All Forum Posts by: Sam B.

@Cody DeLong Congrats on the deal. I'd be interested in hearing more on the numbers - what you think rents will be, what ARV will be after you reposition, etc.

200k for 9 units sounds pretty cheap! How rough is it? Pictures?

Best of luck, will be following.

0 Votes

@Milton Marcelin No secret sauce, just buying properties under market value and in a market where rents are commonly 1.2%+ of the ARV.

I think the BRRRR strategy has become over marketed, similar to the cycle wholesaling went through. Wholesaling houses has classically been the cheap and easy (lol) way to get into real estate. Courses/seminars costing hundreds to thousands of dollars are being sold to teach folks how to do this. And I would argue that 95% of wholesalers FAIL.

Does that mean that wholesaling is dead? My good friend that sold me Property #7 texted me yesterday saying he had another property down the street that he's got under contract. He made $10k selling me property #7 and he'll probably make another $10k when he wholesales this next property.

Wholesaling isn't dead...just like BRRRR isn't dead. But with the hype and people slowly realizing the truth that this **** isn't necessarily easy or straight forward or quick, they like to write it off and say it's dead. It can't be done.

I would agree that it's very market specific and it is indeed difficult and/or impossible to perform in most markets.

@Teague Anderson I went commercial for all of my refis and the terms I'm getting:

- No seasoning aka I send the loan paperwork as soon as I buy the property to ensure that once it's rehab'd, I can have it appraised and get my money back

- 80% LTV based on appraisal

- 25 year amortization

- 5 year fixed

- I was getting prime +0% and reduced loan origination fees based on our relationship

Hope this helps!

3 Votes

@Tom Brickman I found difficulty in attaching LOC to my Ohio properties while living in out of state. A lot of the local lenders wanted me to be nearby. This was incredibly frustrating, especially noting how much cash I had infused into the local market when it was still rebuilding and then the local market didn't want me to be able to borrow/attach LOC on those properties because I wasn't local.

Anyway - I found the best fit was to go with larger regional/National banks. Huntington supported by quest for a LOC on Toledo properties and had no issue that I lived out state. If you need a contact, PM me, happy to share.

I was also able to find a local bank that would group my properties into a portfolio loan...but their LTV was low (65 or 70%) and I really wanted the flexibility of a LOC vs portfolio loan. So Huntington it was for me.

1 Vote

Great before/after and a good story @Zac Burk

0 Votes

@Aaron Rowzee Yes but first a vacation.

@Milton Marcelin Good comments. The single family vs multi-family debate is valid but it's also a very personal decision.

I prefer single family because it almost manages itself and works well for long distance investors. In addition, my competition is less sophisticated, my ability to build equity is strong and my exit options are many (seller-fi, seller-fi direct to note season and sell, sell to retail buyers, seller-fi to another investor, lease option, sell as a performing asset to another investor, get lucky and sell the whole portfolio above market to a hedge fund that's one a buying mandate (lol), etc)

I think the cashflow achieved is very strong, considering I left very little cash in the deal (none, really, considering the refis where I pulled out 30-40k+ more than I put in, eg Property #1 & #5).

In 6 months (okay, maybe more like 9 months), I created $3k/mo in cashflow or $36k/year with none of my own money left in the properties.

$36k/year that should essentially be tax free after depreciation, interest write-offs, etc. So I like to consider that $36k/year really has a pre-tax value closer to $43k-44k/year.

Now, your point is that this could have been done with (1) good multi-family deal. Yeah, maybe. I'd like to think that a multi-fam deal that was large enough to yield the same results would take a lot of time to re-position. I couldn't just go buy a 30-unit, kick everyone out and do a huge rehab all at once. It would more likely be a 12-18-24month plan where I slowly rehab the property as tenants turnover, etc. It wouldn't be a 6 to 9 month project.

All of the above is debatable though...but it works for me.

*Re: building teams, I rely heavily on my references. Other good investor friends that I trust a lot - when they recommend a good contractor, I know they will be a good contractor.

**Pay these contractors on time, communicate constantly, provide feedback and ask for feedback.

***Build upon these relationships. All you need is one good contractor and you'll usually be able to get them to pull in their network. Good contractors work with other good contractors.

I haven't read David's book and I don't have any reading recommendations specific to long distance investing.

1 Vote

Alright @Dominic Balconi you need to post a thread with pictures and a step by step on how to recreate.

Shooting you a PM now, great post & story!

0 Votes

A summary update of this challenge thus far, including some forecast data points.

*You'll see Property #6 forecast equity has dropped dramatically as that scope of work grew and grew with the problems that continued to crop up. The scope on this project grew from approx. $30k to $65k.

**You'll also see monthly cashflow for Property #5 & #7 grow dramatically - this is because I only refinanced about 40-50% LTV, leaving a ton of equity in the properties (reducing my mortgage payment) while still commanding top rent.

Property #1 Equity Earned: $83,000 Monthly Cashflow: $250

Property #2 Equity Earned: $42,000 Monthly Cashflow: $375

Property #3 Equity Earned: $42,000 Monthly Cashflow: $400

Property #4 Equity Earned: $94,000 Monthly Cashflow: $200

Property #5 Equity Earned: (forecast $77,000) Monthly Cashflow: (forecast $800)

Property #6 Equity Earned: (forecast $15,000) Monthly Cashflow: (forecast $350)

Property #7 Equity Earned: $38,000 Monthly Cashflow: $650

Equity Earned vs Goal (including forecast): $391,000/$200,000

Monthly Cashflow Earned vs Goal (including forecast): $3025/$1625

4 Votes

Update

Property #1 Rented at $1800/mo

Property #2 Rented at $1595/mo

Property #3 Rented at $1700/mo.

Property #4 On the rental market for $2200/mo. I feel slightly uncomfortable asking this much but I'm going to try. The feeling of discomfort isn't validated by fact, just emotional discomfort...never had a house rent for so much. Will drop to $2000/mo if we don't get any bites over the next couple of weeks.

Meanwhile, I'm waiting for the $189k refi to hit my account.

Property #5 It's rented back to the sellers until May when I can get in and perform a cosmetic rehab. No change.

Property #6 Flooring is finished, granite is in. This nightmare rehab is slowly coming to an end. My plumber that has worked on all of my other properties is tied up for the next two weeks, so I had to bring in someone new, a good friend's contractor. He's been doing great work this week doing odds and ends. I'm very thankful for my local network.

Updated progress photos showing the granite are below.

Property #7 Now rented for $1600/mo.

Property #6 Progress Photos

59ede852da19757781808783a6930668d6b5bcc5-1 by sam burn, on Flickr

81ad8ffa3eeb648e55a6fdd4c9c2971ae7e3b4ea-1 by sam burn, on Flickr

0 Votes

This is a cross-post from another HH thread in the Investor Diary sub-forum but wanted to share.

I did a budget DYI house hack a couple years ago that was both a miserable failure yet still a win all the same. Incredible learning experience, to say the least.

Purchase price: $80k

Rehab budget: $10k

Actual spent: $24k

All-in: $104k

The story...

This was a Hudhomestore.com home that was a super heavy cosmetic rehab (see before/after photos below). Starting the project in late March of 2017, I got it barely in livable condition by late May.

I lucked out and was able to airbnb my apartment (was locked into a lease through 31-July) for the duration of the lease to a traveling nurse at $1800/mo (rent was $1k including all utilities) – win!

I was roughing it (see my bedroom below) but I was pretty excited to be in the house and even more motivated to complete it.

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About a week after moving-in to my house project, the home was burglarized and I lost all tools, clothes, personal possessions, electronics, passport, SS cards, etc…everything. Fortunately, I had left some items in my apartment storage out of pure laziness. But nonetheless, ouch. I’ve been involved with a lot of renovations and have never had a break-in before. Police and neighbors were equally surprised – break-ins were unheard of in the neighborhood.

I took a four week hiatus before getting back into gear, going and buying tools again and getting started. Continued flooring installation myself which was the bulk of the outstanding work.

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Took on my first roommate in mid-July, a good friend who I’ve worked with on several projects around the world and best yet, a top notch handyman. Updated the bathrooms with his help as well as got some feedback on additional exterior cosmetic updates to add to the scope.

Mid-August I was burglarized for a second time and this time they got everything that I had left as well as my roommates gear. Again, same this never happens story from the police and the neighbors. This event had me considering quitting the project for a couple of days as I was pretty deflated/over it.

But about a week later, Hurricane Harvey hit and I had little time to sulk. The house is in Southeast Texas, the heart of the hardest hit areas during Harvey. I didn’t leave the house as Harvey came on and soon after I was stranded along with my roommate and a girl I had been seeing for a couple weeks (lol). We made it for six days, the last three which included no power, intermittent water supply (no toilets/showers) and rising anxiety. The good part is that the house stayed dry. The bad news is that the rain never stopped.

Picture taken from my garage on day 3, looking out into the street

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On day six, we got a break in the weather and were able to escape - barely making it out on the only lane open East or West on I-10, bound for New Orleans. Seven days later we were able to return (no power until the next day), fortunate enough to a house that had not been broken into for a 3rd time – although there really wasn’t much left to steal!

Picture of that last open lane on I-10. It closed about 2hrs later - as you can see, water was coming over

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Flooded cars on I-10 on the way out

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A gas station had been flooded and for about 5 miles, the smell of fuel in the flooded water was nauseating. Note the flooded RV park in the background where only the tops of the RVs are visible.

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So where are we now? Early September. Ah! I received notice that I’d be moving back to an International project shortly (score) and with no tools left at the house, I actively began seeking out contractors to just get the house finished and done. But due to Harvey, even my best contractors were overloaded with fat margin work from insurance companies and non-investors from Houston to West Louisiana - I was SOL and on the search for a new crew.

Lucked out a couple weeks later and was able to assemble a small crew to help with all the finishing bits and pieces. My roommate and I pitched in and we were able to get the house 99% done by mid-Oct – this included a 6’ secure fence along with a new secured sliding door, the old one being a serious weak point during the 2nd burglary.

I went ahead and installed a new roof on the place as it was badly needed and with me leaving the country, I didn’t want to have to worry about it. Paid a heavy premium on that, again, due to Harvey but it’s done. Also put in some nice recessed interior lighting as well as exterior lighting, both a security and cosmetic improvement.

New fence (there was nothing previously)

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My new secure, patio sliding door - an earlier security weak point

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The plus side (if there was such a thing) to Harvey is that I was able to get the other two bedrooms rented out as coworkers had become homeless (their apartments had flooded). In addition, non-flooded homes in my area jumped 10-15% in both values and monthly rents due to demand.

This was a house-hacking extreme as all of the (3) bedrooms were rented out and I setup a studio apartment in the living room to sleep on a futon for the last few weeks I was in town. As of early Dec, I’ve mobilized down to a project in Mexico and my roommates are all dry, happy and safe in Southeast Texas.

My "free" living room studio below...

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Final numbers – renovation ran $24k + 80k purchase price = $104k all-in.

Rented for $1500/mo.

Appraisal came back in Nov 2017 at $130k.

**Reappraised in Jan-2019 at $150k. Still rented out.
Final numbers/budget break-down are shown in excel below.

Final Renovation Budget Dec 2017

Key lessons learned

>Incorporate security into renovation plans
>>Allocate budget for fencing, securing perceived weak points and window coverings
>>Time is money – I could have subcontracted a lot of this work out very early on and finished the house in <4wks vs letting it stretch out over seven months, two break-ins and a hurricane, not to mention lost rental income (could have rented the bedrooms out starting in late April vs mid-July)

Stuff I can do now that I couldn’t before

>Install flooring and baseboard (market rate is $2-3 sq ft for labor)
>Remove a toilet, floor a bathroom and install a new toilet in <90minutes
>Remove/Install sinks
>Repair exterior housing
>Backsplash tiling

Now for the before & after photos

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LIVINGBEFOREAFTER

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