All Forum Posts by: Vicente Terán

Quote from @Jarrid Weber:

@Vicente Terán interesting! Are you a real estate agent?

I’m not! I’m a local investor only and contractor… if you are in the phx area and interested I’d be happy to meet up with you and introduce you to a few investor friendly agents I’ve used.

Hello! Yes purely in AZ… these deals are possible on the MLS… most require conversions to add bedrooms and baths… if you permit the work then you also increase your ARV

Quote from @Jarrid Weber:

@Vicente Terán that has been our goal to meet a 10% CoC return as well, however, we haven't been able to find any deals like that.

Do you solely invest in AZ?

As a basis I look to generate $1000 minimum per month of pure cash flow (after cap ex / prop mgmt) for $100k cash invested into properties. 

This coupled with a market that has better than average historic and projected appreciation rate. 

3. Whats the best system for scaling out of single family rentals into a larger asset? Specifically I am scaling my single family portfolio to hopefully 1031 all of them into one larger asset.. Is this advisable and common move? Any big considerations or blind spots to consider with this approach? What are the benefits with larger assets versus multiple smaller assets?

Hi Tyler! In my experience, I have had the best luck finding / creating cash flow properties by getting CREATIVE as you mentioned.

Every property I own, I purchased with the intent to add value to create cash flow. A few ways I have done so successfully and might be applicable for you.

1) ADU - look for properties where you can build an ADU / create additional rental income by adding SF and livable area. This can also help increase your equity rapidly in your deals.

2) Convert Existing SF - Often time in small multi families this could be an extra storage area or office area that you. In single family homes we have had alot of luck enclosing garages and adding bathrooms. Again this helps get you an equity bump as well...a WIN WIN in my book. Another example is backyard shop areas, I recently purchase a house with a 400 sf wood shop out back... I was able to convert to livable and added a bathroom, and no it rents for over 900 dollars a month.

Hope this helps!!

Hi Michael - From my experience, I only purchase new real estate when the deal works well and I'm in a secure enough position to move forward.... here is my thought process and two factors I use when analyzing if I should move forward with another investment property

Cash Reserves
- do I have adequate cash reserve to cover 6 months of my living (all in) plus 6 months of expenses for each of my properties in event all properties go vacant.... to me this is very important to be extra conservative.

The Deal
- does the deal hit the numbers I want / expect? For me, if the property isn't netting $1000 / month cash flow for $100k cash.. I'm likely walking away.
- is there value add / forced appreciation opportunity.... to gain equity quickly i'm looking for something I can renovate or do permitted additions / bathrooms etc. to be able to secure equity quickly.

I'm not ever super concerned of the market specifically as long as the numbers and these factors check out. My strategy is long term hold (10 yr. +) so the market is expected to be wavy... I just want to have high equity and high cash flow to be able to ride the inevitable waves of the RE market

Tony - Are you going to be adding a full bath? Most the time this is your largest expense.

My assumption is a $35k budget for a new full bath and conversion of 400sf is safe. This would also assume you are raising the concrete slab to meet the existing finished floor elevation. :)

We recently converted a two car garage (615sf) in Arizona to permitted + livable space.

Talking with your local city/town will be important to ensure the project is feasible.

In AZ, we had some push back on "parking" available off the street. We had to check the building set backs to assure we can get at least (3) car parked behind the setbacks. Not every lot / configuration can handle this parking count so important to check what your city/town will require.

After you have verified the project is feasible thru the City, the big considerations are power, water, sewer, and mechanical.

Power - need to assure you have capacity in your panel to add the load for this additional space. Most often its the power required for the mechanical system that will take the largest load. An electrician can tell you. Worst case a subpanel may be required.

Water / Sewer - for your added bathroom (assuming) you will need a min. 3" sewer line for the toilet. Need to investigate these tie ins.. this expense can be large or small depending on existing utilities and their locations.

Mechanical - you will have to decide if you want to add a unit (roof top, split, or mini split)... I typically go with a split system to make sure there is good air flow throughout the new space and also get the most on your appraisal for the additional SF. Depending on the size, a small mini split can work as well.

All in, in AZ, we are seeing a conversion like this cost $40-50K for roughly 600sf of additional / permitted square footage.

Often times you can find a local architect or going on "Upwork" to find someone that can model out the addition you are looking for and get permit docs ready to submit to the city.

Hope this helps!

Hi Tony! We recently converted a two car garage (615sf) in Arizona to permitted + livable space.

Talking with your local city/town will be important to ensure the project is feasible.

In AZ, we had some push back on "parking" available off the street. We had to check the building set backs to assure we can get at least (3) car parked behind the setbacks. Not every lot / configuration can handle this parking count so important to check what your city/town will require.

After you have verified the project is feasible thru the City, the big considerations are power, water, sewer, and mechanical.

Power - need to assure you have capacity in your panel to add the load for this additional space. Most often its the power required for the mechanical system that will take the largest load. An electrician can tell you. Worst case a subpanel may be required.

Water / Sewer - for your added bathroom (assuming) you will need a min. 3" sewer line for the toilet. Need to investigate these tie ins.. this expense can be large or small depending on existing utilities and their locations.

Mechanical - you will have to decide if you want to add a unit (roof top, split, or mini split)... I typically go with a split system to make sure there is good air flow throughout the new space and also get the most on your appraisal for the additional SF. Depending on the size, a small mini split can work as well.

All in, in AZ, we are seeing a conversion like this cost $40-50K for roughly 600sf of additional / permitted square footage. Hope this helps!

Seems like a fair price, as @Ryan Normand mentioned above.