All Forum Posts by: Ashley Wolfe

The long and short of it is we are looking to buy a better house to live in and rent out our current house.  Our garage is already in need of drywall and new electrical.  My thought is to go ahead and finish it out the garage as a full conversion with a half bath so we can add to our total square footage and room/bath count.  This would help us charge more in rent.

Several questions:

1. If we are looking to moving out in 30-45 days, would this be enough time for a contractor to do a garage conversion?

2. Would the cost of the garage conversion be a tax deduction since we are doing this for our REI business?

3. About how much could I expect to pay for a two-car garage conversion and adding a toilet and sink (washer line and a sink line is already installed, we'd just need to tie in the toilet)?

Thanks!

My belief that there is only one way, which my husband disagrees with.  So I have to find a way for us to invest where we are both comfortable.

I've yet to buy my first deal but have been actively learning, searching, and making offers on SFH since November. Some books that help with mindset are Secrets of the Millionaire Mind by T. Harv Ecker, The E Myth by Michael Gerber, and Think and Grow Rich by Napoleon Hill.

Also, like @Paul Timmins mentioned above, meet people who already do this.  Not many realtors know about MF but some do.  Start calling the numbers on the signs in the yards of MF units for sale or rent and ask them about the property.  Very quickly, you'll know if they're willing to talk to you or if they're just trying to make a sale.  I've even had one realtor tell me that he'd love to talk to me about investing till the cows come home.  Ask these realtors how many of their clients are investors.  That will also tell you more about how much they know about this side of RE.  Good luck!

Great advice, thanks!

Hello,

I've noticed two particular MF properties in the FT Worth area that have been on the market for approximately six to eight months.  One is a 4-plex, one is an 8-plex.  The 4-plex is listed for $189,900 and the 8-plex for ~$289,000.  When properties like this stay on the market without being snapped up by investors, should this be a red flag that there is more going on than meets the eye?  If these properties are both in C/D areas, is that an automatic red flag as well?  I thought that going into a C class property and rehabbing it to a B is one of the most common investing strategies.  So why are these still sitting there? (Sorry for the wonky formatting.)

As I understand, in LU, "passive" investors can invest their money in a MF deal or take a more active role as long as the lead investor is ok with them coming around to look at the property, asking questions, etc.  I work full-time so there is only so much activity and question-asking I can do if my money is invested.  I understand some of the very basics of a MF deal structure just due to what I've learned by reading about and listening to podcasts, not personal experience.  Since my situation is that we have money, not time, I'd like to invest as passively as possible with still staying informed about the progress of the deal.

Am I ready to understand every minute detail and how every tile is laid in the rehabbing of the units?  Definitely not.  If the passive investing role pays off and I feel an urge to learn more about being more involved, I'd most likely, through LU, attend trainings and become much more educated before even considering leading my own project.  And, honestly, that's not even on my radar right now.

That's why the PIG program at LU is so attractive to me.  I can passively invest in MF deals and choose my level of passivity.  And, as I see it, each group investing in MF deals that need passive investors will take a cut anyway.  The $20K at LU doesn't go to the lead investor, it goes to the company.  Now, another burning question I have (and maybe @Chris Soignier can weigh in on this) is how is that $20K utilized and distributed within LU?  At the LU two-day training, David Fisher said something to the effect that millionaires can't give their secrets away for free.  I also know there is a lot of overhead due to website, buildings, events, education, etc.  But I'd like to know a little bit more about what/who the $20K goes to.  That may be another reason why its so hard to pay the $20K up front, its a mystery where it goes.  And, as Del Walmsley says about losing money in the stock market, "Poof.  Its gone."

 Can you tell me more about this?  Do you mean that once our money is invested, we have to wait to get it back?  That I understand but if you have a different point, please expand.

 I agree with that.  I feel like we are going to pay one way or another unless we are leading a MF investment deal and are making the 5% that you mentioned in your post.  I guess it may just be harder to swallow for some folks to give $20K to a group to have access to the deals.  There wouldn't be a person or group out there who will let you invest with them and then all members of the group split profits equally without the lead getting more off the top.  So, 15% off the top for each deal or a flat rate up front?  Pick your poison I guess.

Hello,

I'm a basic member of Lifestyles Unlimited here in DFW.  We are comfortable right now with our membership level because it gains us access to the basic education, forms/paperwork for SF, vendor lists, discounts, monthly training and events.  The only way to invest passively in the MF deals through LU is to pay the $20K Preferred Investor Group fee.  After that, then we would pay the amount we are willing to pay to invest passively in a MF deal led by another member.

My husband and I are wondering if there are other ways that we could invest passively in a MF deal without having to fork over $20K that we'll never see again. That's a lot of money. We could put part of a down payment on our own SFH or Duplex and see returns on it if the numbers work out and we play our cards right. My husband keeps saying, "I'm not going to pay someone $20K to be a part of their little club." I tend to agree that this money, at best, gets us into a group of people that are investing and then, in order to get some ROI, we have to invest more money.

I'm very comfortable with the idea of SFH landlording and I've been trying to get our first SFH deal since December. We came within days of closing on the last deal and it fell through at the end of February. I'm still working on it though. So that is still a part of the plan.

If you have any thoughts on MF investing without having to pay into a group, let me know what you think. Maybe I'm making the idea of MF investing harder than it actually is or maybe I'm putting the cart before the horse and need some SFH deals under my belt before the MF. I do like the idea of passively investing in a MF deal to build some capital in RE that I could 1031 back into the next deal after the MF unit is sold or refinanced.

Thanks for your time and suggestions.

Ok folks.  Here is the update.  As many of you pointed out, we were the ones who defaulted first on our inability to get our end of the contract fulfilled in a timely manner with our loan approval.  However, the seller also did not hold up his end of the repair addendum even though he said the repairs were completed before closing.

Last week, we sent a letter to the seller demanding our EM back in full.  His agent sent us a letter giving us two options.  1) We walk away without our EM, or 2) we let the seller complete the repairs to our satisfaction and we close on the house.  We KNEW that if we trusted that seller again to do the repairs "the right way" it would still not be done to our satisfaction.  He had already proven his work ethic to us the first time (and we really should have paid attention to this at the open house and up on our first inspection revealing so many unfixed problems).  So we chose to counter with a request to split the EM 50/50.  The seller agreed and, I feel, we are all walking away relatively unscathed.  

Its a $500 education, compared to a $77,000 lesson.  That's not to say that we would have lost everything had we purchased that house.  I just think that the house would have been a royal, and far away, pain in the *** to manage, even if we had the best tenant in the world.  And, a bad product will only deter good tenants from staying and paying.  

So we keep on looking for houses, this time a little more close to home.  And I'm very cautious about houses that are obviously flips that still need fundamental work to be done.  And, I've learned a thing or two about trusting sellers to make repairs to my satisfaction.

Thank you all for your suggestions and perspective.  It truly helped me keep a level head throughout this experience.