All Forum Posts by: Rodney Smith

So I will try to be brief, but in short my wife and I bought a 4 plex about 3 years ago (read more detail here - http://www.biggerpockets.com/forums/223/topics/139...) .... So we initially bought this with a short term strategy in mind to stabilize financially to make a career change. As we've learned more about REI we've decided want to do more and need to transition into a longer-term strategy.

So we have a 4-plex that we owe roughly $150k on and I am still researching this, but I think we could make a case for asking roughly $300-$330k. I am thinking that I would be smart to take my gains and either re-invest them into a better long term market (currently in Redding, CA). Also, the goal of the 4-plex was to stabilize income to transition into a new career, which I could now easily do from the amount of appreciation I could realize by selling now.

I don't want to make the mistake of getting greedy and missing out on a good time to sell only to see the market take a pullback and have to wait for another exit point.

I want to transition into stock trading (I know there's a bunch who would like to bust my chops for that:). Another alternative would be to take the gains and 1031 them into more property in a more advantageous market. 

As of now my PITI is ~$1,000/mo. and I can rent each unit for $650/mo. Alternatively (and what i'm currently trying) is to rent the units furnished for $850/mo. to internationals and out of state students (which are drawn to Bethel School of Supernatural Ministry) for 9mo. leases and then listing the units on AirBnB.com for the summer months...?

So i'm weighing out collecting a potential $150k in gains and either begin stock trading (under an experience coach of course), or moving my investing out of state, or possibly holding onto these longer in hopes of further appreciation and having the ability to continue renting to ministry students/families.

@Aaron Nelson Thank you for your kind words. This investment has served us very well. I only wish I would have pursued learning more about REI at a younger age, but thats okay. Cant do the 'shoulda woulda coulda's' right. I remember my dad used to say 'the most money you'll ever make will be on your 1st home' and I remember thinking how I might be able to maximize that when looking for our 4-plex.

Now to be honest i'm trying to look towards guys like yourself and learn from them, I know you are quite the investment minded person with a real gift in the RE business. So now i'm trying to watch what guys like you are doing and trying to learn what I can. I've read on a recent post that you picked up an apt building in the south - firstly congratulations and way to go! Secondly i'm excited to hear about how that pans out for you. I know my wife and I are seriously considering transferring all of our buy-n-holds to a more advantageous state but are still concerned about managing from a distance / finding good PM's. So i'm sure I will learn a lot from the good people on this site.

@Troy Smith  1 - In the tv show I Love Lucy, Fred and Ethel are the best friends of Ricky and Lucy and they happen to own the apt building that they all live in together. They are the best friends / landlords to Ricky & Lucy.

2 - Family member originated a loan on our 4-plex allowing us to pay 'cash' for the 4-plex. Later we re-fi'ed through a conventional bank to pull the cash back out. We re-fi'ed $150k and will only use about $90k on the rehabbed property leaving $60k to either pay back to the family member, or seek out more properties.

My wife (@Shannon Smith ) and I started house shopping while living in Bend Oregon during late 2009, and we looked into the possibility of renting out a bedroom to help offset living costs. During our first few months of shopping we caught wind that we'd be likely moving to Redding California, so we kept an eye on both housing markets. The thought of reducing our living costs transformed into trying to find out if it would be possible to actually get paid to live in our own home. Ultimately we ended up moving to Redding in the summer of 2010 and this added about a year to our shopping process since we now needed to learn a new town.

After running numbers every which way on my excel sheet I decided that if we could buy a multi family for $50k/door or less the building would meet my desired results of making double payments on it's mortgage w/out me having to pull out my wallet, or it would pay the mortgage and pay me an equal payment in terms of cash-flow (at least given the rents in my area this quick rule would give me a fairly accurate filter).

In 2011 we got an accepted offer of $194k on a 4-plex in Redding CA and were able to rent the units for $685/mo. while living in one of the units. Our PITI was about $1,100/mo. So basically 2 units covered the mortgage and a few utilities, and the 3rd unit was cash flow while the 4th unit my wife and I moved into. We bought the building with a cash offer using a private loan from a family member.

After living in the unit for 2.5 years things were going very well with 100% occupancy and 0 turn over, so we re-fi'ed to get our cash loan back. Using the cash we bought a SFR in Shasta Lake California (about 5 miles north of Redding) for $61k and are now just finishing up the rehab. We should have roughly $90k into the house when it's all finished and the ARV will be ~$125k. We plan to move out of our 4-plex apt which we are now beginning to rent out on a furnished basis to international students at our local schools for $850/mo., and we can move into our new house which will be costing us close to $500/mo. after repairs netting us a $200 monthly raise and living in a nicer place.

With the remaining balance on our loan we will likely pay back the family member who originated the loan. However, we have been very heavily considering investing the remaining balance out of state since we are learning how much better other markets can be. We are even considering selling the 4-plex to raise capital to invest out of state since we have captured roughly $100k in appreciation so far.

 @Karen Margrave , if you develop this park in Redding I will be the first to grab a shovel and help build !! You just listed my dream park haha. I live in Redding and love motorcycling... If you build it I will come :)

@J Benoit Thank you so much! I will definitely get in touch. I will probably do so when my wife and I can be on speaker phone to make the most efficient use of your time. I met with a local investor in my town who has bought 5 properties in the past 3 years in Birmingham, but it would be great to have an additional perspective!

@Dave Visaya Hi Dave, so far we bought our first property, a 4-plex in Redding CA with a detached 4 car garage for $194k and have it paid down a bit from that. We got a pretty good deal for the area, but it's now worth the high $200's to almost $300k so i'm seriously considering selling it to take the capital and invest deeper into a better rental property city (see last post to Ali) ... Anyhow before I do anything i've got to nail down a strategy / plan with much more detail.

Our 2nd property is an SFR (3/1.5) that we bought off the HUDhomestore.com for $61k and have updated. This property has been my 'education' if you will. We will have about $85k into it and it should have an ARV of roughly $125k-$135k (we will be done with the rehab in about a month). Our intention is to live in this one, for the short term at least. We've even toyed with keeping the house as a furnished vacation rental on VRBO, AirBnB etc. and using the 4-plex capital to expand our investing capabilities. I'd love to hear peoples experiences with vacation rentals / furnished rentals & the VRBO's.

@Ali Boone Thank you for your warm welcome. Currently my wife and I are re-hashing our investing strategy (we first got involved in REI with a different motive and have began falling in love with the industry... so we're shifting from a short term to longer term vision).

To answer your question of which city; we are definitely unsure but are leaning towards buy and hold rentals in areas such as Tulsa, Indianapolis, Birmingham, Memphis, etc. We also thought of Atlanta but have not yet researched the area at all. I'm open to suggestions! 

So far my thought process has been to do a somewhat superficial scan of various markets and put out feelers on BP about where people have had success ... i'm sure if done right you could succeed in most markets. However, i'm really wanting to focus on finding what seems to be a good market and then before really digging in looking for deals I think i'd be better off finding a good property manager first? I'm open to referrals to good managers / investment cities.

@Drew Dim  Getting married on Shasta would be sweet, great idea! I'm a big outdoors kinda guy so naturally I love the area... the city definitely leaves something to be desired but the surrounding outdoors is unreal!

Hello everyone! I'm excited to have been referred to the BP community (and podcast which i've been listening to like an addict recently). My wife and I bought a 4-plex in 2011 and a SFR at the end of 2013 (both in Redding California Shasta County) as a means to create passive income while making some career transitions. As i've been learning more about REI I've been increasingly intrigued and want to grow my skills in this area as much as possible. My wife and I are now in the planning phase all over again as REI becomes more of a long term priority. We are currently looking into various strategies (at this point primarily rentals in the midwest / south and or vacation rentals), but are still very open to various strategies.

Looking forward to learning from you all and thanks for sharing your experiences and knowledge!... I'm pretty green but i'm happy to share my experience with our 4-plex and our SFR (HUD home rehab) if it would be helpful to anyone.

Thanks!