Great way to start off the year!

Great way to start off the year!

Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes

Hi BP,

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.

SPECIFICS:

-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:)

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New to Real Estate · Kansas City, MO · Member since 2017 · 19 posts · 12 votes
7y

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!

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  • New to Real Estate · Puyallup WA · Member since 2009 · 85 posts · 39 votes
    7y

    @Aaron Millis congrats!

    First as a fellow Vet thanks for you service.

    Great deal on the reno! When I see houses like that I used to think are going to take a ton of money to get up to snuff. So this was great to read that it's possible!

    It's was also great to read that you stood your ground with people that were "more" experienced than you. I used to think that everyone with the title or position had more to offer and more knowledge than myself, after speaking with quite a few, I now know that that is not always the case, and I by no means do I know everything. Great work man!

  • Gilbert, AZ · Member since 2016 · 20 posts · 7 votes
    7y

    @Aaron Millis - Congrats!
    Sorry about the novice agent. AWESOME JOB ON THE RENO PRICE!
    I am curious if you could have gotten this house deeper after how it shows and how long it had been on the market. Forcing appreciation is excellent, instant equity is fan-freakin-tastic. 5k off of list price pretty small after it sat that long, at least in my market.

  • Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
    7y

    @Daniel S.

    I wrote the jist of all my issues in a response to someone earlier in this thread. I’m not trying to be rude but it took a while to type so if you just look ^ you’ll find it!

  • Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
    7y

    @David Biederbeck

    You’re absolutely right about me probably being able to get a better deal. Even When they told me I was in a bidding war I was 90% sure that was BS. Just from a logical standpoint what I knew was that it had been on the market for a long time- and also when I had the structural engineer come out and inspect it he told me that he’d never inspected the house before.

    So that made me assume nobody ever really even got close to buying it- not that the structural report was a necessity, but I think any smart investor would check it out just to be safe.

    I basically told you all of that^ just to now say I didn’t care and I wanted the house so I didn’t try to go lower. I was basically in the I NEED a deal phase and not the I WANT a deal phase. I was finally financially ready to buy my next house and I was itching bad. The 10% chance that there was another buyer was enough for me to just give them what they wanted. So I probably could have gotten a better deal, but hey at least I’m self aware of my faults! That’s gotta count for something:)

  • Member since 2018 · 1 post · 0 votes
    7y

    Why did you not use a VA loan?

  • Fort Smith, AR · Member since 2018 · 41 posts · 62 votes
    7y

    @Aaron Millis

    This is super motivating to see and hear about Aaron! I’m 17 and just getting started and I have a feeling I’ll be seeing you posting your successes on here for a long time:) Best of luck to you, man.

  • Greenville, SC · Member since 2018 · 58 posts · 50 votes
    7y

    @Aaron Millis

    Congrats, keep up the good work!

  • Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
    7y

    @Georgie Sampang The property in the condition it's in would not qualify for a VA loan. I may refinance with one down the road.

  • Ottawa Ontario, Canada · Member since 2018 · 12 posts · 7 votes
    7y

    Thanks for the advice!

  • Henry R.Pro Member
    Rental Property Investor · Saratoga County, NY · Member since 2013 · 178 posts · 73 votes
    7y

    @Aaron Millis Hey Aaron that's a great story congrats! Thanks for sharing!

  • Rental Property Investor · Charlottesville, VA · Member since 2019 · 35 posts · 17 votes
    7y

    Please tell me more about the 5% rehab loan.  I haven't heard of that.  Thanks and congrats!

  • Christi HawkinsPro Member
    Columbus, OH · Member since 2017 · 237 posts · 142 votes
    7y

    @Aaron Millis Hi Aaron, how do you feel about renting properties to college students at Auburn University. I'm close to Columbus, OH, The Ohio State University and I always go back and forth on the issue. I would love to hear your thoughts on it

  • Rental Property Investor · Montgomery, AL · Member since 2016 · 179 posts · 188 votes
    7y

    @Christi Hawkins

    Hi! I don’t really have anything to compare it to because I don’t have any other rentals yet, but I love it. It’s very profitable renting by the bedroom vs the entire house. I know the typical cons of college rentals are - high turnover and possibly more damage to the property, but turnover is something you just have to budget for like any other expense, and the damage/wild part factor can likely be eliminated just by tenant screening.

    My place in Auburn is a pretty nice place a few miles from campus. My mortgage is $730 and I ask for $425 per room ($1700 total) and I don’t have really any issue finding good qualified tenants. The rent closer to campus is outrageous so people love my pricing even though I though I set it a little high haha.

    I was really hoping I’d be able to get some “daddy’s money” kind of tenants and that’s exactly what I got. All my tenants have their parents as their guarantors and all there parents have plenty to lose. I manage my own place and I use Venmo (a money sending/receiving app on my phone) as my means of accepting rent. I love that because the “chasing checks” thing doesn’t sound very fun.. and pretty much every college kid has Venmo or some money app anyway.

    It’s still pretty early but highly doubt I’ll ever regret buying my place in Auburn. The biggest thing for me at the time as a noobie investor was I was terrified of vacancy, and I figured no matter what happens with the housing market kids are gonna keep going to college!

  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    7y
    Originally posted by @Christi Hawkins:

    @Aaron Millis Hi Aaron, how do you feel about renting properties to college students at Auburn University. I'm close to Columbus, OH, The Ohio State University and I always go back and forth on the issue. I would love to hear your thoughts on it

     The OSU market is super strong here in columbus. i'm not sure what you go back and forth on. maybe it's damage that they may do. what we typically recommend is tenant proofing the property and getting a cosigner from a big enough group. 

  • Christi HawkinsPro Member
    Columbus, OH · Member since 2017 · 237 posts · 142 votes
    7y

    @Robert Ellis  I go back and forth because having been a college student I've seen the damage kids can do to an apartment. I didn't attend OSU but did come home for many many football games and remember vividly how the students treated their apartments after a Buckeye game ( win or lose!) It terrifies me thinking about it. However, when possible do you make parents co-sign and is there a % of parents who actually pay the rent for the student? What about Grad Students?  This is only my perception so I'd love to hear how it actually works but are Grad students more responsible? Sorry, for all the questions but has the OSU rental market become too expensive ( because it's so valuable) for a new investor to get a foot in.  I'd to hear what you mean by tenant proofing the property. I've never been a landlord so these questions may sound ridiculous to you but I've secretly been thinking it for a long time and I've always believed college towns were a good investment.  Who in their right mind wants to live in dorm anyway!!? I couldn't wait to get out 

  • Christi HawkinsPro Member
    Columbus, OH · Member since 2017 · 237 posts · 142 votes
    7y

    @Aaron Millis   That's great information, thank you so much!!! I completely agree with you about "daddy's money" kind of tenants and I was thinking that as well. While I was in college I saw both, some of my friends had parents paying the bills and others worked their butts off to be able to afford it. I'll never forget a conversation I had once when I young, stupid and naive about from where money came because I think I was 25 when I realized there wasn't a money tree in my parents back yard! I was a freshman or sophomore and one of our friends who was older than us said "I can't go out this weekend, I have to work" I swear to God I looked at him like he was speaking a foreign language and said "just call in sick, it's Homecoming, you have to be there with us." If I only knew then what I know now!!! Congratulations on your early start, keep up the great work and call your parents right now and thank them!!

  • Lender · Auburn, AL · Member since 2018 · 67 posts · 35 votes
    5y

    Love this!

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