All Forum Posts by: Mike Trzaska

@Michael Swan no, not Lake County…Mostly talking about Cleveland Heights, University Heights, South Euclid, and Shaker. 

I'm local to Cleveland and you can definitely still find properties that cashflow. I will say you have to look a bit harder than you did a couple years ago. Are you just using realtors or you employing any other strategies (Wholesalers, Direct Mail, etc.)? Are you giving single families a look or just multis? With singles you can pass on water/sewer, lawn and snow removal to the tenant. Even on the market there are still deals, you just need to move fast and keep banging away with offers.

What areas are you looking at? I agree that the East Side suburbs wipe out most cashflow with their taxes.

@Mary Katherine Lynch I did find a lender who specializes in delayed finance, but have not had to use them yet. My last deal was seller financed on the front end so didn't mind waiting the 6 months.

Check out Aaron Chapman with Security National Mortgage.

@Kevin Sobilo I definitely did consider flipping it, but I really do not think it would actually sell for the value it appraised for. Then I’d have selling costs and capital gains to contend with so it was a toss up for me. My goal is to get out of my W-2 so passive income is most important to me right now.

My cashflow does account for setting money aside for vacancy, maintenance, and capex. I’m actually more conservative than most, I put away 20% of rent for these. If I was managing this myself for $100/mo it would definitely not be worth it.

Investment Info:

Single-family residence buy & hold investment in Garfield Heights.

Purchase price: $22,500
Cash invested: $55,500

This was my second full BRRRR. Cash invested - $55k, Appraised Value - $128k, Rent - $1150/mo

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

This was my best friend's Dad's house and I spent a lot of time here growing up. I actually think I drank my first beer in the basement.

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

I found the deal because my friend reached out to me after seeing I was doing some investing through Facebook/Instagram. His Dad had some health issues and had a tenant in the property that was taking advantage of the situation. My friend had the tenant evicted we agreed on the price, and I actually got him to seller finance 80% of the purchase price. This was my first off market purchase and my first seller financing transaction.

How did you add value to the deal?

The place was a mess, but structurally in good shape. Over three months we cleaned out the place, replaced all flooring with LVP, painted everything, installed AC, replaced the furnace, renovated the kitchen with new SS appliances, and cleaned up the landscaping.

What was the outcome?

I used a property manager for the first time as well (found on BP). He got the place rented for $1150/month within 4 months of acquisition, he actually had to raise the price due to so much interest.

During the refinance the house appraised for $128k, I was totally shocked and feel it likely only worth $115 at the high end. With that appraisal I pulled out around $80k after paying my closing costs, and profited over $20k while holding property that will cashflow >$100/Mo after all expenses.

Lessons learned? Challenges?

I continued to develop systems on my 3 previous deals, and only spent about 20 hours working on this deal. Looking forward to see how outsourcing property management works!

@Aaron Zimmerman Tax advisory is included, but the engagement letter does not state how much. Is it typical for a CPA to put an hours cap on this type of work?

@Russell Brazil Good questions, and I am starting to see the intricacies here. All properties are in the same state, all owned in personal name.

Agree with that, but having never worked with a CPA and not knowing how much they will save me is this in the range of what you would expect given the number of properties and complexity?

I’ve been investing for the last 18 months and have decided to enlist the help of a real estate CPA to help me with tax planning a filing. I currently have 4 properties and a W2, I just got fee proposal back from a CPA that’s well respected for $3k. This seems like a lot of dough for 4 rental properties. Is this normal for those who have a handful for properties and use a CPA or am I using a bazooka to kill a fly?

@Jaron Walling multi-family assets are the end game for me, but like you said hard to find. I'm working on building relationships with brokers and figuring out direct mail, but still trying to make progress within the residential asset class in the meantime.

@Costin I. @Stephanie P. thanks for the detail responses.  In all the free reports, each category is green except avg length of credit. I have 5 mortgages (which are counted as a credit line) that were all opened within the last 12 months which skews my average, since I have one credit card I've had for 10 years and another I've had for 3 years. I'm going to do some research on the what if or wayfinder tools, but the answer seems to be "time". I figured that to be the case, but wasn't sure if others worked around this some how.

Thanks @Jaron Walling and @Dan Guenther. I do have an LLC, but the mortgages are in my personal name. I did plan to quit claim these properties into my LLC for asset protection purposes, but I don't think this helps with the credit score unless the mortgages are in the name of the LLC .

One big reason I'm trying to boost my score is to qualify for the best rate on Fannie and Freddie loans while I can. If I go to a commercial lender to get a loan through my LLC, wouldn't my rate likely jump higher than it is right now? If that's the case, I improve my credit score but I'm stuck with a higher rate than I have now with my lower credit score.