All Forum Posts by: Charles Clark

@Randall E Collins

I hope all is well with you. It takes a lot to seek advice when things are not going your way. You recognized that your situation could be better and you are doing something about it. 

First, what are you trying to accomplish? You stated, looking for a big break. There are no big break. My first purchase was a four unit using a FHA loan. I was making $800 a month after expenses. That doesn't look like a big break on paper, but it changed my life.

Second, if you are flipping/wholesaling properties then you can not be in front of a computer. You have to be out meeting people and working on properties. That is how flipping/wholesaling works. How many offers did you write? How many properties did you go see? You can not look at properties from your computer screen and try to flip them. 

Third, do you have a team of people to call on? Do you have a realtor, a contractor, loan officer, insurance guy/gal, and attorney? If you don't have any of these people that you talk to on a regular, I have to honestly say that you been playing real estate and not doing real estate. 

Randall, I hope this helps you on your journey.

Beleza,

Charles Anthony

@Jacqueline Blue

I hope all is well with you. My strategy has been to signed MTM leases with new tenants. This allows both parties to get comfortable with each other. After a six month "trail period", I will go back to them and offer a year lease. Sometimes, I just keep it at MTM, because it allows more flexibility. I can give a 60 day notice to raise rent if I am in a MTM. Signing a two year lease locks you in at a rent rate that will be out of date when the lease is up. This will bring calm, because you won't have to worry about signing a lease; however, it is less money over the long run. I hope this helps from a different point of view. 

If you ever want to chat about RE, please feel free to contact me.

Beleza,

Charles Anthony

@Corlin Anderson , I hope all is well with you. Great question. I say go for cash flow, because it can deal with problems if they arise. If you go for appreciation and a boiler goes out. Equity in the property can't pay for a new one, cash flow does. 

Four units are the way to go, in my mind. I purchased my first investment property with a FHA and it was a four unit. Less than 2 years later, I have 15 units because I started with a four unit instead of a duplex. Leverage is the name of the game. More doors per loan helps you scale and gain a higher ROI. My goal is $150 a door, but I currently I average $300/door.

I hope this helps with your decision. If you have any questions or want to discuss further, don't hesitate to contact me.

Beleza,

Charles Anthony 

@Joshua King

Congratulations on putting an offer on a property. FHA loans have a bad wrap because of FHA appraisals. Yes, they are more difficult and sometimes harder to pass approval than conventional loans. With FHA, lenders will also ask for you to have 3 months of reserves to close the loan.

With that being said, FHA loans are the best way to go to start your investment journey. I used a FHA loan to purchase my first investment property. It was a four unit and I only had to put $7k to close on the deal. I had to have $10k in reserves also to close the loan. FHA was a game changer for me. Less than 2 years later, I own and manage 15 units, and it all started with a FHA loan.

If the seller doesn't want to use the FHA, then move on. It is a great financial tool to use to get your foot in the game at lower cost than a conventional loan. I am also an agent, well an Investor Agent, and I work with first time investors and I always suggest using a FHA to get their first property. It is a great tool to use with House Hacking. I closed on one deal last month and have another closing in December and both are using FHA.

I hope that helps you are your journey. If want to chat further or have more questions, feel free to contact me. 

Beleza,

Charles Anthony

 

@Larry Williams

Welcome real estate investing, landlord addition. Hire a lawyer. I found one in my market for $400 to handle everything. I am sure you can find one in your market.

Have everything in order. You need to have the lease, and please send your 14 day in certified mail. Do not give it in person. It is your word against theirs. Do not collect rent from the tenant. If you collect rent, then you are technically working with them so the judge will tell you to continue to do so. Once you send a notice, don’t send another one. It will start the timeline all over. For example, you give 14 day notice this month, then you give 5 day notice next month. The court will go off the 5 day notice.

Again, hire a lawyer that just do evictions and save yourself time and money. I tried to do it myself and it cost me over $2k to finally get the tenant out. Learn from my mistake and hire a lawyer. You can’t afford not to have one on your real estate team.

Beleza,

Charles Anthony

@Dwight Cook

I like MTM when taking over a property. It allows the freedom to cut ties if you don’t fit with the current tenants. In my market you just have to give a 30 day notice. When I sign a new lease, I also like MTM, because it is a new relationship and you want to figure out if you both are a good fit. Once you both accept that you are a good fit, then I sign a year lease.

Hope that helps with your direction.

Beleza,

Charles Anthony

@Dwight Cook

I hope all is well with you.

I was in your situation in 2019 when I purchase my first rental property, which was a four unit. When I took it over the rents were $575, in a market where rents are $750.

When I took over, I improved anything that I could in those first 60-90 days. After that, I gave a 60 day notice to the tenants that were on MTM leases. This allowed me to increase rent and keep my current tenants. However, this cause tenants to recognize that I was not going to be like the last landlord which caused some tension, but they did stay. After the first year, I decided to raise rents another $50, and one tenant put in their notice to vacant while the other 3 stayed. I was able to turn that apartment and raise rents to $750. Then another tenant put in their notice and then I was able to do the same to that apartment.

This year I was able to finish the third apartment to raise rents to $750, but then I decided to put it on the market. I should it for almost $100k more than what I brought. I put about $30k in total into the property and walked away with $76k before taxes. Turn around and purchase a five unit.

I say, take your time unless you have the cash to turn the apartment to make it worth $750. If you have tenants that have been in placed for 5+ years then the apartment is out of date. So improve the property where you can so tenants know you are different than the previous owner.

Feel free to contact me if you want to chat.

Beleza,

Charles Anthony

@Cam Flowers

Roberto is the GC. Contact me and I will give you his info.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Milwaukee.

Purchase price: $199,900
Cash invested: $25,000
Sale price: $288,000

First completed deal from analyzing to purchasing the property to adding value to selling for a profit.
I purchased the property using a FHA, and put less than $6k as a down payment. Rents where $575/ea, mn income = $2300, debt service w/ expenses = roughly $1600. W/in 90 days, increase rents to $625 ($50 increase).

Renovated 3 units to increase rents to $750/unit. Each renovation ran between $4-$6k with a total of $18+k

ROI: ($76,000-$25,000)/$25,000 = 204%

Beleza!!

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

It fit my strategy of using my FHA and knowing there was room to raise rents after renovation of units. The strategy was to buy and hold for the next 10 years. My goal was to refinance in 2022, but the market jumped 44% since I purchased the property.

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

I found the deal on the MLS. The price was right for the amount of rents that were being received and the possible growth of rents in the area.

How did you finance this deal?

FHA loan. I was able to get the loan but did not have the down payment. Received down payment and initial funds from outside investors.

How did you add value to the deal?

Found the deal, manage the property, and used investor funds to improve apartments and building.

What was the outcome?

Original purchase price: $199k

Down payment: $6k
Investment: $19k
Total Investment: $25k

NOI (11/2019 - 09/2021): $9k
Sales Proceeds: $67k
Total NOI: $76k

ROI: ($76,000-$25,000)/$25,000 = 204%

Now, I am using this return to invest in a bigger project. I went from 4 units to 14 units in under 2 years. Pick a strategy, analyze properties, talk to everyone you know about real estate, and pull the trigger when you find something that makes sense to you.

Lessons learned? Challenges?

Lessons learned is that you have to pull the trigger when you find something that meets your standards. And problems are going to happen no matter how much you prepare and you have accept it. It is the person who deals with problems who gets to dictate their income.

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

I was the listing agent on the deal. Carly Stack was the buyer's agent and did an amazing job communicating.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Milwaukee.

Purchase price: $199,900
Cash invested: $25,000
Sale price: $288,000

First completed deal from analyzing to purchasing the property to adding value to selling for a profit.
I purchased the property using a FHA, and put less than $6k as a down payment. Rents where $575/ea, mn income = $2300, debt service w/ expenses = roughly $1600. W/in 90 days, increase rents to $625 ($50 increase).

Renovated 3 units to increase rents to $750/unit. Each renovation ran between $4-$6k with a total of $18+k

ROI: ($76,000-$25,000)/$25,000 = 204%

Lets talk strategy. Beleza!!

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

It fit my strategy of using my FHA and knowing there was room to raise rents after renovation of units. The strategy was to buy and hold for the next 10 years. My goal was to refinance in 2022, but the market jumped 44% since I purchased the property.

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

I found the deal on the MLS. The price was right for the amount of rents that were being received and the possible growth of rents in the area.

How did you finance this deal?

FHA loan. I was able to get the loan but did not have the down payment. Received down payment and initial funds from outside investors.

How did you add value to the deal?

Found the deal, manage the property, and used investor funds to improve apartments and building.

What was the outcome?

Original purchase price: $199k
Down payment: $6k
Investment: $19k
NOI (11/2019 - 09/2021): $9k
Sales Proceeds: $67k
Total Investment: $25k
Total NOI: $76k

ROI: ($76,000-$25,000)/$25,000 = 204%

Now, I am using this return to invest in a bigger project. I went from 4 units to 14 units in under 2 years. Pick a strategy, analyze properties, talk to everyone you know about real estate, and pull the trigger when you find something that makes sense to you.

Lessons learned? Challenges?

Lessons learned is that you have to pull the trigger when you find something that meets your standards. And problems are going to happen no matter how much you prepare and you have accept it. It is the person who deals with problems who gets to dictate their income.

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

I was the listing agent on the deal. Carly Stack was the buyer's agent and did an amazing job communicating.