantly. With everything rented including the 5th unit, pure monthly cashflow is expected to be ~$900+, conservatively.

Lessons learned? Challenges?

I spent pretty much all of 2022 looking for a property. There were a lot of bad deals and a handful of good deals - yet, almost everything was still selling. Kept on looking and ended up getting this property - which was actually on my watchlist due to the area. Although the price wasn't what I wanted (or thought it should be), the numbers told me that it was a deal that I couldn't pass up.

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

Tabitha Cooper with Berkshire Hathaway HomeServices as the Buyer Agent. Steve Kucirek with West Gate Bank on financing for VA Loans.

@Ben Zimmerman Thanks for the information! I wasn't aware that you could open a business account without a LLC, but this is good information to know for future reference.

I was mostly looking at the US Bank Cash+ card for the 5% toward utilities since that will be recurring monthly expenses. However, only getting 1% on everything else, especially the bigger purchases, just doesn't tempt me much. Same thing for the Vantage West CC. Maybe later down the line I could look to use multiple credit cards to cover different categories.

I had heard of the AOD Visa Signature CC offering 3% back, but also heard it was difficult to get due to membership requirements. After reading your post and looking into it a little more, I decided to pull he trigger on this one using the similar route you explained of joining the NEABA for the month until approved. Thanks for the advice! I thought I wouldn't be able to apply for this card.

Recently purchased a property that I am House Hacking and looking for advice on which credit card would be best to get to cover recurring utility expenses, maintenance expenses, and future capital expenditures in order to maximize rewards/cash back. This would have to be a personal card instead of business card as I have not yet opened a LLC for the property due to me using the VA loan for purchase (can't quite put the property in a LLC just yet). I have excellent credit and pay off all debt each month. I know everyone has their opinion on which card is best, so just trying to see if there are any that I might be missing that could be perfect for this situation. I'm open to suggestion both for points and cash back cards.

Cards I'm looking at currently include:

• Navy Federal Visa Signature® Flagship Rewards Credit Card
• PenFed Power Cash Rewards Visa Signature Card
• Alliant Visa Signature Card
• U.S. Bank Cash+ Visa Signature Card
• I'm pre-approved for most, if not all, Chase Credit Cards
  

Thanks all! Excited to see how this first year goes.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bellevue.

Purchase price: $263,000
Cash invested: $6,966

This is a House Hack deal. First ever investment. 4-unit, single family home conversion in Bellevue near the military base. 3 units rented and I am living in one for the first year.

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

I felt that House Hacking was a good way to get into the world of real estate - learn the ins & outs of what is needed to manage a property - while living free of housing expenses.

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

This was an FSBO deal that I found through Zillow. End up submitting an offer slightly over asking due to multiple offers - all of which were better than mine but the owner previously worked with my agent's spouse and the note that my agent sent set it over the top.

How did you finance this deal?

I used a VA Loan, got a good rate on the mortgage, and paid a little less than $7K in closing cost (only cash in deal).

How did you add value to the deal?

All units were fully rented except the one I moved into, so not much to do to the property yet. The unit that I am in will have a full remodel when I move out and one other unit could use a small rehab when the tenant vacates.

What was the outcome?

Will likely do a forum post of the outcome when I move out and make all necessary updates to the property.

Lessons learned? Challenges?

Learned: To make an offer! I didn't make outrageous offers and stayed within my analysis. This was the second property that I was able to get under contract (the first one fell through when the seller would not negotiate after inspection findings). Even in a hot market where everyone is a cash buyer paying significantly over asking, there are still deals to be made.

Challenges: I initially had a hard time getting the seller to fix all inspection findings, but in the end all items were fixed

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

Tabitha Cooper with Berkshire Hathaway HomeServices as the Buyer Agent. Steve Kucirek with West Gate Bank on financing.

 Ryan I sent you a message as I will be looking to House Hack a small multi around the end of this summer.

 I've been looking in the Phoenix market for Small multi-family units as well.  Have you had any luck with finding anything that cash flows?

@Byron Davis Do you have contact information for Larry Miller?  You can PM me the information if you have it. 

Thanks for responding.

@Arianne L. I will have to look into the delayed financing option, I don't know much about that.

Also, I don't think C- or D areas would be a good idea for long distance investing.

It wasn't in my profile, but 10-13% cash on cash return is my ideal return.

Looking at your profile, are you a wholesaler? If you don't mind, can you add my to your listing?  I can PM you as well.