All Forum Posts by: Annchen Knodt

@Jesse Soriano yes you are correct that after the 6 months you will no longer be limited by the purchase price - ie if you purchase for $60k cash and then do a rehab that boosts the value to $100k, under the delayed financing rules you'd still be limited to getting $60k out even though 75% percent loan-to-value using the ARV would be $75k (maybe slightly more bc you can include closing costs there and also any rehab funds you were able to include on your closing statement). After the 6mo seasoning you can do a traditional cash-out refi and get that full $75k.

@Brett Kingston You've got a lot of great advice on here and I imagine something that's been said already should help do the trick!  I'll add that surrounding yourself with successful people will be enormously helpful since 1) she can then see up close and personal examples of what's possible and 2) they can help you get to where you want to go!  Awesome that you've already got some tips on local gatherings.  

And if she's the type that could be inspired by stories of other successful women, you could definitely have her check out "The Only Woman in the Room" (stories compiled by Ashley Wilson).  There's such a wide variety of inspiring stories of the amazing things you can accomplish with real estate (besides just financial freedom) in that book that no doubt she (and you too really!) would relate to something in there.  And it's a quick read!

Good lucks and congrats on getting started early!

Hi @Tien Nguyen,

I'm a new-ish investor and have read a ton of books and my first advice is that you'll probably want to read more than one - so just pick one to start with and go from there!  Brandon's Book on Rental Property investing is definitely a good place to start, or Josh & Brandon's How to Invest in Real Estate ("the ultimate beginner's guide to getting started").  You may also want to consider the new BP book First Time Homebuyer - I wish that was around before I bought my first house!

I haven't come across a book with any specific advice on getting a house to live in then rent, but this is something I'm currently doing (bought a place I only plan to live in for a year or so), and I've uploaded the spreadsheet I used to run all of my numbers to the BP fileplace if you're interested: https://www.biggerpockets.com/...

Best of luck!

@Andrew Postell thanks for your input here - I've been learning about delayed financing for a while and based on everything else I've heard, not being able to put repairs in escrow is a surprise!  E.g. a lot of my understanding (and I think many others') is based on this blog post by Alex Felice where he talks about putting repairs on the HUD to maximize the DF strategy. My understanding was that he's putting them in escrow to then draw from as he does the repairs (in his example, it's $10k wrapped into "settlement charges" on the HUD), though I guess he doesn't say this specifically. If that's not actually allowed then that's very good to know!!

Hi @Jeremy Lee, what market are you looking to purchase in?  hopefully you can get some advice from folks there

Congrats!!  I wish I had bought anything at all in 2011 - live and learn! :-)

Hi @Jeff Regist, I agree with @Joe Jor that the estimate seems high.  That's close to $3/sqft for a fairly thin product - not terrible but you could likely find a better value.  

As far as additional due diligence, I'd make sure the contractor is including very thorough prep work to make sure the floor is flat / level to the LVP manufacturer's specifications, ideally including a layer of plywood underlayment (if your subfloor is wooden), or whatever is recommended in your situation for the product you are using.  With LVP under 4mm thick, any imperfection in the subfloor is definitely going to telegraph through, and it won't take a significant low area to cause a spot where the planks pop down / click when you step there.  You (and the flooring product) may have some tolerance for minor peaks and valleys, but also be aware that anything outside of the manufacturer's specs is going to void your warranty.  I say this because I learned it all the hard way when I recently replaced carpet with LVP, as I've described in this thread and comments.  Your contractor should in theory alert you to this as part of the install but I've definitely heard of MANY who did not.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $85,000
Cash invested: $35,000

Contributors:
Tom Knodt

Well-maintained 3bed/1bath that we bought as an estate sale from the family that had owned it since it was built in 1958! Only 900 sqft, but a very well-designed layout, and 600 sqft+ of additional storage space in the well-maintained sheds outside. Our property manager has been able to fill our Burlington rentals very quickly, so this one is working out well for us so far.

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

Good cashflow potential in Burlington NC

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

Our agent found it on the MLS. He had been watching the listings like a hawk and was able to alert us to this one minutes after it came on the market so that we could jump on it. Seems to be the only way to snag something off the MLS in the hot market these days!

How did you finance this deal?

We purchased in cash, roughly half of which came from a HELOC

How did you add value to the deal?

Unfortunately there was not much room for value-add in this one, and in fact our all-in cost (purchase plus mostly cosmetic rehab) ended up being a little bit above the appraised value. However, our returns are good so we are not too upset about that.

What was the outcome?

After 6 months, we did a cash out refinance and paid off the HELOC. Cashflow is currently >$350/mo for >12% CoC ROI. We hit all of our numbers goals except for cash left in the deal (close to the $35k).

Lessons learned? Challenges?

Purchasing our second property in Burlington was much less stressful than our first! We were surprised by rehab estimates from multiple contractors, and learned that COVID was causing increases in the cost of certain materials etc. So one lesson learned is that previous projects can provide a great starting point for estimating rehab costs, but it's also important to keep in mind factors that might cause the prices to fluctuate.

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

Yes, feel free to message me!

Thanks @David Schmiediche! We are normally aiming for at least $200/mo per door cashflow, and 10% CoC ROI. Very difficult to hit lately in any of the markets we are looking to buy!

Investment Info:

Single-family residence buy & hold investment in College Station.

Purchase price: $165,000

Contributors:
Tom Knodt

Relatively new (2008 build) 4 bed, 4 bath SFR that we are currently renting to students, about 15 min from Texas A&M. Cashflow and ROI are currently below our target, but we purchased it since we were able to get it at below market value and were advised that we would be able to raise rents (we have not yet been able to get as much as we originally thought).

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

We wanted to pick up rentals in College Station since the market is strong there with Texas A&M's continued growth. Further, it's not far from where my partners (/parents :-) live in Brenham, so it's easy for them to be the boots on the ground. We also liked that the house is positioned to work well as a student rental, but also for families.

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

MLS, was being sold by an out-of-state landlord. We negotiated a lower price based on below-market rents and sub-optimal lease terms.

How did you finance this deal?

Conventional loan

How did you add value to the deal?

The primary value was recognizing the potential to negotiate a considerably lower price on the purchase for built-in equity. We have also made some cosmetic improvements, fostered a better relationship with the tenants than their previous out-of-state landlord, and raised the rents closer to market value.

What was the outcome?

We will continue to hold and hopefully continue to get rents up.

Lessons learned? Challenges?

We have been learning more about the rent trends in College Station. Many areas of the market are saturated, preventing much room for rent growth. This plus the competitive housing market can make it difficult to find a cash-flowing rental with good returns.