All Forum Posts by: Scott Littlefield

1

So, I am considering my first multifamily deal. Ive done several single family, but my first multi. This is a 3 unit in a C+ class neighborhood. I built myself a calculator to analyze deals and I wanted to run this property past you. My main concern is just the lack of actual cash flow after all hard and soft expenses are built in. I have not yet physically looked at this property, I will be looking at it tomorrow. The rents should be able to be raised. All three tenants are MTM and appear to be 25-35% below market value. However there may be a good reason why that I don't know about. I think all three units would need rehabbed to get maximum rent even though some smaller adjustments could be made without rehabs. See my calculations below.

I bought a doublewide mobile home from auction for $65k. The house sold in 2010 for $130k. The listing was no interior access however it said it was bank financial which cause me to be lax in my due diligence. After purchase and getting inside it was found to be full of black mold and salvage from a realist perspective. Its 2.14 acres with a detached 2 car garage, private well/septic in unknown condition. The land itself would be worth 30-40k max. I could get a cheap replacement doublewide for maybe $85-$90k. I'm am not seeing many good options currently for used doublewides in my area. With a new doublewide, it should be worth $145-$160k. Has anyone ever had this and does anyone have any advice? I know where I went wrong and how I screwed up, I need thoughts on damage control. 

I currently own one SFH and am in the process of purchasing a two-unit to house hack with as well as a doublewide on two acres of land to rent. I come from a background in IT and love techy things. Do any of you have thoughts or experience with smart devices in rentals? Things like smart locks, thermostats, cameras (outdoor only obviously, no audio). There seem to be good advantages, such as not needing to change locks, just deactivating codes, being able to keep an eye on your property and keeping an eye on heat usage. But obviously you could have privacy concerns as well as theft concerns. A good lease agreement with communication and good tenant screening seems to be able to rectify that though.

Investment Info:

Single-family residence RTO in Altoona.

Purchase price: $13,000
Cash invested: $29,000

Bought the property that was a gut job in the spring of 2014. I lived in it as owner-occupant until I moved out of state in February 2019. A lease was signed with an option to purchase in June of 2019 with 6% down and am in an up to 3 year deal with the current tenant.

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

I kind of fell into it as the house did not sell after a move and I got a request to do a rent to own. I was previously interested in investing in real estate but wasn't sure I wanted to do long distance.

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

A friend who was an investor assisted in locating the property that was an estate sale.

How did you finance this deal?

Private investor for initial purchase. Cash + HELOC for renovation.

How did you add value to the deal?

A complete renovation of the house and systems.

What was the outcome?

After several years of owner-occupant, a lease with an option to purchase within three years was signed.

Lessons learned? Challenges?

The house was FAR more work than anticipated as the plan was to screw drywall over the existing particleboard. After beginning work, however, it was found the house was not studded in any organized fashion. The particleboard was simply tacked to random boards that were tacked themselves to the frame built out of old railroad boards. So the whole house needed studded/strapped to put drywall up.

@Thomas Theriault I live in Lewiston, Maine. Be vary wary of any streets that have tree names. Oak Street, Pine Street, Birth Street, etc, as well as Horton Street, are low income/high turnover properties. The properties are old and run down. At least one that's currently for sale is vacant with a lead paint abatement order. There is some racial tension as well with a very high population of African Muslim immigrants in a very traditionally caucasian state. There had been a LOT of controversy around landlords either accidentally or through neglect, having tenants live in deplorable conditions in the last few years. I recommend doing some real research into the atmosphere and culture as well as the numbers before making a firm decision. 

I have a lease agreement with the option to purchase on a house I own outright. The lessee paid me $3500 downpayment and is paying $516 a month. He has an option to purchase by the Spring of 2022 for $59,000 minus the $3500 downpayment and the principal paid throughout the span payments. Will I be expected to count the $3,500 as rental income? It would come off the principal of the house and would not be subject to capital gains as I lived in the property for about 4 years before doing the RTO deal. So I wouldn't pay income taxes on it if it was the whole lump sum of the 59k. So do I need to pay income taxes on it as it will come off the final amount owed?