All Forum Posts by: Josh Emory

Well, I'm still a sleeper here.  Don't post often, but continue to absorb knowledge from all the great podcasts and people I have met through BP.  You can see my first story her, from a few months ago.  

https://www.biggerpockets.com/forums/223/topics/24...

As excited as I was then, I'm even more fired up now as I went under contract on Friday on a 16 plex. Making doors 9-25 in Louisiana.  

So I left you at Deal #7 (duplex doors #7 & #8).  I got lots of congratulations for my earlier story and how well my deals had worked out.  Well, this one has become the learning experience.  I did get the deal and close on it.   What I didn't do was get all my ducks in a row on the rehab.  Got busted pulling permits for one part of the job without having the general permit required by the city.  Red tag in hand, everything was halted.  Finding a contractor to move in mid job has been a challenge and so far I have lost about 3 weeks in the rehab process.  That said, it looks like things are going to get rolling again this week, and fingers crossed I will be ready to list for rental by April 1.

Deal #8.  My $8,000 house.  Well, at least that is what I called it at first.  Now, I'm referring to it as my $40,000 house as this one is a flip and I'm looking at netting about $40,000 on it.  So how did I end up with an $8,000 house?  When I closed on deal #6 (back in August) the selling agent was represented BIG BANK Foreclosure houses in the area and he mentioned it to my agent (connection made through BP).  It had been on the market for almost 2 years (originally listed around $90,000) and he said he wasn't allowed to advertise it below $49,000 but they would consider any offer.  We took a look the next week.  Overall the house was pretty nice.  1950s  house, hardwood floors had been refinished, new cabinets had been installed in kitchen, nice front porch had been added.  The master bath had been gutted, and not finished and their was quite a bit of trim work replaced in the house that had not been painted.  So a little work was needed, but from a rental standpoint I probably could have in rent ready for less than $5,000.  Down side it was in a little podunk town about 25 minutes from my house. that really didn't command much rent.  I threw around the idea of making a $20,000ish offer but decided to pass.  Well, I was driving back through the town in late December and wondered if it was still available.  My buddy said it was, so I told him to just offer $8,000. Maybe if I was lucky they would throw back some counter and I could get it around 15k-20k.  Was told an investment group was working on a package purchase from BIG BANK and they wouldn't consider any offers while that was going on.  No problem, but then in late January I got a call saying it was available if  I would like to make offer.  Made an $8,000 offer, and they accepted with no negotiation.   Again, I really wasn't sure I wanted a rental in this area, so as soon as I was under contract I started trying to find anyone who was looking for a house in the country.  A friend in the mortgage business had a buyer, and the same day I closed we signed a contract for him to purchase at $70,000.  I've got about $14,000 in work to do to get things we agreed upon complete, and I am paying all closing costs.  But if all works out, should close on the sale within the next 45 days.  

Deal #9 (Doors 9-25)  Super pumped to be on my way to my first multi family.  16 plex  all 2/1s renting for $500 each.  15 of 16 are occupied with the current owners using #16 for an office. I do think rents are a little low and area probably justifies $575-$600.   Older couple owned them for 20+ years now and had been doing 100% of the work themselves and ready to get out.  Started listing around $900,000 (way to high) almost a year ago, with a Realtor I can only guess did not have good investor contacts.  Anyways price has been dropped over and over and was down to $680,000. In steps another BP member (see deal #4), wholesaler and now licensed agent also.  She secured an agreement to advertise the property at $580,000 for 30 days and got it out to her list.  I quickly looked at the property and gave her a call.  Told her I could get the 80% financing, but did not have the funds for down payment, and asked if the sellers would consider carrying back the down payment.  She said they would consider it and I made an offer within 12 hours of her email going out for $550,000.  $400,000 now and they would carry the down payment of $150,000 due in 5 years.  We are under contract now and I am working on my due diligence.  

My big take of the last few months has been to make offers. The ridiculous price on Deal #8 and the creative financing on deal #9 are both things i thought wouldn't really happen, but they are the same types of stories I have heard others share on BP and I figured why not.  "It never hurts to ask"  Has really held true.  

Oops, somehow I posted that unfinished.  That $1200 is with one loan having only 4 years left and another 5 years left.  I plan to actually pay off the first with cash flow in 2016, and the second one in 2017.  That will add about $800 more to that number.   I don't plan on leaving my job any time soon. Looking to build a strong portfolio for freedom later in life.

Definitely have a day job.  I have pretty flexible hours, but put in a lot of hours at my regular job.  Without the W2 income, I don't think I would have had as easy of a time with the bank loans.  Currently Cash Flow is right at $1200/mo

@Jennifer Jesse @Keion Gray @Susan Maneck @Garry C. @Kevin Polite @Ben Richie @Scott Schultz

Financing-

Everyone praises the local banks and building that relationship with a local bank is definitely paid off with getting in with little and no money down.  I guess the keys to what has made it work so far.  

1. I've got a 5 plus year relationship with that bank.   They provided the interim financing for my house when we built several years ago, and carry the second on my current house.

2. I do have good credit.  Learn from many sources, i have stayed debt free except my personal mortgage and investment loans.  No loans for toys.  I have put both my personal mortgages and investments on only 15 years. So I really try to reduce my overall debt as quickly as possible.

3. I do have some equity in my house, only  had 15 year mortgage, and been there 4 years.  I was willing to tie my home to some of the loans.  That was cleared up though when I refinanced to commercial loan.

4.  The bank was willing.  I assume some will not loan over 70-80% of purchase price or appraisal whichever is lower period.  Had that been the case with my bank I would probably only be on house 1 or 2 in Louisiana or be searching for other options.

5. I do expect things may dry up at my bank.  This is the reason, I have started searching out partners.  I am also not needing the cash flow now, so I am paying down this current debt as quickly as possible to free up the potential for new loans.  

Loans 1,3,5 were all 15 year fixed mortgages straight through the bank. 2 was just the 5 year signature loan for the mobile home.  and 4 was the one that originally I owner financed.  I rolled these into a 15/5 loan for the commercial loan that did drop my interest rate by 0.5%  

I did misspeak slightly in saying I rolled all these in.  My intention is to pay down debt as quickly as possible to ensure i can keep buying when need be.  The mobile is on a 5 year loan, and I am already about 10 months in.  I did not want to extend that debt out to 15 years.  I left this as is, and should be able to have it paid off in full with the other cash flow by the end of 2016.  Also the deal that I had originally got the owner to carry the note.  She had a first of about $78,000 and a second of about $25,000. Her second only had about 6 years left on it and I also did not want to extend that out to 15 years.  I did borrow, and move it into my name, but only put it on a 5 year loan.  After paying off the mobile, cash flow should clear that loan in 2017.  

I plan to keep borrowing, but always snowballing the debts as I go.

Foundations-

Here's a spot I left out a part of the story. During the first 6 months before I closed my first deal, I had another house under contract. It ended up having major foundation issues, and I backed out losing my $1000 earnest money in the process. This was another auction/REO property and as an investor instead of owner occupied, deposit was non refundable. I was prepared for all the work ahead until the inspector brought up the foundation. That gave me cold feet and I walked away. So what changed? The monthly meet up with others from here on BP. I met guys that were flipping 10+ houses a year and were dealing with foundation issues all the time. I live in an area where foundation issues are extremely common. All I needed was to better understand what that meant for the rehab. Had I been to a couple meetings prior to that house, it would absolutely be part of my portfolio today too.

At this point I'm looking for houses with a "structural issue"  foundation or roof.  That pretty much guarantees that if the seller doesn't have the money to fix ahead of time (or the bank isn't going to put money into it), that the vast majority of buyers out there getting conventional loans are eliminated from purchasing.  Less Demand = Lower Price.

Kansas-

I am from Topeka. I still occasionally look on the MLS in that area. Right now it seems like the rent to price ratio is just a lot better where I am at.

Thanks for the praises everyone. 

@Michael Faulk thanks for being the center of our networking group in SBC

So, I have been a sleeper on Bigger Pockets Forum, but have been very active since first finding the podcast.  I'm a big fan of audiobooks and learning while on the road.  I typically drive about 55,000 miles a year.  I am 50/50 partners in 5 houses in Kansas where I used to live. We bought those in 2004-2005, and WOW was I uneducated.  Didn't get a deal, thought "if renters covered the note" everything would be good.  Fortunately, my partner and I have decent incomes and managed to get through the down turn without becoming a statistic.

So Feb, 2014, I was on a 16 hour road trip, and ran through my regular listening when I started searching for either real estate or investments.  Stumbled across BP and things have changed dramatically.  By the time I made it home I had listened to all but 4 or 5 episodes, and within the next week I finished those off and haven't missed an episode since.  I met several others through BP and we have been meeting regularly in our own little group.

I've learned and been inspired so much by all the guests on BP and got to work doing things in a completely different fashion than I did in Kansas.  It took about 6 months to close on my first deal, and this week I closed on and owner financed my 6th property.  

Deal 1: 3/1 in B- area

I had made offers on several HUD/FannieMae/FreddieMac/REO properties. The first one that finally came together was a Hudson and Marshall Auction Property. I had offered 40,000, and was high bidder. Agent said I was probably out of luck, selling bank had already rejected high bids as high as $60,000. Its all about timing though and they countered at $43,000 and we closed the deal in September. I have good credit and through local community bank was able to get financing for $60,000 to do purchase and do repairs (house appraised at $105,000 with planned repairs). In the end I went over budget on repairs. With holding costs and my blown budget I ended up coming out of pocket approx $7,000. My other big mistake is I tried to do everything myself. Other than sheetrock repair I was doing everything. That was definitely my biggest learning curve on this one. It took me until late January to get the house ready, and as we got to the holidays progress was ridiculously slow, and I hated it. Looking to handle rehab much smarter going forward.

Final numbers. Total Cost $67,000, Out of Pocket $7,000, Monthly PITI $570 on 15yr, Currently Rented at $975.

Deal 2: 1999 4/2 Mobile Home on 3/4 acre in B area

Still early in rehab #1, I had a "friend" looking for a place closer to town than where he was. This was another REO property. Property recently dropped to $30,000 and I offered $18,000. They came back saying they had another offer at $20,000 and wanted to know if I wanted to make a best and final offer. I told them no, and figured that deal was dead. Got a call back around Oct 25, and they said if I could close by end of month, they would accept my $18,000 bid. I said yes, and we closed around November 10, as they ended up running into delays on their end. I borrowed $20,000 on a 5 year signature loan, and then spent another $6,000 on flooring, paint and appliances. I did the floors myself, but had someone else handle the rest, and I had my buddy moved in before Dec 1. So far, so good with the friend. I cut him a good deal below market rent, so I hope this continues to be positive long term as he will be tough to find a nicer place for the money.

Final numbers. Total Cost $26,000 Out of Pocket $6,000, Monthly PITI $380 on 5yr, Currently rented $600 and increasing $50yr until at $800.

Deal 3: 3/1 in B- area

Here's where action helps makes things happen.  As I was finishing Deal 1, the people across the street walked over and asked if I was interested in buying their house.  It was originally grandmas house.  She left it to Mom when she passed away.  Mom lived in it for many years and then let both of her daughters live in it rent free while going to college.  Youngest daughter was the one living their and had just graduated and was getting married and moving out. House needed a lot of work, with significant foundation issues and they didn't want to spend any money fixing up before putting on the market.  Again I'm working on an identical layout house across the street, that just appraised at $105,000.  Our first conversations she mentioned $65,000.  We talked more as I made progress and she eventually mentioned $55,000.  I told her what I paid for deal 1, and eventually I made an offer at $45,000 and they accepted.  After getting the foundation inspected I went back and was able to renegotiate down to $40,000.  Based off deal 1 I borrowed $67,000 to get this one done.  Again I hired out most of the rehab work this time.  My sheetrock guy was getting a lot more hours at his daytime job and his progress here was way to slow.  All in all it took about 4 months to complete the rehab.

Final numbers. Total Cost $69,000 Out of Pocket $2,000. Monthly PITI $640 on 15yr, currently rented for $950.

Deal 4:  3/2 in A- area

Networking and BP made this one possible. At a year in, our little monthly group meetup had grown to 15-20. One person was a wholesaler who I met through BP and she brought a deal. Very nice 3/2 where 70 year old owner was about to get foreclosed on. House was worth $185,000. She was approx $20,000 behind on payments, and after catching up would have a $103,000 balance on loans. She had tried to sell in the past, but could not get a deal closed due to minor foundation issues and an aged roof. Both caused problems for buyers after inspections. I was pretty tied up at this point so I started trying to get creative. We worked out a deal. I would catch up loan, do foundation/roof work, then we would put on the market. I would get my money back and the 3 of us me/owner/wholesaler would split any profits. If it didn't sell within 6 months i would keep as rental and write a small check to owner and also wholesaler as a finders fee. Got work complete and put house up FSBO and for rent along with owner finance option. Got a buyer interested in owner financing. $175,000 with 10,000 down and $1630 monthly payments. Under this scenario house would be staying in my name and I would just be paying wholesaler fee and small check to owner. I offered the owner a little extra and asked if she would be willing to let me keep her current financing in place. She was happy to do that and I kept things in her name for several more months. I just refinanced deals 1-5 into a commercial loan that closed this week, so it now in my name.

Final Numbers: Total Cost $142,000, Out of Pocket $0, Monthly PITI $1,300 on 15yr. Sold on owner financing at $175,000 and got $10,000 down $1625mo.

Deal #5 3/2 in A- area

This was an auction.com property.  I bid on this property at least 7 separate times.  Very first time I think I bid $112,000.  Was "outbid" by computer because after auction ended it immediately went back up for auction. once I realized that I dropped my bid and was only bidding in the $98-99,000 range.  I was continuously outbid but it continued to come back on the market.  I missed one auction one week, and they called saying the seller had lowered their price, and they referenced my $112k bid and siad they could take 119K.  I passed and eventually the house was pulled off the auction market.  After that, I went back and made an offer at $102k.  they countered at $106k and we closed the deal.  This house appraised at $170,000, and I borrowed $135K to complete repairs.  Did much better on repair timeline and had this house ready to rent in under 30 days.  Put the house on the market and got a call from an insurance company.  A couple had a house fire and needed a place to stay while house is being rebuilt.  Insurance company offered a $300 premium on rent for a 6 month lease and I would be getting checks directly from them.   Had house rented before I was 100% ready.  Lease was though December, but my guess right now is it will run into January at a minimum.

Final Numbers: Total Cost $135,000 Out of Pocket $0, Monthly PITI $1180 on 15yr. Market rent $1600, currently getting $1900.

Deal #6 3/1 in C  area

This one again came through BP contacts.  Another active investor who purchased 3 in last year and also got himself licensed as real estate agent.  He found a 4 house deal, and thought he might need to partner up.  Seller was extremely motivated, but also very concerned about pricing.  2 ended up being in one area and 2 ended up being across town in a worse area.  In the end we weren't interested in the far ones,at his pricing, but still made an offer on the close two.  He accepted and instead of partnering on two we split them up and each took one.  Part of our struggle on price was he was adamant on doing all repairs before selling instead of letting us take them as is.  That worked out though as this was the first house I didn't have to rehab.  Closed Monday on house and took two application Wednesday to owner finance 

Final numbers: Total Cost $51,500. Out of pocket $0. Monthly PITI $510 on 15yr. Sold owner financed for $74,000 with $4,000 down and $800 monthly payments.

Deal #7????

Currently working on a duplex.  If deal comes together.  It will have came from another wholesaler I met through BP and I will be partnering with another BP member who will bring money to table and I will take care of rehab and management.  Big reason for a partner is this one will not be a good equity play after rehab, but will be a great cash flow move.  We'll see what happens.

Thank you BP and community for all the information and motivation.  None of these deals would have been possible without the motivation, connections, and creative ideas I have gotten through the podcast and forum.  

 I hope I haven't bored everyone to death, but wanted to be as complete as possible in describing this very busy year.  Counting the old properties I'm currently at 11 doors with 6 of those in the last 14 months.  My goal is to be at at least 20 doors by end of 2016.  

Chance-

I have a house I just closed on that I was going rehab for a rental. It is in reasonable condition as is. And I could delay demo work if it makes sense. PM me if you would like to discuss further. 

sorry for not responding sooner. I will be there. Jimmy should be. I should be signing papers on offer tonight. 

count me in. My wife is a possible also.

Thanks @DJ Johnson

@DJ Johnson