All Forum Posts by: Tim G.

@Eric S.   sent you a message.

@Tim C. I think you will have a hard time finding 4-plex buildings in the nicer school district areas.  Nicer school district areas tend to be in the newer developed areas which have either apartment complexes or cookie cutter neighborhoods.  On the north side, I consider Mason, Lakota, Sycamore, Kings and Loveland school districts to be good.  Those are mostly A or B neighborhoods. 

Most of your multi unit buildings will be in the B or C neighborhoods on the North side.  School districts include Princeton, Mt. Healthy, Winton Woods, Hamilton, Monroe Middletown .  There are probably more, but I've never really investigated them. 

@Kevin Hart I did a quick search of properties for sale in Evanston.  There is 1 property for sale at $129,900.  After that it drops to $85,000 and lower.  I would probably steer clear of that area.   You also have to worry about theft/vandalism during the renovation as well. 

If you are trying to stay in that area, I would look towards some parts of Norwood and St. Bernard.  Both of those areas have pockets of redevelopment that are starting to happen.

@Jason Eyerly I found this property on the MLS. I haven't invested much time in looking outside the MLS yet. But I'm hoping to attend the next Cincinnati REIA meeting to try networking and finding other properties off market.

@Damon Armstrong The $20,000 I borrowed from my friend is buried in the purchase price of the home to pay the down payment on the loan.  You are double dipping by taking the $25k from the profit.

@Nilesh Makhija 3 main lessons I learned.  1. You make profit when you buy the house.  If you overspend on the initial purchase, it doesn't matter what the rehab looks like, you won't make any profit.  2. With the correct contractors, you can spend very close to the same amount of money on the rehab as if you did it yourself.  3.  To grow the business, I need to get out of the rehab portion - it takes too much time and effort on my part.

@Mike McKinzie I see what you're saying now.  Makes a lot of sense.  Will definitely try to do my budget that way for the next one.

@Frank Dortilus I did not read J Scott's book.  Although, I probably should! 

@Daniella Ortiz I'm into cars as a hobby and the GC is another local car guy that I know.

@Karl Pierre great advice.  I definitely don't want to get stuck with a house if and when the market busts.  I also plan to sub out the work on future fix and flips.

@Krysti Sam where is your rental property located in Cincinnati?

@Nicholas DeLouisa Jr  @Maryjoe Romando we have about 800 hours total in the rehab.  That's myself, my parents, father-in-law and subcontractors I used for the roof and doing some demo work inside.  The rehab took about 90 days to complete.  So not quite full time but it sure felt like it sometimes!

@Joe Demonte we did not have an inspection done on the house.  But I did walk through it with my GC buddy and we talked about a bunch of different things.  Ultimately there weren't any surprises that came up during the rehab.  The roof was in poor shape - edges of the shingles pulled up everywhere.  The soffits were also rotted out and the gutters were missing in spots.  I've given my realtor some referral business, so I think we're even! ha!

@Mike McKinzie good information.  I'm not sure doubling the rehab budget is a good idea....you can price yourself out of a lot of profitable homes that way trying to buy it too cheap.  Knowing what I know now though, I will definitely be a lot smarter on how I come up with a rehab budget on future projects though.

@Account Closed The $20K from my friend was between him and I. The bank wasn't aware of it. My credit, job and bank statements are strong enough to get the loan on my own. When we closed a couple days ago, I had a check for $25k written to my friend added to the HUD. So he got his $20K back plus 25% interest.

Thanks everyone for all the kind words!  Its been a lot of work these last few months but seeing the check has made it all worthwhile!

@Raven Parmer you have some great comments and questions. You are spot on with your comments. The GC that did the roof said he could have done the complete remodel on this house in about 3 weeks compared to the 3 months it took me and my helpers (family). So instead of 5 months of holding costs, I would only have 3 months. That saves me $1500. As for the costs, obviously there will be additional costs using a contractor to do the work. The key is finding the right contractors. Again, talking to my GC, I said I used mostly Lowes and HD to buy materials for the rehab. His response was "oh, I can get a lot better deal on materials than going there" So while you do spend more on the labor side, you save on the materials side. We looked at another house together and he gave me a bid of ~$25K to do the rehab. Using my knowledge from this flip, I was in the $20-23K range doing it myself. I also don't have the time to devote to being on-site all the time like I was with this flip. My day job suffered during those 3 months and now I have a wife that's 8 months pregnant with our first child.  It's literally a full time job on top of my full time job.....days, nights, weekends.  I was over there during any free time I had.  I was kicking myself because I took a Saturday off to be in my friend's wedding! lol

@Charmaine M. see above about using a GC. I think my GC could have done it for under 30K and cut down my holding costs. The interest on the HML from my friend was 25%. Not sure I consider that low. I see a lot getting HML's on here in the 10-20% range. Being my first deal, I really wanted to sweeten the pot to get him on board with the investment.

@Joshua Springer He was my parents realtor about 10 years ago and then I used him when I bought my personal house 4 years ago.  Just got lucky I guess!

I had a similar conversation with my insurance agent yesterday. He also happens to be my best friend! He said I should create a LLC to put the properties under. As I understood it, the LLC will have its own umbrella policy and each individual property will have its own property insurance.

thanks @Cody Brownfield !  Free labor is the best kind! Ha!

Thanks @Kevin Hart !  Sorry for not getting back to you on your questions....been slammed with work and this lately.  Hopefully I answered a lot of them above.  If not, let me know and i'll be happy to help.

Wow! Where to begin!?!

A quick background on how I got involved in real estate investing.  I started a new job a couple years ago.  About a year in, my boss asked me if I was interested in retiring in 10 year.  I obviously said yes!  He started talking to me about real estate investing.  He has 3 duplexes in an upscale neighborhood of Cincinnati that cash flow very well.  So I started digging around and found Bigger Pockets.  I spoke with the wife about this and she wasn't really on board with the whole rental thing.  So I brought up fix and flips, which she was a little more cautiously open to due to the "short term" nature of owning the property and not dealing with tenants.  Now that the first flip is done, I think she's more on board with fix and flips or rentals. ;-)

Looking back on the last 6 months, I really didn't know what I didn't know!  Thankfully I have a good realtor that has worked with investors and knows what's needed to buy a house at the right price in order to make a profit.  They say you make money when you first buy a home - well without him, I probably wouldn't be writing this success story!

We put together a search in suburbs on the north side of Cincinnati primarily in 3 good school districts - Lakota, Mason & Sycamore.  It probably took us about 2 months to find the right property because it was my first 1 and I really didn't want to deal with a "train wreck" for my first property.  The house had been sitting on the market for about 8 months and was extremely overpriced - starting at $109k and had slowly fallen to $90k.  We took a chance and put an offer in at $60k.  After a little back and forth, we agreed on $62,750.  We closed on the house on 2/25/14.  I used a construction loan for $84k and borrowed $20k from a good friend to fund the down payment on the loan.

Over the next 3 months, with the help of my parents and my father-in-law we rehabbed the home.  As with any first time rehab, I completely whiffed on the budget!  I had $21k budgeted for the rehab.  Once it was all done, I came in at $27,637.94.  Taking a step back to look at what happened, I really only whiffed in 2 areas.  I had a new roof, gutters and soffits put on the house.  I had budgeted $6k for this.  Ended up being almost $9k.  The other item was windows.  I wasn't planning on doing windows as they didn't look horrible - just needed a little work.  Well that didn't work out and we ended up replacing the windows for $3k.  The rest of the budget items weren't way off - saved here and overspent there.

Put the house up for sale on 6/9/14 for $139,900.  Had 5 showings in the first week and received an offer for $135k after 7 days on the market.  Had a few minor things come up in the inspection that were taken care of and that was about it.  They had some issues on the loan that delayed closing.  But ultimately closed on 7/31/14.

Purchase Price - $62,750

Rehab - $27,637.94

Carrying Costs - $3,098.39

Commissions, fees, etc - $8,316

Seller paid closing costs - $1,000

Interest on hard money loan - $5,000

Total Expenses - $107,802.33

Sale Price - $135,000

Profit - $27,197.67

It was a pretty grueling 3 months of work, but in the end it was a great learning experience and I have a degree from the School of Hard Knocks!  I've learned that in order to grow this business, I need to get out of the rehab part of it.  I'm already in talks with the contractor that did the roof to do the whole rehab.  We've looked at a couple houses together and his prices are inline with where I think they need to be.

Sorry for being so long winded and thanks for reading!

BEFORE PICTURES!

AFTER PICTURES!

Random before and after shot of the hallway.