All Forum Posts by: Timothy Doenges

Investment Info:

Single-family residence buy & hold investment in Beckley.

Purchase price: $34,000
Cash invested: $6,000

First rental property! Bought out of estate sale. Replaced all windows and floors, remodeled kitchen and bathroom.

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

This was my first deal, and I've been keeping an eye on 2/1's and 3/1's with >1,000 square feet for a while now. Saw this property was available, watched it for a while while the price was reduced, and it began to make sense numbers-wise to pull the trigger on it.

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

Found on the MLS. Saw it had been reduced several times and had high DOM so I offered below list and offer was accepted.

How did you finance this deal?

Financed with investment loan, 15% down.

How did you add value to the deal?

Replaced windows from storm to double-hung. Cut heating and power costs from $600/month to $150/month year over year.

What was the outcome?

Property is now up for rent at $700/month.

Lessons learned? Challenges?

Buying right is where highest potential for income is made, but avoiding over-rehabbing a property is where you can protect that potential for income. If you over-renovate, your equity and cash flow will both be affected, and you can't guarantee that tenants will appreciate your upgrades (and protect them) the way you would.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I'm an agent! If you would like to chat about investing in the Beckley area, feel free to message me on BiggerPockets!

Good morning! Not looking for legal advice, just asking about experiences.

Has anyone here ever done an off-market deal where you JV with the seller? I'm looking to finance a 5-plex with a HML but the lender that works in my area doesn't allow second positions. They are willing to do 80%, and the seller is willing to finance up to 30% (but not the whole deal).

The HML did say they would allow JV with the seller instead of owner financing, since the owner wouldn't get a lien in this instance. Have any of you done this?

If I had a preference, I'd love to do a 80% HML / 20% owner contribution as a silent debt partner in JV. I would match the terms for the HML to the owner in JV, with the intention of refinancing ASAP. Since we are buying at about 65% of value and there is room to both raise rent and lower expense, I'm not worried about the hit to cash flow caused by the HML.

Thanks, BP!

@Derrick E. It is starting to pick up. This property is three blocks from WVU Tech’s new campus, and the school is growing like crazy. The demand for housing is expected to explode in the next few years, as the school anticipates 1,000 more students each year for the next 5-10 years. I’m looking not only for cash flow but for land value increases just from being in the path of progress for the school. Anything within a three minute drive of campus is fair game for that, as far as I and some other real estate agents familiar with the area can tell.

@Andrew Angerer I have the pictures from the MLS but not any personal pictures.

As far as fix-and-flip, I haven't ventured into that space as of yet. Not sure our market will support it.

I'm working it as a BRRRR - I think I'll get all my cash out since it works as a fix and flip.

I'm going to walk the property again in the morning and might put some pictures up when I get a chance.

Thanks!

Hey guys - found this deal on the MLS in Beckley, WV, our farm area. I walked the property yesterday, and the roof is in good shape, no foundation issues either. Full unfurnished basement that could be turned into an additional bedroom or two, or could be lifted and plumbed to add a second unit downstairs in the future. For now, we are keeping it a 3/1, redoing the flooring, painting, and updating appliances.

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I’ve listened to all the BiggerPockets podcasts, and they are all very inspiring, but I haven’t really heard any episodes that dig into the nuts and bolts of scaling, and what real estate investing looks like on a daily basis, whether for a newbie or seasoned investor. How do you pay bills? Different between managing your own versus having in property management?

What is your biggest tip for keeping everything straight? Any tricks for keeping bills on schedule, account information together, finances in the correct “buckets?”

@Stanley Bronstein @Dave Foster

Thanks for the replies! My wife and I are still developing systems for scaling and documentation, but fully realize we have no idea what we are doing until we do it. In addition to the BP Podcast, I’m also listening to Clayton and Natali Morris on their podcast where they have talked about practical ways to build and scale. I hope we have everything structured like we need to. Would having an agreement with a property manager be enough to constitute intent? Or is that a question I should “ask an attorney?”

Tim

@Stanley Bronstein thanks for the reply. I would say that $10,000 to $15,000 is all I would expect to gain here since it’s a smaller investment. I guess I didn’t think about the cost of time and papetwork versus the cost of just paying the tax. My question would still stand, though if we took the numbers on my property out. Do I need to have my property rented before I can sell and 1031 into a bigger “like-kind” asset? Or how long does it have to be rented in order to qualify?

So I was just commiserating with a coworker about how I'd love to move on a new real estate opportunity here in town, but all my capital was currently tied up. I came back to my desk, and looked at the time - it was 10:31. Thanks, universe!

So, I wanted to ask a quick question here. I've got my first investment property we just purchased and intend to fix and rent. We bought for $26,000 on a commercial investment loan, and need to put $14,000 into it; the appraisal for purchase noted the property would be valued at $60,000 after repair. We intend to rent it, but would be willing to sell in order to move up to a larger property with more income potential.

The deal we are looking at moving on is a 10-bed 3-bath old boarding house that was used as a single family. With a major construction project going through our area, we've had almost a thousand pipeliners move into our small town of around 10,000, and there simply isn't enough housing supply. By using it as a 10-bed boarding house, we think we could charge almost 600 per room per month - way cheaper than the hotels that are charging almost $75 per night. This property is listed for $200,000 but think we could get it for $175,000 - if we put everything we got over rents and expenses against the mortgage, it could be paid off in a little more than 5 years. Once the construction project is complete, we would restore the property to its 1930s charm and use it as a bed and breakfast since there isn't anything like that in our town either.

I know the 1031 wouldn't get us to a full down-payment on the larger home - we'd have to find additional capital - but it would put a dent in it.

How early is *too* early to 1031 exchange into a larger property? 

Hey all! Super excited to tell you all that we have closed on our first deal! Not a home run, but I’d rather hit a single at my first at bat than swing and miss.

Found this property on the MLS, out of an estate sale. 2 bed, 1 bath, 1008 square feet. Originally listed at $55,000, ended up under contract for $26,000; appraisal after repair just came in at $60,000; should rent for $650-$675/month. Full basement that is dry but unfinished. Good opportunity to frame out an efficiency apartment downstairs in the future and turn 'er into a duplex with an additional $450/month.

First, no shower in bathroom, so we are adding one; removing a claw foot tub, and putting in a tub/shower insert.

Second, the back deck was falling off; for a cool 2 grand, we are putting in a new deck and adding a set of stairs to the backyard.

Third, we heard that the heating bill was $600 per month and when we looked at the property, all the storm windows were leaking cold air and some were cracked. Replacing all he windows and putting seals on the doors should save us a ton in holding costs and keep our renters from leaving due to high utility costs.

A little elbow grease on the hardwoods and adding some waterproof vinyl to wet rooms, and the floor will be good to go.

Kitchen, we are moving the 220v for the stove beside the fridge and then replacing 1960’s sink with a wall of cabinets and a sink under the window.

We have found a property management company that has a GC on staff and several subs that charge low rates per hour. They said they charge cost of labor plus the exact rate for subs (no upcharge on labor) since they make their money property managing, and the faster the property is rented, the faster they make money.

We also found a lender that will refinance our properties into a 15 year commercial loan on secondary market, rates in the 5’s, no seasoning required.

Once we get the hang of the BRRRR strategy, I think the sky is the limit here in Southern WV!
Hoping to scale ASAP and get to 20 units by end of 2020.