All Forum Posts by: Patrick C. Bellamy

Quote from @Akku Kumar:

Thank you so much, Patrick! Two questions:
1. Would you mind explaining what house hacking is for you and your friend? I understand the basic concept but would love to hear your insight as well.

2. Would I be able to get in to contact with your co-worker? If he does kind of what I would like to do, would be a great first contact!

Sure, house hacking is finding a house that can reasonably divided into two areas allowing you to sublet one side or one floor of the house while also allowing you to live there.  The easiest of these is finding a house with an unfinished basement. This allows you to live upstairs/downstairs while renting out the other. This strategy often will cover most, if not all of the actual mortgage, while you fix up the other half or life there (in your case school). 

Doing this allows you a couple of added benefits, such as being able to put less down on new mortgages if you go with a bank loan as it will be your primary residence.  

Some of the properties I own have rrquired much more down. I have a family and kids and moving frequently isn't ideal for my situation.  

I'm out of the country right now but I will reach out to him when I get back. 

Hey Akku,

Starting REI with MFH would be a great opportunity. But difficult to find. The MFH market is very competitive and deals go QUICK! I don't want to discourage you as anything is possible and the more resourceful you are the more advantage you'll have. Networking and really narrowing down specifically what you are looking for is crucial. As a backup to your idea, look into house hacking. That would be a very good alternative to multifamily.

I have a co-worker who does nothing but house hacking and owns several properties with two units per house.  It has been very profitable for him.  

Good luck!

Quote from @Jason Wray:

Patrick,

In this market interior upgrades like kitchen, bathroom and every day cosmetic renovations offer very little increase in appraisal or ARV value in general. Appraisers are hell bent on not doing much of any gross adjustments to increase the homes price unless you added Sqft/GLA. Converted a garage into a bedroom & bathroom, added a below ground pool, ADU/mother in law suit, raised the overall construction C2, C3, C4.

Just be careful on what you spend versus what you want to get back because most kitchens are like brake pads at some point it's just a required replacement. If your tenant burns down the house you will only get replacement cost unless you hire a public claims adjuster.

Try not to negatively impact your cash flow with high insurance costs if not warranted.

Understood.  It will be going from 2100 to just under 3000 Sqft with the unfinished basement being finished, and room for a full bath and additional room, but not counting on that last part. 

Last year, I made an off-market house purchase next door to me to start a BRRRR in an A quality tenant area. The seller/neighbor was interested in selling but staying as the tenant. We worked out a sale price and rent, and pulled the trigger. Over the last year, I've fixed up some things here and there, but the house needs a lot of work. I attempted to price in the cost of the repairs accordingly into the sale price, which I got $100k knocked off the sale price.

She just recently moved out and I've begun the renovation portion of the BRRRR; fully renovated and expanded kitchen, two full bath renovations, full porch renovation, finishing the basement, etc. I expect the ARV to be closer to $700k (which isnt unreasonable on my neighborhood) after the purchase price of $400k and $100k in the renovation.

I haven't pulled the trigger on the full kitchen renovation yet, but wanted to see if anyone in the area had a company or crew they recommended.  Im in NW Atlanta area.  

But my main question for you all was logistical;  should I have the house appraised post-renovation and approach my insurance for higher coverage to protect my investment.  I'm wondering in a worst-case scenario (a tenant burns down the house) and the insurance doesn't acknowledge the new estimated value.  How should I approach this to safeguard the investment?

thanks for any and all advice,

Patrick

In 2015, I helped my In-laws from Germany purchased a home here in Georgia.  I assisted with finding them a GC and we had an addition to the property making it a 3BR/2B from a 2BR/1B.  They purchased at $178K, put in about $75K, and now valued at $430K.  They moved into another place and I have been managing their LTR.

I've been interested in purchasing it for a BRRR from them but we were told there is a 15% fee with FIRPTA off the sale price that they would have to pay, roughly $60k they'd lose out on. They don't plan on selling it to anyone else and it has been put into any inheritance we would receive. Is there another way for us to go about this that wouldn't require them to lose this money? Has anyone dealt with this before?

Thanks for any advice,

Patrick

@Jenny ScottWhat exactly does the "4 units or under" mean? I have seen that keyword many times, but I don't fully understand it. I have 5 small rentals + my primary. Recently I have been thinking about getting the cash out from one of my rental which is free and clear, I don't know what route I should take, do you guys have any suggestions? (I am in Atlanta area as well.)

Thanks 
Jenn 

 Hey Jenn, Lenders treat a quadplex or less differently than a property with 5 or more properties. Once you reach 5 it really needs to be a commercial business loan rather than an for an individual loan for multiple reasons.

What you are talking about is doing a cashout refinance, and while it's doable, interest rates are pretty high.  For me personally, unless I had a killer deal that rarely came around, I would be waiting to lock in a great rate.  My last cash out refi I did was at 3.5%.  It's most likely to be about twice that now.  There is nothing wrong with using any revenue from the paid off property to pay off the others and/or do repairs to help give you higher appraisal values later.

Hey Mortag, I'm in Atlanta too! As much as I try to avoid social media for leisure I will look at tiktok for inspiration. I'm currently working on a kitchen and implimenting ideas I found from tiktok and youtube. If there is something I'm unfamiliar with or don't know how to do I will research tutorials from youtube I feel are credible and reliable sources. The tiktok algorithm will share more similar content to what you like, so mine is tailored to REI, DIY, and construction design ideas.

Hey Tanner, 
  It depends on your goals, location, experience, financing, and type of property.  I would love to help answer you but this is a broad question.  What experience do you have?  Where are you located?  Are looking to invest locally or long distance?  Do you have enough money to finance yourself or will you be using a traditional lender or hard money lender?  What kind of property are you looking to flip or rent?  
   If you are looking to invest in Nashville, I have heard great things about that market.  I have a friend who is a realtor in Nashville who keeps an ear out for me. From what she says, it's worth looking into there first before finding other cities and states to invest.  
  
Patrick

Hey Aharon,

Something else to consider would be to figure out where are the developing areas that might not be cashflowing now, but given a few years they will be.  If you're okay with forecasting out 5 years that might open up more opportunities for you. 

I look for neighborhoods in these areas that have older style homes but with scattered higher price renovated homes. Something with a 4:1 ratio of older homes to renovated homes.  If you buy one of these properties and flippers come through and cause forced appreciation in your neighborhood, it will set you up for a good opportunity any way you go with it.

If you have any questions feel free to reach out.  Keep at it, don't give up.  You got this!  

Welcome Tawanda! Congratulations on your start in Real estate investing.  

I recently started myself in the Atlanta area and had the same question. I eventually formed my LLC in Georgia and I will tell you why. When you form a LLC in another state for benefits that state offers it begins to complicate the things. If there was a tax issue or legal issue, my understanding was this would have to be solved with that state. I was thinking of forming in Delaware, but I know nothing regarding business law in Delaware. You also will want to form the foreign LLC with the state of GA or other state where you will be doing your business. To answer your questions though, I would just keep it simple, at least for now.