All Forum Posts by: Brittany Kuschel

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $225,000
Cash invested: $15,500
Sale price: $275,000

The longest LIVE-IN flip in history! Really though, I spent the first 6+ years trying to get my husband on board with investing.

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

We were first-time homebuyers and our lease was ending.

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

This property was listed in the MLS for $234,900. We wrote a letter to seller explaining our circumstances and analysis of comparable sales. They countered and we settled on a sales price of $225,000 with sellers contributing $3,000 towards our closing costs.

How did you finance this deal?

We utilized conventional financing with 10% down. We elected to use a semi-local community bank.

How did you add value to the deal?

We made modest improvements (mostly cosmetic). The last two years we owned this property, we gave it a major upgrade with an upcoming move in mind. Most improvements were DIY and cosmetic only. We added a small retaining wall in front and French drain on side of home for approx. $2,000. We updated (paint, new flooring, new light fixtures, new hardware, new mirrors) both bathrooms for less than $1,000. We re-painted most rooms top to bottom (and painted some trim white from honey oak) and re-did

What was the outcome?

After all expenses paid, we were able to use approx. 40k in equity from this home towards the purchase of our first two doors in Lincoln Park, and we netted approx. 100k to put towards our next big purchase.

Lessons learned? Challenges?

Get started with investing sooner! If starting over, buy a multi-family property as a first home. House-hacking is the BEST way to get started on your path towards financial independence.

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

Yes, I was not licensed at the time and we worked with Jeanne Tondryk. She was extremely patient.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $225,000
Cash invested: $15,500
Sale price: $275,000

The longest LIVE-IN flip in history! Really though, I spent the first 6+ years trying to get my husband on board with investing. The last two years we owned this property, we gave it a major upgrade with an upcoming move in mind. Most improvements were DIY and cosmetic only. We added a small retaining wall in front and French drain on side of home for approx. $2,000. We updated (paint, new flooring, new light fixtures, new hardware, new mirrors) both bathrooms for less than $1,000. We re-painted most rooms top to bottom (and painted some trim white from honey oak) and re-did flooring in entry and kitchen. New carpet installed in finished basement. We hired out the flooring and exterior paint. We updated the appliances in kitchen and replaced hardware. Prior to the sale of this property, we were able to use the equity from this home to purchase our first two doors in Lincoln Park, Duluth, and still had about 100k in liquid to use towards the next big purchase.

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

We were first-time homebuyers and our lease was ending.

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

This property was listed in the MLS for $234,900. We wrote a letter to seller explaining our circumstances and analysis of comparable sales. They countered and we settled on a sales price of $225,000 with sellers contributing $3,000 towards our closing costs.

How did you finance this deal?

We utilized conventional financing with 10% down. We elected to use a semi-local community bank.

How did you add value to the deal?

We made modest improvements (mostly cosmetic).

What was the outcome?

After all expenses paid, we were able to use approx. 40k in equity from this home towards the purchase of our first two doors in Lincoln Park, and we netted approx. 100k to put towards our next big purchase.

Lessons learned? Challenges?

Get started with investing sooner! If starting over, buy a multi-family property as a first home. House-hacking is the BEST way to get started on your path towards financial independence.

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

Yes, I was not licensed at the time and we worked with Jeanne Tondryk. She was extremely patient.

@Tom Henderson

Curious, did you ever find a solid company or third party that would handle RUBS calculation in MN?

You are welcome!  I just sent you a DM with some lender contacts. 

@Chris Aronson Congrats on getting started so young!!!  It is always exciting to hear from investors who get into the game at an early age.  

For our area, your vacancy rate is going to fluctuate significantly depending on where the property is located.  Based on what you're discussing for rents, I believe you to be contemplating a property in an area where the vacancy rate is going to be closer to the 1 - 2.5% mark.  I have worked with a number of seasoned investors in the last few years that have 15+ year track records of 0% and 1% vacancy rates!

Regarding the CapEx, I don't think your figure is too high given our traditional housing stock. However, if the property has a newer roof, newer windows, updated plumbing and/or electrical, updated heating system etc., it is possible that this number could be adjusted downward.

Regarding property management, I have found that nearly all of my past owner occupier purchasers choose to self-manage. If you are working to calculate costs for property management once both/all units are occupied by tenants, your figure is low. With most properties that I see managed professionally, rates start at 10% of gross rents.  With a multi-family property, you could also explore the option of utilizing the RUBS method for allocating utility costs to tenants when utilities are not split but there would also be an increase in your property management fees for such an arrangement.

Let me know if I can help with any additional questions!  

@Noah McPherson

I always recommend that clients look at the following when analyzing duplexes in our area:

• Rents & Terms of current Lease Agreements
• Owner costs (Are utilities split?)
• Parking (does the property have non-conforming off-street parking concerns?)
• Is the property actively licensed as a Rental?  If so, when does license expire?
• Opportunity to increase rents?
• Evaluate bedroom dimensions & square footage for each unit
• Fuel source for both units? Can you convert to natural gas?
• Estimated short term and long term repairs (ask your Realtor about this) - Because our housing stock is quite old in Duluth, this is one of the most important factors in assessing whether a deal makes financial sense (verify age of mechanicals, roof, windows, water heater(s), appliances, siding, exterior, electrical, etc)
• Does the building have laundry hookups?
• Review crime mapping in and around the area

There are obviously a number of additional factors we discuss when evaluation a particular property in a particular area but those talking points tend to be best reviewed/discussed with your trusted Realtor.

Please feel free to shoot me a DM if you have any specific questions that my team can help with!

@Brandon Lubich I am so happy to hear you were able to reach a resolution!  So many folks are navigating tricky tenancy circumstances these days.  Sounds like a win-win for you all though. I've been seeing more rent-backs on the purchase side and can't help but wonder how many folks are dealing with sellers who refuse to vacate after the rent-back period due to lack of inventory and/or available housing...all the more reason to have make sure that Addendum/Amendment includes a fair non-performance per diem.

@Brandon Lubich Mark Pilon at Hanft Fride has a great deal of experience with 1031 exchanges, as do a number of his partners.  I also highly recommend Bill Burns and Holly LaBoone-Haller for real estate attorneys out of that office!  Holly and Bill have assisted a number of my past investor clients.

So sorry to hear that you are dealing with non-cooperative tenants!  

@Ty Jackson  I used to work for an attorney here in Duluth that was licensed in both MN and WI and he often assisted clients with similar needs.  His name is Mark Pilon with Hanft Fride.  He has a few partners who could also likely assist in the event he is not taking on new clients.  Feel free to PM me with any questions.

@Craig Hansen

Welcome to BP!  Please feel free to reach out to me DM if you are interested in connecting!  I love most things real estate and always welcome the opportunity to have a discussion about market trends and/or local investment strategies that you're thinking about.  I work with a large number of investors from all different approaches and would also be happy to recommend a great real estate attorney, local CPA and title company.

I too remember watching those Carleton Sheets infomercials as a kid and being struck by how attractive real estate investing sounded ; )  I'm a bit more risk averse than the no down payment approach but we can touch on those discussions as well if we get a chance to connect.