It's always nice when you get to click "Real Estate Success Stories" as your Forum Category:)
I would just like to share with the community that I am now an owner of 2 properties, because I just closed my 2nd deal yesterday! This process was about 100 times more stressful/difficult than my first purchase. I purchased my first property about 20 months ago right off the MLS. I bought it for exactly what it was worth and closed in 30 days.. there was no fancy negotiation or value add play. I was simply buying it as a house hack and it worked out well for me, better than I could have anticipated. The property is in Auburn AL, and I was very fortunate because the value on that property has risen by about $45,000 in the last 20 months due to the market getting crazy hot here.
Though I did not have any control over the value add with my property, I did understand how powerful it was and how it gives me a lot more options as far as: selling/HELOC/cash out refi/etc.
So this time around I decided to do value add on purpose rather than hoping to get lucky again.
The property I have just purchased is in the south part of Montgomery AL near Vaughn Meadows. It was a foreclosure that looked like a train wreck in a lot of ways- which turned out to be because it was vandalized. To include to copper wires being stolen from basically everywhere imaginable, the entire ceiling in one of the bedrooms was caved in, and to top it off it looked like there could be foundation issues.
The property was on the market for about 6 months and I imagine its appearance scared off all other would be investors. But I decided to take a closer look.... After a few inspections, a lot of headache with my realtor, and a lot of headache with my lender, and a lottt of headache finding a contractor- I ended up going through with the deal. Maybe on a future post if anyone cares I will elaborate on my realtor/lender/contractor headache because it would be a lottttttttttt of typing haha.
-list price: $75,000
-purchase price: $70,500
-loan type: conventional renovation loan - 5% down payment/have to live the property for a year
-Reno cost: $12,700
-Total price: $83,200
-Cash invested: $9760
Structural engineer inspection $450- Home inspection $350- Earnest money $2,000- down payment $4160 (5% of $83,200) closing costs $2800.
- Appraised value: $124,000!
When I started investing about 20 months ago the only RE knowledge I had was from BiggerPockets. And that is 99% the case today. Anyone reading this that is just starting out and wondering if this site is legit and if you can actually benefit from REI I'm here to tell you it is/ and you can. If you think you need to buy into some "investing course" or pay a coach or mentor you don't. The books, podcasts, and forums on here are GOLD and they cost you next to nothing.
When I started investing I had about 25K to my name saved up from the 4 years I was in the military(lower enlisted). 20 months later I have over $100,000 in equity between my 2 properties and one of them is cash flowing beautifully.
I left a lot out but I'm trying to keep this shorter than my last success post.. so this concludes my success story:)
Awesome job @Aaron Millis ! I think it's really cool that you were willing to take the plunge into a true renovation project and come out the other side with some profits! Keep up the hard work and I'm sure you will have plenty of 'success stories' to share with the community.
Thank you for your service!
Wow, congrats! I feel like this is the picture perfect scenario for why BP was created.
I grew up in Montgomery, and graduated Auburn (War Eagle).
Onward and upward!
Very proud for you!! Can't wait to see all you accomplish!!
Wow that is great news. I would love to know more about how you got started as i am to looking into investing. The auburn area is where i am looking to invest at.
Congrats on your second property. Looks like your hard work paid off!
I'm currently looking at a property that has foundation leaks, ceiling leaks/damage and a bunch of other work to be done. Any tips or advice you can offer to this new investor? Did you do all the reno work yourself?
CONGRATS! you're inspiring a lot of people. Keep up the grind and never look back. Way to go.
My take away is, rehab and repairs in California are just so inflated. Foundation work alone would probably be $5,000-$10,000, drywall, flooring, kitchen, bathrooms, roof, ceiling repair, electrical, plumbing, etc. for that size house would be easily $30,000-$40,000 in my experience. Labor and material out here in CA is depressing.
In a recent flip I did I needed to run a drain pipe from the laundry area to the kitchen about 10 feet away. All that was involved was remove some concrete, run a pipe and tie it into the kitchen drain pipe. The contractor quoted me $2,000 for the job. I feel like it was about $200 in parts and $1800 in labor ( he was done in 2 days)
I am so envious of people who own, rehab and manage properties in areas where costs are so much more affordable for the average person. A new roof in CA is $8000-$15,000. A new roof on a similar size home in Oklahoma....$2400 -$3500
Congrats Aaron! Very inspiring post.
Congrats! That’s crazy that you spent under $13k on renovations. That looks like a lot that needed done. Would like to see full after pics.
Well done @Aaron Millis , great job and great result!
Thanks for sharing! Congratulations - I'd love to hear your headaches stories actually. I feel there most likely is good info to learn about from we new REIs. Cheers!
Congrats on your 2nd purchase. I’m looking to get started with Investing and need all the education and encouraging stories I can get
Congratulations. I am looking into real estate investing also. I am in the Indianapolis, IN area and I have noticed a lot of houses that may have potential. I hope I can have as much success as you. Good luck on your future endeavors.
Congratulations Aaron! I love to hear these types of stories, please keep 'em coming and thank you for your service. I admire your courage in taking a calculated risk and making good.
Congratulations! And thank you for sharing real world experience!
Congrats on the second investment, @Aaron Millis ! Looking forward to following along with your success. All the best!
Congratulations!! Would love to hear more about the issue you had purchasing the second property I am new to this as well and was wondering if you had to get an llc for tax purposes?
@Tuan Pham Thanks man. I would definitely recommend finding a structural engineer in your area to do an inspection on any property that you are considering buying. I know nothing about foundation issues ( or really most home issues at this point) so I didn't bother trying to make my own opinion. And I imagine that's what most people did. The house looked scary so they walked... I paid an expert $425 and he told me that it was all cosmetic and that it wouldn't need any repairs because the foundation hasn't shifted in a long time and likely wont again. Best $425 I ever spent.
Today I looked at another property and paid the $425 and found that the house is going to need significant repairs. Maybe more than its worth, so I may have just thrown that money away. But to me its worth knowing for sure. Don't just not buy a house because its been on the market forever, there are a lot of lazy investors out there!
@Austin S. Pogue Thanks man!
I'll try to give you the quick(ish) rundown on all headaches I've had from this, hopefully it will help for your future endeavors!
Agent Issues: Basically the agent I was using flew out of town when I found this house and wanted to make an offer. I'm a veryyy impatient person so rather than looking around vetting realtors to see who seemed like they would be a good fit- I just called some random broker and he assigned me a realtor. I had already found the home so I figured who the agent was didn't really matter because I didn't need him to do much for me... Well for starters he tried to lean me away from pursuing this house, though he didn't really have much reason. He just saw cracks in the wall and a missing ceiling and kind of wrote it off. Also he had 0 experience with fannie mae forclosures so he really didn't know any more than I did about anything. He assured me that I would have 15 days for my inspection period.. he ASSURED me - come to find out when I read the agreement I have 10 days not 15. And when I told him "hey its only 10 days" he was like "Okay sounds good" and acted like he never told me otherwise...
All of that is pretty minor - the huge thing was when he told me that I was in a bidding war with some other person and that my offer had been denied and that I was out of luck because that was my last day to bid...... I was pretty pissed after that and I was just sulking telling my gf that the deal fell apart. But after like 30 minutes of feeling bad for myself I decided to call the listing agent to see wtf had happened. He informed me that I still had until the end of the day to put in my final offer (There probably never was another bidder). So I called my realtor and told him he was wrong again- then he put in my offer- then I got it. So I'm not saying the lesson here is to not trust your realtor- but after that I will forever verify everything for myself because he almost cost me an amazing buy because he's misinformed. - this actually made me decide to get my license, which I'm in the process of now!
Contractor Issues: I had a contractor that I was initially going to do the work for me but he was realllllly bad at communicating. Like I would have to email or text him 5 times to get a response. Eventually he just stopped responding altogether which left me scrambling to find a contractor (2K of earnest money on the line- that I definitely don't want to lose). I found another contractor that seemed decent. Until he took me to a house he was working on. Seemed like he was pretty good because everything looked great as far as I could tell..... Then one of his worked lit up a cigarette right in the middle of the freshly remodeled kitchen that they worked on for an out of state investor! That was enough for me to walk away. After that I literally called over 100 people trying to find a contractor. I eventually found one though, his price was $4,000 higher than my initial guy but he seemed like he was an actual legitimate trustworthy guy. So I went with him, and it worked out great.
Lender Issues: My initial lender didn't have a clue how the construction loan worked. Pretty much every question I asked him he didn't really know the answer to and that just made things difficult to get going. Eventually I just called up the same bank (Renasant Bank) but one town over and asked for someone that knew what the hell they were doing haha. I found a guy who claimed he could help me, and he did. He was a tool to me at first though. I think its because he could tell I'm young.. or maybe that's just how he is I'm not sure. Either way it was very aggravating working with him and on one phone call I kind of snapped on him and told him to stop talking to me like I have no clue what I'm doing. After that things eased up a little but I could tell he was expecting the deal to fall apart due to me being incompetent or something. This one has a happy ending though because he was the one that called me to tell me what the house appraised for ($40K more than I paid). He was stunned on the phone because I think in that moment he finally realized I'm making a nice chunk of change.
You are so brave to take that on! And young so I'll say I'm proud of you. :-) Congrats!
@Ethan Schneider I just wrote a novel on my issues somewhere in here haha. As far as your LLC question no I do not have an LLC or anything like that for either of my properties.
That doesn't mean getting one is a bad idea.. honestly I could not give you any advice on that because I know pretty little about it. I just decided to open an umbrella policy after getting my tenants in my first property. Its wayyy less expensive than I expected it to be, and It follows me wherever I go and I can raise or decrease the limit whenever. That doesn't mean that I wont eventually get an LLC but this is my thought process.
I've seen people on here/ met people that have business cards/LLC's/ and all that other fancy stuff- but they haven't actually done any deals. Obviously there are perks or reasons to get all that stuff and I'm not saying its pointless- but I think taking action should be the most important thing on your mind. After all what good is an LLC if you don't have a property or anything to put in it?
I'm big into basketball so I like to make basketball analogies for real estate related things ha.
Don't be the guy that walks into the gym decked out with a headband, shooting sleeve on both arms, doubled up highlighter Nike socks, A tank top that says "Ball is life", compression leggings, and a $400 pair of Air Yeezy's- shooting air balls all day.
Be the dude in the T shirt and shorts schooling everyone!
Nice job, Aaron! Wishing you a successful and prosperous 2019!
@Dallas Hynes Thanks man! And you're absolutely right. Those are just a couple pics and the 13K is just what I had the contractors do. It's still going to need a good bit of work, but I'm going to do the "Live-in-flip" thing. The current appraisal is not what the ARV will be. So more money will go in, but more should be coming out as well.
I tried to keep the post shortish.. my last one was so long that few people bothered to read it hahaha
@Peter Hanson Thanks man! And wow those numbers are kind of depressing! Good thing you've got beautiful beaches, beautiful women, and beautiful weather to cheer you up over there haha.
All we have here is Nick Saban and incest haha
Thanks so much for the share! I'm looking forward to investing for my first BRRRR in 2019!
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