All Forum Posts by: William Donnelly

This looks interesting. What are the finance options?

Layton drive appears to be low income housing. About half of the properties look like they haven't been maintained. Also, almost all of them are for sale, and none have sold...2 red flags for me!!

This was actually listed on the MLS. It had been for sale over 9 months with no offers. This was attributed to the high asking price and the low income tenants. As for my next step, ideally, I'd like to expand on this current property. The condo was built as the start of a plan for a small community. Obviously, when the builder foreclosed, the rest of the community was never built. I'm working on refinancing and obtaining a construction loan.

Everyone's approach to raising their credit score will be different. For me, I had failed to make payments on a few credit cards and student loans. I reconfigured my budget and made it a priority to bring my past due bills current. As far as screening tenants, I set a standard for military and first responders to receive incentives by signing a lease. These individuals are held to a higher standard, and also have direct deposit available through the government. This assures the highest percentage of hassle free land lording, in my opinion. For my particular area, (MS gulf coast) there really isn't a large amount of small multi family units for sale. Out of the few that were available, I chose the one with the highest rent potential, and still in a B+ type neighborhood. I stay away from anything B or lower. It's just not for me.

About two years ago, I made the decision that I would in fact be leaving the Marine corps. I had long been interested in real estate. I began reading books and I signed up for bigger pockets. Knowledge gained is crucial, but to seek that knowledge is invaluable. I took the initiative to learn as much as I possibly could about the business, particularly small multi family buy and hold. After many late nights of reading and studying,( my wife complaining I was spending too much time doing so) the time was coming for me to make a decision. Within 12 months, I improved my credit score, got approved for a VA loan, and bought my first duplex! Six months after closing, the property is now renovated and occupied with new tenants, allowing me to make a profit of over $400 per door. Here's how I did it! 1)- I bought a foreclosure. This particular duplex was built as luxury units to be sold as condos. Since the housing market crashed, the owner foreclosed. 2)- I bought for %60 less than the foreclosure price. Since the bank failed to maintain the property and allowed low income families to occupy this once luxury property. This allowed me to offer the bank %60 less than the asking price. 3)- I forced appreciation. After purchasing the duplex and terminating the current tenants lease due to violations, I lived in one unit while renovating the other. The property was brought back to better than original luxury status, therefore increasing my rental prices from $950 to $1200 per month. With the other unit complete and occupied, my next step is to renovate this unit and find another great tenant. When both units are occupied, total rental income will be $2,400, and total expenses (mortgage, taxes, ins. Cap. Ex., etc.) are $1600. That leaves me a monthly profit of $800. Not bad for my first property! There are a few invaluable things I learned along the way: 1)- Always offer lower than asking price. The worst they can do is say no. This is the main reason I got this property- no one else was brave enough to offer less. 2)- Have MORE than estimated for a renovation budget. Especially if you're doing any of the work yourself, it can and will take longer and require more money than anticipated. 3)- Take your time screening tenants. Do not let anyone rush you into a lease through promises and handshakes. Also, don't put yourself in a financial situation where you feel as if you have to rent your unit ASAP. 4)- Plan, plan and plan some more. I planned out my move for a solid year. I read everything I could get my hands on. I attended seminars and I sought out people in the business. You can never have too many people in your network. After just this property, I now have a an established rapport with contractors, real estate agents, attorneys, city officials and bankers. That network will prove valuable as I move to more properties. 5)- Create a LLC for your property. Under the business headings of property management and real estate office, there are significant tax write offs for renovations and other business related expenses. Feel free to leave any comments and questions you may have! Send me a request! Will Donnelly, Owner United Coast Realty

I ended up stopping this deal. I decided that it wasn't worth the hassle. I'd have to micro manage and keep an extremely close eye on any work that was being done. The only benefit for my side of this deal would be the potential gain of an immediate tenant. However, with this luxury unit, I won't have a problem finding a great tenant in a short time period. 

Hello Everyone. I have a luxury unit that is currently being renovated. It still needs paint, carpet, new toilets, attic insulation, new upstairs heat pump, and the downstairs still needs to be cleaned and painted. The previous tenants were inside smokers and vacated the place leaving it trashed. 

When fixing a different AC unit, my AC repair man noticed the luxury unit and has stated that he would like to move into the unfinished unit because he's getting separated from his current wife. 

He has discussed working on completing the unit within 60 days, with quality work up to my standards and guidelines. He would pay a security deposit and pet deposit, but receive a sizeable discount off rent as long as he shows improvement and receipts until the renovations are complete. All details would ofcourse be in a contract.

Pro's - I secure a tenant now as opposed to later

- I work on rehab less 

Cons - I would have to trust his work, or micromanage repairs

- He is a very busy individual, with loud work trucks and a lot of equipment to disturb surrounding tenants

As tempting as this sounds, is it even legal to rent an unfinished space? 

If it is in fact legal, is this something anyone would recommend?

welcome to bigger pockets! It's always exciting to find other members on here from the gulf coast. This is such a great tool

Jay,

It is in fact very different than me owning and renting a duplex. My tenants are not low income and they respect the property and the neighborhood. I don't know about your area, but here, it's been my experience that  low income housing equals trashy people who could care less about something they don't own. They simply ride in uncle SAMs car and trash it. 

Thanks for the input. What kind of constructive arguments are you referring to?