All Forum Posts by: Alex Gunnerson

Hi @David Yee, 

You will want to have somebody who can be your boots on the ground, who can check out the property and send you videos.

 I'm right there with you and this is always one of my main talking points in our debates. Buying a property right and forcing appreciation through fixing the property up is such a powerful strategy that is hard to replicate in the stock market.

 Love this. I have 4 brothers, all very competitive, gamifying this could be very interesting.

Adding another quote to my already too long list of quotes I love. Thanks for sharing.

 @Joseph Beilke "I personally only invest money that is market related to my TSP (401K) account. I only put in what the government matches dollar for dollar, which is 5% of my base pay. Then I put money into a IRA to off set taxes when real estate deduction are not enough. The rest goes into saving to buy my next cash flowing property."

This is almost identical to my approach. The 401k match is too good to pass up but I shove as much as I can away to buy the next property. I have gone back and forth on whether or not it is better to put that money that is set aside into the stock market or to keep it in savings. I can't stand the low return of a savings account, but I would never forgive myself if I found my next great deal BUT it was at a time when the stock market was tanking so I didn't have the funds I anticipated I would have.

 @Greg Scott I couldn't agree more. I just re-read Tom Wheelwright's 'Tax Free Wealth' which does such a great job of pointing out all of the awesome tax "loop holes" for real estate investing.

It might as well be a tradition at this point... Every year I get together with my family over the holidays and at some point, the debate gets brought up...

Is it better to invest in Real Estate or the Stock Market? These are always fun debates, and yes I know there is not necessarily a right answer as this is very situational, but I thought it would be fun to come to the table with some extra ammunition this year. My guess would be that MOST of you invest in the Stock Market and Real Estate, however if you will humor me for the sake of the upcoming debate... 

Pick one... Real Estate Investing or Stock Market Investing?

Yes you can do it yourself but I would be very cautious if this is the route you choose to go. Not only do you have to educate yourself on all of the ins and outs of the tax code so you know exactly what you are righting off and whether it qualifies (assuming you aren't already a tax expert), but you also need to make sure the cost segregation report is formatted perfectly, otherwise it could be flagged by the IRS. I'm not saying it can't be done, but personally, I like the peace of mind of not having to worry about screwing something up and having the IRS on my back.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $95,000
Cash invested: $23,000

3 Bed 1 Bath Single Family Home in Kansas City Kansas.

What made you interested in investing in this type of deal?

The home is in a good area and the price was great! I was also looking for a home that needed some rehab, this fit the bill.

How did you find this deal and how did you negotiate it?

This home was a For Sale by Owner on Facebook. There were no photos on the listing and the owner stated they did NOT want to work with an agent. I called the number immediately. The owner had 30+ homes in the neighborhood and was looking to start selling off her portfolio. I told her I wouldn't be able to pay all cash and pay 20k above asking like everyone else at the time, she didn't mind and was happy to help out a new investor start of his career. Don't give up, you will get lucky eventually!

How did you finance this deal?

I went through a mortgage broker and ended up putting 3% down on a 30 year fixed rate loan, 3.3% interest rate.

How did you add value to the deal?

New Roof
Carpet full of cat piss -> luxury vinyl plank
Repaired 2 windows
New Paint
New Counter Top
New Appliances
And more.... big project!

What was the outcome?

23k of my own money invested (5k down, 18k rehab)
$460 cashlow / month
19% cash on cash return

The numbers ended up even better than I had hoped. The rehab was a lot of work, I had a ton of help and for that I am very fortunate. I learned so much. Ready to find the next deal 👀

Lessons learned? Challenges?

1. Always be looking for a home, sitting on the sidelines while the market 'calms down' would of lead to me missing this deal
2. During renovation, unless you are a professional, everything takes about twice as long as you project it will.
3. Thumbtack app is great! I tried to do everything I could on the renovation side to save money, but for things like replacing windows, Thumbtack was an awesome resource to get many quotes very quickly.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, Steven May was my realtor and he was excellent. He is a kick *** investor as well. He was very patient with me and my very strict buying criteria.

Congrats @Robert E Erisman IV ! 28k less than asking? You don't hear that very often in today's market, good work.