All Forum Posts by: Richard Sherman

@Alberto Izarraraz Cut your lifestyle to NOTHING...no new cars, phones, no TV etc..go crazy.  Get on Mr. Money Mustache site or something like that (google FIRE retirement etc.)  You have a great income, knock out that student debt and start going nuts investing.  I would be VERY careful about flipping or anything like that if you do not have experience.  

Do you own a house currently?  What about buying a 4 unit building, living in one and renting the other 3 as a way to start?  You have a great income and that is a great way to get started.

@Karl B. Thanks!  Yeah, the broker I use is a small office, VERY VERY good it was the owner of the office that noticed it (if anyone is looking for a commercial lender in Portland OR area DM me and I will send you their info.)

Yes, it is a good property..was not run well for a long time, but big units, great location, just needs some more work (and now I have an extra $1000 a month to do it with  bwahahahahhah..hhhaaaahhh...ha...sorry

It will just depend on where you are and what the inventory is.  I do not like to go earlier than mid 70s...but I just bought one build (VERY WELL BUILT by a high end builder on a creek) in the 1960s.  I hear a lot of investors like 80s and newer.

You will probably not be able to do a traditional mortgage with it in the LLC name. You would deed them to yourself, do the refinance and then move back (PROBABLY against the terms of the loan so just be aware of that.) OR try for a commercial portfolio loan (talk to the commercial lender at your local/regional/credit unions.)

@Alberto Izarraraz There are several other posts about this same topic, for sure search those!   What's your income level now and are you done with school?  Do you or your brother have contractor experience or experience flipping houses?

@Antoine Pippens I agre 100% with J Scott.  No way you can build there for what you can buy for.  Until those two lines of the graph cross (where cost to buy in-place and rehab) costs more than building new, you buy existing.  Building will always cost more than you think...

@Vega F. What @DeWayne Mann means is rent it out and then go and get a mortgage on it to take the money out and buy another property with it and keep going.  

Is the property near you?  Do you like it?  If you had $80k in the bank today and did not have the property would you go and buy it?  If you would not, then sell it and buy something that makes more sense to you.  The rent return looks decent.

I would just say something like I want the ability to sub lease as I have a  business doing short term rentals something like that.  They might be ok with it they might not.  I think there is a podcast or some posts about someone doing this on a large scale, like 20+ units.  I would search airbnb arbitrage or something like that.

In mid-August, we closed on a 32 unit property just west fo Salem OR (About an hour south of Portland.)  11- Three Bedroom units, 21- Two bedroom units, backed up to the elementary school, awesome location and room to build another 12 units.

During underwriting, the loan officer and I independently saw the utilities were off...a lot...the area has relatively low water/sewer costs and these were running around 7% of gross rents.    I figured there were leaks etc somewhere.  We have used a leak finder specialist on other properties and had great success.  This time was no different, we were losing 6 gallons A MINUTE....culprits ended up being 3 bad toilets and a couple of small water heater leaks into the crawlspace (I knew about those form the inspection.)

Total repair and labor cost, around $500 MAX.  Leak search was $350.  We just got the water/sewer bill today and it was $1011 LOWER....and the city gave us a $600 credit for fixing the leak.

SO, in summary....160,000 gallons of water per month saved (1,920,000 per year)

$1011 per month at 7% cap rate means that repair nets a increase in value of 14.285 x (12 x $1011)= $173,305.62

Which is sort of like finding another 1.5 TWO bedroom units.

Good work Lee!  Get the duplex fixed up and rented, then refinance it to pull the cash out and keep on going!