All Forum Posts by: Vu V.

Oh forgot to add: 

I estimated 2 months' completion. I started renovating on June 14th and had my first tenant move in on August 21st. So 1 week over 2 months.

So again, just to reiterate for other new investors: know the work that you need to do and give 25-50% extra buffer time to accommodate other things.

For this project, I ran into delays because of a lack of labor (the contractor could only work over the weekends) so had to spend my own time fixing things. Learned a ton but please do weigh in the fact that you may not want to spend another 8 hours of physical work after 8 hours of normal daily work.

I did do very well on my purchase plan so all needed materials were delivered on time.

Hi there!

I'm looking to do something with the space but have been quite indecisive, hence I'd like to ask our community :)

The space is around 24' x 14'. The bars are around 8' in height measuring from the ground to the lower edge of the wood beams

I'm thinking about building a pergola for cheap (<$1k if possible) like below but would like some opinions on what to do with the concrete ground? Should I demo it and put dirt? What considerations should I take? 

I could also build a wooden deck but that would just cover up the messy ground. However, it would need to be anchored. 

Hopefully, I can get some input from you! If you've done this before, please let me know what it was that you ended up doing.

The location of this section is about 15ft away from the main house. 

@Jim K. @Account Closed

I realized that I never gave you guys an update on the project mentioned here (my apology since I've just started grad school :)

The total repair + essential furnishing cost ended up being $34,417, which includes:

1. Full bathroom build-out (~$14k on this)

2. Adding a guest bedroom (converted the old dining area into a room)

3. Other replacements and makeovers (new flooring for the new bedroom ~ 120 sq ft, new doors + hardware, lots of paint, framings)

4. Also managed to squeeze out a new shed 8 x 6 to relocate the washer, dryer

5. All appliances (most are second hand but barely used appliances like fridge, fryer, etc)

6. New fireplace (electric fireplace + Floor to ceiling DIY shiplap frame)

7. Updated electrical for 1st floor ($5k)

That means all in, it was around $80k (down payment + closing + costs mentioned above) for a $605k purchase price

To answer your potential questions: Yes, I did a lot of the repair myself except for the electrical, bathroom, and plumbing. No, I'm not ********ing the numbers or made a mistake in calculating (lots of this is automated and I'm an engineer by trade so math is something I do daily); although you're entitled to label me as phony :)

The house is now a 5/2.5 from being a 4/1.5 a couple of months ago. I'm currently house hacking and have been able to rent out 3 out of 4 extra rooms for $925, $1175, and $1275. Currently waiting to sign the last one for $1325. So the total rent income is $4700. Total out-of-pocket for me per month would be $555 based on the $5255 (downpayment + CAPEX + utility + other expenses like insurance and security) breakdown above.

Given the fact that the house recently appreciated quite a bit from the market (based on Redfin estimate it's around $760k but I do take this with a grain of salt), I don't think this is a shabby deal. Maybe Jim wanted me to make a slam dunk on my first deal to be considered to be in the game, but I'm comfortable with this being my first deal.

But to address Jim's concerns on new investors buying into a renovation-heavy project:

To new investors like myself,

I believe that doing due diligence is the key. Prior to purchasing the house, I spent over 1.5 year researching REI before making my first move. And although the timing could've been better, I knew what I was getting myself into; so should you if you're thinking of getting in REI. The key isn't to buy at the best price, but to buy at the right price. Also, have excess cash ready in case of unexpected expenses. I estimated everything to be $30k total, which ended up being $34k. So make sure that you're doing your homework and break down your cost to the box of bolts (literally). It also helps if you know how to code instead of just using excel, it saves you a lot of time if you can build models that can predict the cost by drawing live data from the internet. Be smart and try not to over-extend yourself. And don't be afraid of picking up the hammers and do it yourself!

With that said, every investment is a calculated chance. Make sure to have exit games when things fall apart so that you can minimize the damage.

@Todd Pultz @Elin Trinh

Thank you! :)

@Calvin Kwan What's your experience with EBRHA's resource? Is it suitable for house-hacker in Oakland? I'm weighing in between getting a membership with them vs. talking to an attorney. The main thing for me is that housing laws in Oakland change so quickly that it is definitely worth looking into joining something like this.

Appreciate your input!

Hey @Jim K., thank you for your honest opinion on the "faith" I put on others. I do realize that's a potential downfall and I understand why that can be an issue. Maybe I should just burn the house down and restart from scratch instead of relying on others. I'll get my sledgehammer ready.

Jim, I don't think your questions really help anyone in the forum, especially you and me. I am "New to Real Estate", as you can see, because I'm willing to learn and get more opinions. Sometimes, opinions will differ. A simple question of "what do you think?" is how I'd like to engage in a discussion. I aim to get a fully thought-out answer on the other end.

To be clear, Jim, I really do appreciate your thoughts and agree that people in the forum should be truthful. It's important to note that my lack of experience in this side of BP forum communication doesn't equate to fakeness; it just means I now know more about what to mention/not to mention in a deal recap. Happy to realize my mistakes and learn.

Maybe my research was completely off and my estimate on repair cost is nowhere near what I thought it'd be. However, Jim, it speaks volumes how you're portraying yourself. I understand you have 15 years of experience under your belt, but I sure hope those 15 years of experience also includes how to converse without being, what can I say, cocky and douchy. Maybe that's something we can both learn from this conversation. That's my cheerleading opinion of balloons and pom-poms to you, Mr. Jim.

@Account Closed I've read your posts around the forum and you're one of the rarer class of investors. My full respect to you and your experience in this field!

How often do you run into issues with a building that's structurally unsound like the example you gave? The cost of the permit, school fee, and engineering was $18,000 like you said. How did that get to $500k to complete the job? I'm really interested in knowing what causes that jump.

Can you break down the $18,000 per day to remodel a bathroom by just changing the fixtures, painting, and a little tile? What size of the bathroom is this assuming? What type of materials, fixtures, etc. are used?

How often do you have to rewire a property just to add a window air conditioner? What's the size of that apartment unit that required a $6.5k rewire and electrical installment?

I appreciate that you're giving me more food for thoughts. There will definitely be things that come up and I can hope that it won't be something major like you mentioned

I look forward to giving you an update as the project continues

@Wale Lawal Thank you!

@Hayden H. Yes sir you're spot on. I've come to terms that house hacking in the Bay will require a very different strategy from a traditional house hack (positive cashflow, etc.). And with a different strategy, expectations would be different as well. 

Thank you for the kind words!

Hi @Nathan Gesner, thank you! This house is in the south of Oakland, around Mills College.

Hi @Account Closed, thank you for your post. I appreciate your honesty and sincerity.

I agree, I should've been more precise with my numbers. To start the dialogue right, I want to stress that by no way am I trying to brag on this deal. There's nothing really to brag about since this is my first deal. On the contrary, there are still so many things to dig through on my end to make sure that it works to what I expected. I wanted to post this here just as a way to build some dialogues within the community and maybe, learn from one another.

I got the house for $602500 (the list price was $625000). I'm house hacking so not exactly the traditional BRRR deal. I put down 5% at 3.186% Rate and then will put around $30k into fixing it up.

I want to clarify that fixing up the house and updating the floor plan will be fairly cheap since I'm doing it within the envelope and I'm not moving any load-bearing beams/walls. The project is planned to take around 1-2 months based on the estimate of my team. My payment won't kick in until July so I still have that 1-month buffer to get this done.

My risks here are in 2 main areas: rental income and market appreciation.

Obviously, with house hacking, it is generally a bit more difficult to accurately estimate the monthly rent per room. I based my research by going through private room listings on Airbnb, Facebook, Craigslist, Trulia, etc. Conservatively in my area, a private room monthly rental is around $950. With 4 extra beds and some other additional amenities from the upgrade, I aim to get around $4000. 

Expect a 15% vacancy, which will be $570 a month. Utilities are estimated to be $100 per bedroom per month. CAPEX reserve is around $400 a month (10% income). Other expenses (Other insurance, subscriptions) will be around $300. Total will be ~$5255 per month including mortgage payment, taxes, insurance).

This will leave me with a negative cash flow of ($1255) a month. $951 of that will be for principal paydown so my "rent equivalent" or loss will be around ($304). Personally, I think $304 of rent a month is pretty decent in the Bay Area. In reality, I know the number will shift but this is my estimate on this. What do you think?

I won't mention appreciation here since it is a speculative play. However, I think this neighborhood is up and coming for the next 5-10 years. I plan to stay put until the next cycle approaches.

Investment Info:

Single-family residence buy & hold investment in Oakland.

Purchase price: $602,500
Cash invested: $70,000
Sale price: $625,000

This is a 1914, 4bed/1.5bath SFH located in Oakland, CA.
Currently, I am looking to increase the value of the house by cosmetic fix-ups with an updated floor plan to turn it into a 5 bed, 2.5bath SFH.

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

It's definitely the ability to house-hack.

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

Via my wonderful agent, Houston Garcia.
It was a motivated seller type of negotiation. We tried our best to accommodate and meet our end of the bargain.

How did you finance this deal?

Conventional

How did you add value to the deal?

Adding 1 bathroom and 1 bedroom. General cosmetic fix up

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

Yes! Check out Houston Garcia at Compass.

Hi Derrick,

Thank you for letting me know about your process and the tip on finding lenders. I did guess that it would be difficult in the Bay Area, or else everyone would be abusing this type of loan.

That's wonderful that you're closing on a new place! Congratulations to you and your fiance! 

I've been working on analyzing several deals in the Bay and most are negative cash flow. How did you make this work to at least break even with a regular FHA?

My expectation is to get the most out of house hacking so that my effective "rent" (after taking out principal pay down from cash flow) can be below the market rent. I was hoping that 203k can help offset this by building equity prior to refinancing.

Maybe I still have that newbie optimism :)

Thanks again for sharing!

Vu

Hi BP community! 

After doing more research on my initial intention to find a property in Austin TX, I've decided to refocus on where I currently live: the San Francisco Bay Area.

Life happened and I now find myself in a good position to purchase a home in 2021. I'm looking for a 3/2 SFH located within 15 miles from the Cal State East Bay area (San Lorenzo, Hayward,etc.) and am aiming to house hack.

Since I'll be starting a new job in January, I'll have to wait until March to gather my proof of income.

I'm targeting the FHA 203k loan, my questions for you are:

With contractors:

I'm planning to hire a GC. I'm interested in hearing your story and advice on selecting the right GC and on avoiding the common pitfalls when subcontracting out jobs (slow/delayed work, etc.)

With lenders:

How early should I begin talking to potential lenders? Should I hold off until I have at least 2 months worth of paystub? What sort of questions do you typically ask in assessing whether a lender is suitable to your need (in this case for supporting 203k)? 

Lastly, if you have worked with contactors, local lenders on this type of loan and believe they are great resources, please let me know as I'd love to chat with them.