All Forum Posts by: Winn Merwin

Hello BP,

My wife and I bought a duplex in Augusta in March 2017. One of the tenants was inherited. He was paying $600/ month at the time. As we took over, we increased his rent to $635 (market at the time was $750. We thought we would give him a break as we were friends with the previous landlord and by all accounts he was a good tenant. We assumed our current property manager would get him to sign our lease (we have other properties), but she did not. This was due to a failure in communication on our part. 

He remained month to month on the old lease which had lawn care included. At a cost of about $60/mo. We never intended to include lawn care but as it was our mistake, we ate the cost for the past year.

In March we gave him 60 days notice (per GA state law) that we would be raising rent to $685 to cover cost of lawn maintenance. He said "no problem" and remained month to month. 

Later in March, our property taxes went up about $60/half of the duplex.

Our current monthly expenses for his half of the duplex are $682.5 after reserving a combined 20% for future Cap. Ex, Vacancy and Maintenance 

And current market rent is closer to $850 (without yard maintenance). 

We asked our PM to notify him that rent would be increasing to $750 and he signs our lease and takes care of the yard or we he could pay $795 and we would continue to maintain the yard.

He stated his rent just went up to $685 and now we are jumping it up even higher. He states he is unable to afford such drastic increase as he is a medical school resident. But believes he would be able to afford more next year. He will be in the area for the next 3 years.

Other Facts: 

The other half of the duplex rented in 3 days at $800, 2 months ago and he is maintaining his own yard.

The previous owner of the property was a mentor of mine who died suddenly of an aneurysm. He was very well liked by his tenants.

What should we do?

Thanks in advance,

Winn and Kaitlin Merwin

@Brian Eilering

While keeping an eye on our farm area, I saw that the main home has now been listed for rent. Congrats! The pictures of the reno look great. I hope you get your asking price.

My wife and I bought a small home 5 doors down from your's in December. We have since rented it out. It really seems like that whole street is turning over in a good way.

Have you had any luck with the airbnb cottage yet? Or is that still in the works?

Are you looking for the next property in the area yet or still trying to stabilize this one?

Looking forward to hearing about the progress.

Thanks, @ana 

@Ana Garrido

Congrats on jumping in, I am looking forward to hearing about how your deal goes. We are trying to learn and get a little better with each deal too. Good luck to you.

Hello BP,

My wife and I recently (December 15th) completed the purchase of our 3rd rental property (4th door) in Augusta, GA. We did not consider it a success story until it was rented out. The tenants will begin their lease Feb. 14th. 

We purchased a duplex in March of 2017 and knew we were getting ready to purchase another property. We had been inconsistently following leads, tracking zillow and FSBO's, whenever we had the time. Then I heard Brandon Turner's podcast in October about the 90 day challenge. He challenged us to do something every single day for like 15 minutes to move closer to the next purchase. I ignored the suggestion for a week or so but then listened to the podcast again. At that time, I set up automatic emails for homes listed in our "farm" of Augusta. A week or two later my wife and I were walking into Hobby Lobby to find towel hooks for our master bath which we were redoing. As we were walking in, my phone blows up with an email. It was a Zillow listing of a home in our area listed for at least 10% below market. I had been showing my wife prospective rentals for about a week. Upon seeing this home, while in the Hobby Lobby parking lot, she said "sure you can buy this one." I laughed, thinking she was just blowing smoke so that she could get to more important things, like towel racks.

After further discussion and running the numbers, we realized it actually made sense and spoke to our realtor. She put in our offer without us having seen the house in person. That is because we now live 2 hours away from our target rental area. Our offer went in over the weekend and Monday AM we had a counter offer. At the time we accepted the counter-offer, the other agent let us know that there had been multiple showings scheduled for that day but the seller wanted to sell quickly rather than for top dollar.

At the home inspection, there was a slight odor to this older home, but the roof, HVAC and water heater had all been replaced in the last 3 years. We decided to go ahead with the agreed price.

After listing the property, which looks great in pictures, we realized it was a very slow time for renting a house. We had 5 showings and no one was interested. This was likely because we did nothing about the stale house/slight smoke odor. We then discussed this with our PM and she offered to put a couple of air fresheners in the home. We also lowered the rent $50 to recreate interest after it did not get rented in the first 5 weeks.The next 2 showings both had positive reviews and we now have a renter. We likely could have avoided a month of vacancy and holding cost if we installed air fresheners immediately. Now we know. We believe we are below market rent currently but we still should make 10%+ cash on cash return after PITI and saving for future vacancy and maintenance/cap ex.

On to the next property search.

Written by Winn Merwin
Edited for grammar and content by Kaitlin Merwin

@Account Closed,

Congrats on the recent purchase. Are you planning to self manage from San Diego? If not, I would recommend Shannon Rollins Real Estate for property management. We use them for our 3 properties in Augusta and have been satisfied so far. Good Luck!

Winn and Kaitlin Merwin

Hello @Gustavo Lopez,

Congrats on the soon to be purchased property. My wife and I also invest in the Augusta market. Where is your property located?

Unfortunately I do not have any contacts with banks in Augusta at this time. To this point we have used Brand Bank in Atlanta to finance our purchases. They have all been ready for rent so we have not had the opportunity to try the BRRR method. I would suggest calling a few banks or better to go in person and ask about refinancing options. Good Luck!

Winn and Kaitln Merwin

@Brian Eilering

Agreed. There is certainly a change in quality of properties as you head down the hill on Kissingbower. 

Both of the rentals we have purchased had a newer roof at time of purchase. I have not personally had to use any of the roofing companies in the Augusta area.

@Joel C. has done buy and hold rehabs in the Augusta area and he may know a quality roof guy.

@Brian Eilering

@Chris Majors

Congrats on the purchase. My wife and I are currently looking for a 3rd rental property in the Augusta market. Our first 2 are on Kissingbower and a duplex on Mcdowell, so not too far from where you bought. 

We have considered the airbnb route as well in the area and would be very interested to hear about your experience. There is some talk about Trinity Hospital being bought out and turned into a cancer center by one of the larger hospitals in the area. If this is the case I believe the airbnb may turn out quite well for families of patients who would like to stay close by. 

Good Luck and keep us posted on your progress.

@Steven Hawkins

Sorry for the late response. I would agree with the above statements, especially that Augusta should be growing in the coming years based on Cyber. Also I would add that if you buy a property that will cashflow after PITI, cap-ex and vacancy, fluctuations in the market should be less of a concern. As long as the home is producing cash every month it should not matter if the price of the home goes down in the short term. If you hold it long enough as a rental, the market should turn back up. Try not to worry about day to day or year to year fluctuations and think long term.

Also if you plan to live in the property for a year or two you should be able to get a very favorable loan. My wife and I bought a home in Augusta in 2015 with 5% down on an FHA loan. It produces solid cashflow every month after expenses and saving for future expenses. Rents could even go down 10% or more and we would be happy to own it because of the great financing we have locked in for the next 28 years.

One other thing. Make sure to take in to account what current rental rates are in the same area/neighborhood you are looking at to purchase. This way you can be sure the rent will more than cover all expenses.

Hello @Keenan Thomas,

My wife and I bought a home to live in, knowing it would eventually become a rental property in the Pendelton King Park area of Augusta. We have since purchased a duplex close by and are in the process of getting it rented out. We have used Shannon Rollings Real Estate as our property manager and have been happy with the results. They came highly recommended and have not disappointed.

I would suggest reaching out to a few property managers in the area. They should know the rental market and should have valuable information for you. Secure a good property manager and see what areas they would recommend purchasing in as a rental. 

That is my Two cents. Have a great night. Or maybe day where you are. Not sure of the time difference.

Winn Merwin