What’s up BiggerPockets, Alex Felice here. I’m going to tell you a story today about how investing in the BiggerPockets community helped me and one of my fellow investors in town put together this fantastic deal and find the right contractors, the right property manager, and the right people to really turn this deal around and really give my friend Jeff the confidence to move forward with it and make it profitable.
Hi, I’m Jeffrey Hall, father of five and U.S. Air Force veteran, I’ve been investing in real estate since 2011, and today we’re going to go over some things I’ve done wrong and done right.
So while overseas, I was trying to decide what to do with the first rental that I attained. I actually was thinking about selling it and I needed to figure out a way to run the numbers. So I ran into BiggerPockets. And what I found through their YouTube pages is that it wasn’t that I needed to sell my property, it’s that I didn’t understand why I bought it, what it would take to keep it, and what I could do next to actually get better.
So today I’m going to run you through this house. And while we’re looking, we’ll take a look at the numbers, what I did wrong, what I did right. And hopefully, by the end, the list of things that I did right will be longer than what I did wrong.
I have a tri-level home that I just bought via VA Vendee. I’m super excited about it, the renovations haven’t even begun yet.
On the main floor, you have the dining room, the kitchen, and the living room. Down below is the second master suite or the master suite. And then upstairs has the actual master bedroom and two other bedrooms. So this is a tri-level, four-bedroom, three-bath home.
If you look at the living room, the first thing you notice is that number one, it looks like renovations have begun, even though I said they have not.
What I went through with this house was a good lesson on business practices and using reputable companies to do work for you. The issue I had with this home was that I agreed to let someone begin work on it because I felt bad for them.
We’re going through these hard economic times and I went against my better judgment and swapped out the contractor I normally use at the last minute for a new one, trying to help them out. And then to make matters worse, they weren’t able to complete the renovation, obviously. So they’re already gone.
This is something that I feel like can discourage potential real estate investors. However, what I’ve learned is you just have to keep the momentum going to see it through. So I didn’t lose a ton of money, maybe ate a little bit of my pride. But at the same time, as we look through the house and we talk through what I did to rectify my choices, hopefully we’ll see that everything will come out okay.
Reimagining the Layout
Upstairs, there’s the shared bathroom, spare bedroom number one, spare bedroom number two, and the original master bedroom.
However, I have a couple of ideas to do some slight updates on this house. After a walk through the house, realizing that there are a lot of big families in this area, I have some ideas to actually switch the master bedroom from upstairs to the master suite downstairs.
This is my favorite part of the house. I have five children, and when I walked into this house, I immediately knew what this downstairs would turn into. It is another master bedroom with its own bathroom that is completely separate from the rest of the house, offering peace to whatever parent decides to take the downstairs.
So the struggle I’ve had with this property was hiring the wrong people. This is very common from beginners to more advanced level real estate investors. The way I rectified this was, again, through people.
I had met Alex through BP and reached out to him and he offered up for me to come to a real estate function. At that one meeting, I met the property managers and construction workers that I needed to get me not only through this property, but to fix the issues that I had with my other ones.
For a lot of new investors, this is the most complicated issue you will run into: making sure that you have the right contacts to get the job done.
I’ll go over it a little bit, but we’ll talk about the VA Vendee program and some of the things that I like about it and some of the benefits that I’ve seen through using this program.
What is the VA Vendee program? That is the actual Department of Veterans Affairs answer to offloading foreclosures that they’ve obtained for people who had VA loans. They offer 5% down, very competitive fixed term rates, and they’ll repair anything that is considered a safety hazard within the house.
So typically what you end up with, with a VA Vendee program, is a little bit tougher guidelines to get into the house. But the house you’re getting is actually a very competitive price and typically will be in better condition than some of the foreclosures that you’re used to looking at.
I got the house for $94,000. The down payment and closing costs got me to $9,800 out of pocket. I’m paying $5,600 for all the renovations, which again is completely attributable to meeting the right people. The fixed payment is $655 dollars a month. And the best part of this deal is that I already have a tenant in place who has paid a deposit for $1,280 a month, even though it isn’t done.
It’s a tremendous peace of mind to know that you already have the income waiting for you when it’s done. I’m sleeping like a baby with this deal and this is setting me up for what’s next.
Was there a time when you had the right—or wrong—contacts for a job? How did it help (or not)?
Share your story in the comments.