All Forum Posts by: Wayne Yahnke

Hey BP Crew,

Just wanted to share our most recent success. We purchased a commercial property that was a residential home converted to 2 commercial units and an ADU. Essentially a duplex with an ADU. Closed in May 2021. Jumped through numerous hoops to convert this property to a 3 unit property (SFH, JADU & ADU).

Remodel consisted of full downstairs gut in the duplex. Adding 2 sub-panels, Added 2 kitchens, converted two 1/2 baths to full baths, removed the dated HVAC replaced with miniSplits, added LVP flooring, paint and fixtures in both units. 

ADU needed carpet, paint and we added laundry services, upgraded the lighting and fixtures. Also added a new stove, furnished the place and added our personal touches with Art and Decor.

City had us add fire sprinklers to the duplex and a carport. Ugh! This essentially put us $30k over budget. 

Duplex units are going for $2k each and ADU in the back could go for the same. However we decided to use this as an AirBNB and a crash pad for ourselves as needed.

AirBNB is tucked away behind a fence with a nice garden area and needed minimal rehab. The location is optimal as it is walking distance to downtown. 

The AirBNB is booking 6 weeks out with a 70-80% occupancy. It is bringing in double the market rents for its size ($4k). All of the guest love it and the reviews continue to come in as 5 stars. We are automated with IGMS & Pricelabs. 

$645k Purchase Price-Negotiated down from $689k. We used an environmental test to prove that the acoustic ceiling was asbestos and got quotes for mitigation as leverage to bargain down while in contract. 

All in $830k (645k purchase, 130k rehab, $55k Private money note)

$954k ARV Appraisal (challenging appraisal as we speak hoping to break the $1m evaluation mark)

Most will think this is a crazy evaluation for 3 units. But this property is located in Wine Country, CA.

Rental income $8k

Total Monthly profit after expenses $1k-$1.5k 

Not a home run by any means but this is in a desirable neighborhood and near the downtown area which is appreciating rapidly as well as experiencing significant new construction and development. We will most likely have to leave some cash in the deal (bring some to closing plus the $30k). 

@Benjamin Bennett most lenders and insurance agencies will not touch a property with knob and tube wiring. Make that first on your list of repair items

I finally took a leap and completed my first BRRR!! I got one hell of an education in the process. Thank You @David Green

REO Foreclosure Purchase Price $75K! Cash purchase using HELOC funds

This was after calculating and making offers on multiple listings. I even did a small mail marketing campaign that I almost got a duplex from. 

Multiple issues: Shared water and septic with the neighbors. Un-permitted studio in the back garage and more. Due diligence was key in this project. I had numbers on remedies to these big issues before closing. 

My Vision!

Phase 1: Full gut renovation on the main home. Change the floor plan to open up the space. Bring a modern open feel design to the interior. 

Phase 2: Purchase the adjacent lot to create acccess to the Garage studio in the back of the main house. Remodel into a 900sq ft 1bd 1ba ADU

Main House Remodel.

$115k Rehab costs

Multiple challenges. 

-Delayed in closing from May to August 2019. 

-Remodel Over Budget by $25k

-Planned Remodel took longer than expected (5 months). Mostly due to the delay in closing.

-Brand new refrigerator didn’t get cold when I finally unpacked it the week before the new tenants moved in. Lessened learned here. Always test appliances within 30 days so you don’t have to deal with Manufacturers warranty. 

-Raccoons living under the house. Insert plug for BP Pod Cast Episode ?? here.

-Merging Properties is not easy.Its also very costly if not done correctly

-Refinance started during COVID (March 2020). This was challenging but I was able to eventually get a good loan. In house loan with a local credit union. 30 Yr fixed @ 4.5% with 75% Cash out.

What went well:

-I learned a ton!!!

-Splint the Electric into 2 meters. Planning ahead for phase 2.

-Qualified renters fell into my lap as I was finishing up.

-Rented the month after it was completed.

-The open space floor plan came together really well. 

-I was able to successfully negotiate and purchase the adjacent lot. thank You Chris Voss!! 

-I learned how to challenge appraisals. Thank you @Andresa Guidelli for the inspiration! Gained an additional $10k from the first appraiser. Took it a step further and started a loan with a local credit union. New Appraisal came in $51k higher than the first! I trusted my gut and listened to your interview on BP again. 

There’s so much more...

All in $205k

Appraisal $290k

Cashed out $203k

Cash flows $200/month (Main House only)

Phase 2 is underway and should be completed by August 2020! 

Rehab Budget: $70k

Projected Rent $1,000

Projected Cashflow $400/month

Before:

Hello BP Fam,

Looking for some advice on how to find the owners of properties that have listed owners into a trust?

Background: State CA, County Records show deeds recorded to trust. There are a few small multifamily properties Id like to pursue off market and I haven't had luck with mailers to the trust address on record. 

Please advice.

Thanks In advance

I have some experience doing this in California. I think a lot of the answers depend on your local municipality and state laws. 

Hello BP Fam,

Looking on advise for my current refinance situation. 

Heres what I have so far:

Standard Loan Docs ready (income, bank statements, taxes etc)

BP Calculator on current investment (BRRRR) completed and saved as a PDF

Dilemma: heavily leveraged with a HELOC and a 2nd Mortgage. The Refi would clear both of these loans. These loans funded the purchase and rehab.

Does anyone draft a bio and/or a business statement?

Goals?

I have 3-6 months in savings for my properties. How do I show that?

Any advise would be helpful.

Thanks in advance

Great plan there!. Im sure there's some other options in there as well. This may even be something a VA could do at scale!. Id be interested to connect on these "rooming houses" my son moves to college this fall and I thought it may be a good way to teach him REI and help offset his expenses. Ill sent you a message Frank.

Thanks @Jason D.

Good Afternoon Biggerposskets crew. Looking for a few leads on insurance coverage for the rehab phase of a cash purchase? Working on a BRRR and Im having some challenges getting coverage. Its a California property and in an area with a history of wild fires. If anyone has any experience with this please share the leads.

Im closing this week and Id like to have coverage during the construction/rehab phase.

Thanks,