A year in review -2017.. Where do you go from here?

Question

*Please keep in mind while reading this that I work 45-50 hrs a week in my corporate W2 job*

2017, or rather tail end of 2016 was the first year that I got really serious about Real Estate Investing. Prior to that, I pretty much had followed, buy, rehab, live, and then rent (after a yr) kind of strategy. That's a good start for anyone wanting to get started in RE, but that's not a scalable approach. I quickly realized as became active on the boards that 'real' investors did things a little differently.

Jan- April.

So I looked around the boards and got really interested in flipping. I even downloaded and read J Scott's book on flipping. Great book. I busted my a$$ for 3 months trying to find a single deal to flip. Even got in touch with HML. Finally found a deal, and went under contract only to discover at a later stage that there was a major encumberance issue that was unresolved. I won't get into details of that for the sake of this post, but long story short, the title insurance could not be obtained unless the issue was resolved, and given the uncooperative seller and incompetent agent, it was next to impossible to achieve. I decided to move on.

I quickly realized that I may have done lot of groundwork necessary to educate myself, increase my network for flipping, but immediate DC-Metro area was not conducive to flipping in the current 2017 real estate landscape.

May-June

Since, the immediate DC Metro area is not conducive for flipping, I decided to explore Richmond area. Richmond, VA is about 120-140 Miles from where I live. Not bad. I can make a quick day trip if I find something. Found a great realtor to work with and visited some properties. I found same issue with Richmond properties that I had with properties in DC Metro area. Properties are selling too close to the ARV, not leaving much room for flipping activity. So, I changed my strategy. It was June already, and I thought instead of trying to chase flips, I should look for what can be achieved.

July

Found a duplex in Church Hill area of Richmond, VA and decided to go for it. I closed on July 27th. Finally got something achieved, so this year was not a complete waste.

Advertised price - $125 K

Offer Made - $77K

Counter Offer - $105K (Counteroffer accepted by buyer)

Appraisal came at - $124K

Property is performing well - minus some tenant headaches of getting paid on time. Note to self. Not to accept inherited tenants anymore. Accept the property vacant, and put your own tenants even if it means not getting rent payments right away.

Miscellaneous Expenses include - Lawn mowing and Insurance. Had some court costs as I had to file eviction suits against both the tenants. Once the suits were filed, they started paying right on time without any fuss. Amazing what a little bit of show of strength can do.

Utility bills - Paying Electric for 1 unit and water for the entire duplex. (Changing this soon, and the tenant will start bearing electric bill for a small discount in rent)

Deferred maintenance - Only cosmetic. Roof will have to be replaced in another 5 yrs or so. It's about 20 yrs old.

August - November

Dealing with tenant issues from the sale of the Duplex. It has been somewhat of an emotional roller-coaster ride. But looks like worst is behind us.

December

Did some soul searching and decided which direction do I want to go. I cannot see myself doing real estate full time, but I do want to increase my portfolio to create long term wealth. I do have a well paying corporate job with full benefits. Just because so and so says, he wants to flush his job down the toilet doesn't mean that's the best suited strategy for me.

Most importantly, this year, in 2017, I was able to answer 3 very important questions.. Who Am I...? Where am I going? What am I going to do when I get there...

In 2018, I have decided to take my real estate out of state. Currently I am in talks with various Turnkey Providers to work with for OOS investing. I am also in talks with another gentleman I found on BP, who works with other investors in one of the hot markets, allowing them to keep more equity than any TK provider. So basically, I am exploring various options..

How was your 2017? What are you planning to do in 2018?.

Off to a great 2018...

Dilly, dilly..

Eric James · Answer

In 2017 I moved from an area of the country where I would never buy RE to a place that is more conducive to REI. Found a local lender and have purchased 4 houses to flip. The 1st has sold, the 2nd is for sale, and I'm rehabbing the other 2. Flipping these places has increased my capitol to begin purchasing more rental properties, and I have one under contract. Once I have sold my remaining 3 flips my goal is to continue purchasing a rental property each month (or as close to that as I can). Goal for 2018: purchase 9-10 new rental units. Good luck to everyone!

Julius F. · Answer

@Chinmay J.

Thanks! Sounds like you got in at a good time and had a good amount of initial capital to start with. Keep up the great work!

Chinmay J. · Answer

Sure.. I have bought in Manassas, Ashburn, and Leesburg area. All were bought as short sales between 2011-2015 and rehab costed somewhere between $10K - $30K. I have very good equity in these houses.

Chinmay J. · Answer

Yes, you did... That's great.. Good luck to you. Wish I had done what you are doing at 23.

Chinmay J. · Answer

So where do we go from here? This is where we go, and this is how we do it..

After flirting w/ TK properties for about 2 months, I decided to call it a day on that idea. Details of the post are listed here. Click Here ! I decided to focus my attention on Richmond where I already have a Duplex (as mentioned in the thread above).

After about month (starting Jan, 2018) of combing every single deal on MLS with a fine tooth comb and contacting wholesalers and FSBO property owners, was able to make couple of offers only to be outbid by other investors, or being late to the game by a day or so. . I was mostly focusing on Duplexes, and the inventory in Richmond area is pretty sparse right now for Duplexes.

One fine morning, my realtor sends email with a listing that just came on MLS the night before. The pictures look great. The property is priced for competition. I tell him to go and look at the property right away. We make offer the same afternoon for 2K over the asking price, and it gets accepted right away.

Here are the details

Asking Price: $92,000

Offer Price $94,000

Contingencies: As Is with only Inspection Contingency. No repairs will be requested.

Existing Tenants: One side of the duplex is currently occupied by a tenant, and the owner who lived on the other side and rehabbed the place. He has developed somewhat of a friendship with the guy, and doesn't want to kick him out. Understandable. I would also not want to kick out my friend.

I would have rather he deliver me the property vacant and free of any tenants, but that didn't seem possible. The seller exhibited.. "Screw you.. Take it or leave it.I ain't kickin' out maa homie." attitude. Given that it's a seller's market.. Hardly a surprise.. You have to play with the hand that is being dealt to you.

Thankfully, the seller permitted me to do due diligence on the gentleman, and looks like promising tenant - based on the application he has filled out. I will do more in depth diligence once I get the title to the property and if he doesn't pass the conditions, he will be shown the door. He is on MTM, which is a good thing.

Appraisal came back at $98K. Closing on 3/15/18. All fingers crossed..

One side is fully refurbished. Other side needs some light touch ups. The outside is in need of light touch ups. According to the inspector, about $3K-5K. Nothing too extensive. Most of it can be deferred.

Ask away any questions you may have..

How is 2018 treating you so far? Have you upped your game?

Dave Ramirez · Answer

if you buy a couple more units you are going o have to make the decision to get a property manager r spend more time in the Richmond area. Sounds like you are pretty busy in Loudoun County too!! I think the decision for a property manager is coming pretty soon for you. By The way, I use Cozy to collect rents and I let them be the "heavy" with email and text reminders. It's a free service. I would love to JV with you as well. I am in Loudoun County ("Cashburn").

Chinmay J. · Answer

That's pretty solid goal, and its quite commendable that you were able to move.

Chinmay J. · Answer

I had tried to partner up with others in the past, but couldn't complete any deals to fruition. It can be very easy to get into one, but very difficult to get out of it when things don't go as smoothly as once people thought they would.

Maybe one of these days I will do a big MFU complex under a partnership/JV, but those days are in somewhat of a distant future for me.

Jay Helms · Answer

@Chinmay J. - DILLY DILLY! Here’s where I’m going: https://www.biggerpockets.com/blogs/8160/69274-time-to-reflect-time-to-set-2018-goals-and-begin-pursuit

Like you, I have a W2 but I do want to make REI full time. Thoughts on a partnership?

A year in review -2017.. Where do you go from here?

A year in review -2017.. Where do you go from here?

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