All Forum Posts by: Kimberly Kesterke

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $17,900

This was a deal I coined myself a "grab bag" lol. Do you remember the old brown paper bags that had random stuff in them when you were a kid? These were mostly at family owned hardware and pharmacies back in the 1980's... Well- did you know that you can do that with rental properties? (yikes). And these are not for the faint of heart- BUT I was able to score a property in NY, for $17,900 and sold it on seller financing terms for $653/ month.

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

I was becoming more of a 'tired landlord' and did not want to deal with maintenance anymore. However, I still am a BIG FAN of cash flowing rental properties. I joined a buyer group and found this little house priced pretty low- and decided to give the strategy a try.

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

I found it through a buyer's club and the deal was as-is. No negotiation occured, but then the price was very low and attractive to begin with.

How did you finance this deal?

Cash

How did you add value to the deal?

I cleaned it up and then marketed and sold it through Facebook, Zillow and For Sale by Owner. I marketed it as a seller finance- land contract deal.

What was the outcome?

I ended up selling the property over 10 years to a local gentleman.

Lessons learned? Challenges?

Because this was a different strategy- not a flip or standard buy and hold, the biggest learning lesson was patience. Eventually a buyer will come. Eventually it will work out. Especially now with interest rates on the raise- there is an incredible opportunity as private landlords and private investors to help others get into homes and become home owners.

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

No

I invest in that area

Investment Info:

Condo buy & hold investment.

Purchase price: $330,000
Cash invested: $95,000

This one bedroom condo sits on the shores of Orange Beach, AL with front row views of the Gulf of Mexico. I rent this property out as a vacation rental, but do visit from time to time with family and friends. This purchase was a result of a multi-family unit I flipped and then did a 1031 exchange into this beauty. One of the best real estate moves I have made to-date.

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

I wanted to start getting into vacation rentals and did research on different areas. I decided on starting with a beach condo in Orange Beach, AL.

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

I honestly looked off Zillow and reached out to a local real estate agent in Orange Beach. Since I have my real estate license I was able to negotiate a referral fee and receive some funds back at closing.

How did you finance this deal?

I took out a conventional loan, using a 1031 exchange to fund the down payment of the property.

How did you add value to the deal?

I hired a property manager and placed it on all the top vacation rental sites. During the off-season of 2022, I changed the cabinet faces, replaced the ceiling light over the table and replaced the outdated curtains with nice blinds.

What was the outcome?

I love the space and I bring in on average $3500/ month in rents. For 2023 I am going to work with my property management company to more aggressively market to the Snow Bird rental population during the off-season.

Lessons learned? Challenges?

I believe I can bump up my monthly average by keeping the unit booked during the off-season. I didn't have a plan for that in 2022, but am targeting to be more aggressive in 2023.

What is your criteria to evaluate secondary markets?  

For me- its the following: 

Population 150,000 + 

3-5 Industries in the town/city

Rent to Own Ratio of 40% or higher 

I have more criteria- but want to hear what else you look for? 

What is your monthly cash flow goal? Once you hit it - would you stop and smell the roses or keep going?

I'm curious- how much longer do you think we will see market prices going up? Especially now that interest rates are 5.5% and climbing higher each week. 3 months? 6 months? I'm curious to hear you thoughts and why. 

@Zak Leonard I was pretty lucky since my mom’s husband is an extremely talented carpenter. They had no problem doing it- they actually had a lot of fun with it. However even if I had to hire a contractor I still would have done it. :) Good luck.

Hello Jordan- it does depend on the market you live and in my area I only needed to obtain the construction permit to get sign off from the City. Also since this a garden level apartment attached to my house (aka above ground basement) it doesn't technically fall under an "accessory" or separate unit- so maybe you don't need an ADU permit? (certainly ask, but I'm always a fan of pushing the envelope)

Another question- do you know if your city has a process to get a permit for an ADU? My guess would be it would start in the office that hands out construction permits- and if not- they can guide you to the right person to ask. Also if you live in a neighborhood w/ an HOA- I would make sure they allow this type of thing as well.

I think the good thing is that you are considering investing out of state. There are a lot more properties you can pick up with that same buying power elsewhere. 

Investment Info:

Single-family residence other investment.

Purchase price: $349,000
Cash invested: $30,000

House Hack example. I purchased this property as my primary residence- and then converted the bonus room off the garage into a furnished, studio apartment with a private entrance. This 500 sq. foot apartment covers my entire mortgage each and every month. I currently rent to traveling nurses and people who are in between homes for whatever reason. Hands down- this is the best investment I've ever made because not only do I get a rental property- but my mortgage is paid in full.

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

I wanted to buy a house for me and my daughter. With housing prices going up I needed to figure out a way to get into a house I loved and afford the mortgage at the same time. A friend of mine was paying her entire mortgage + each month by renting out her basement, so I thought I would give it a try.

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

Since this was also going to be my primary residence, I searched the MLS for a home I liked, but needed to make sure it had a garden level with a private entrance.

How did you finance this deal?

Standard conventional loan. Since this was my primary, I was able to put 10% down.

How did you add value to the deal?

After closing, my mom and her extremely talented and handy husband came down and stayed with me 5 weeks. We added plumbing, electric, framing and built out a 500 sq. foot studio apartment with a full kitchen and bathroom. We also furnished it. I have to say- this is one of my more prouder projects.

What was the outcome?

I have been fully booked since April 2021. FULLY. BOOKED. Each month the income covers my entire mortgage. In a few more months I am going to test boosting revenues from $1850/ month to $2250- I think I am maxed out at $1850 for now- but let's be honest...for a garden level studio w/ private entrance- this is a great rate. I couldn't be happier.

Lessons learned? Challenges?

#1- DO IT! House Hacking is a great way to add value to your current residence.
#2. BE CREATIVE! Think about your current space available. Could you create a private entrance anywhere? Could you take the stairs out of the basement to the main area to expand out living space? Could you convert windows into a door to make a private space?

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

I used Vance Blew with SWBC Mortgage in Gainesville, GA
I represented myself in the transaction since I have my real estate license. I also received $10,500 at closing that was I able to use for my renovations.