All Forum Posts by: Nicholas Z.

Investment Info:

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

Purchase price: $108,000
Cash invested: $27,000

This is my first multi-family deal and I'm already seeing the cash flow benefit.

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

Mostly turnkey with separate utilities, which were both important to me as someone who's just getting started.

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

Another investor was looking to sell off some properties and it cash flowed at the offer price, so I went accepted it.

How did you finance this deal?

Commercial mortgage - 25% down, 20 year amortization and 5 year term.

What was the outcome?

A cash flowing property.

Lessons learned? Challenges?

One thing I didn't realize was that I would need to pay for lawn care in a multi-family property. I didn't take that into account when I ran the numbers, so I updated my spreadsheet to automatically add in the cost of lawn care for multi-family properties.

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

I got my mortgage through Blue Grass Savings Bank. Very easy to work with, easy to talk to someone with questions.

I'm also an out-of-state investor with properties in the Quad Cities. I highly recommend getting a property manager, at least until you learn more about local laws and dealing with tenants. They could advice you on how to deal with your current situation, as well.

My perspective: I agree with @Nathan Gesner in that I don't believe in reducing rent for work. It eliminates a lot of the complexity when you know the tenant is going to always be paying $X every month, and you don't have to worry about the, "I thought we had agree on $30 for that work, so why is your rent $50 short?" type of situations. Pay the same rent, every month, and then have them invoice you at the end of the month for work they've done. You can always dispute the work invoice while ensuring your rent is still coming in.

Definitely get a new lease setup. Always have everything in writing as a landlord because if there's any disputes and need to go to court, you'll want that documentation.

I don't use any rent collection apps myself (my property manager collects rent for me) but I know others who use Cozi and Rent Redi.

Good luck!

I use MillTown Realty. Not a lot of other good options in the area unless you can hire an individual. 

Investment Info:

Single-family residence buy & hold investment in Moline.

Purchase price: $70,000
Cash invested: $17,500

100+ year old property that was rehabbed a couple of years ago and rented out. I was able to purchase with the tenant in place to get me started in my real estate investing journey.

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

I was just looking to get started.

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

I found this deal through another Bigger Pockets member who I was talking to about a different deal that fell through. Not too long after, they contacted me about purchasing this house because they were looking to 1031 into another deal.

How did you finance this deal?

Commercial mortgage. Due to a lack of W2 funds, I didn't qualify for a conventional mortgage. Because the amount was so low, the commercial mortgage interest rate was pretty close to the conventional mortgage interest rate. 20 year amortization with a balloon payment after five years.

What was the outcome?

I now have a cash flowing rental property.

Lessons learned? Challenges?

First, I learned that a mortgage preapproval doesn't mean you'll actually get the mortgage. I was preapproved for a conventional mortgage only to be denied when I went back to finalize it. Second, borrowing small amounts like this is tough. Any lender that wants to sell to Fannie Mae/Freddie Mac won't even look at loans under $150,000. Third, commercial mortgages aren't that scary. I had heard so many horror stories and warnings to stay away from commercial as long as you can. It's been fine.

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

Blue Grass Savings Bank gave me my loan. They were great to work with.

Investment Info:

Single-family residence buy & hold investment in Moline.

Purchase price: $70,000
Cash invested: $17,500

100+ year old property that was rehabbed a couple of years ago and rented out. I was able to purchase with the tenant in place to get me started in my real estate investing journey.

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

I was just looking to get started.

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

I found this deal through another Bigger Pockets member who I was talking to about a different deal that fell through. Not too long after, they contacted me about purchasing this house because they were looking to 1031 into another deal.

How did you finance this deal?

Commercial mortgage. Due to a lack of W2 funds, I didn't qualify for a conventional mortgage. Because the amount was so low, the commercial mortgage interest rate was pretty close to the conventional mortgage interest rate. 20 year amortization with a balloon payment after five years.

What was the outcome?

I now have a cash flowing rental property.

Lessons learned? Challenges?

First, I learned that a mortgage preapproval doesn't mean you'll actually get the mortgage. I was preapproved for a conventional mortgage only to be denied when I went back to finalize it.

Second, borrowing small amounts like this is tough. Any lender that wants to sell to Fannie Mae/Freddie Mac won't even look at loans under $150,000.

Third, commercial mortgages aren't that scary. I had heard so many horror stories and warnings to stay away from commercial as long as you can. It's been fine.

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

Blue Grass Savings Bank gave me my loan. They were great to work with.

@Yolanda Garrett sure thing. I'm also an active investor in the area, so always happy to chat. Good luck!

@Yolanda Garrett MillTown Realty is the only reputable game in town. I'm using them for my two properties and have so far been pleased.

Interesting points!

Unfortunately, there’s not space for a separate entrance to the basement, so I don’t think finishing it to that level makes sense.

I’ll need to check, but I think the ceiling is around 6 feet. 

I'm in the process of buying a property ($70,000 in Quad Cities region) that has a really weird basement situation going on. First, the house is over 100 years old, four beds and one full bath, so the quality of the basement is not great. It's susceptible to moisture and water, so not a good candidate for finishing.

At some point, a previous owner decided to put a shower stall and a toilet in the basement. Not a bathroom, mind you, as there are no walls, doors, etc....just a shower stall and a toilet. Sitting against the wall of the basement. I'm guessing maybe it was the "emergency bathroom" when either the main bathroom was being fixed up or otherwise unavailable.

I've been trying to figure out a highest and best use for this space, and I'm just coming up empty. I don't think it makes sense to build out the area into a full bathroom (though open to hearing other opinions on that), nor does it make sense to pull everything out (having an emergency toilet/shower seems like a good idea). But it does seem like a potential liability with renters in there.

Any thoughts on what to do with this weird basement?

@Grace Griffin thanks! I'll definitely keep you in mind as I explore this further.