All Forum Posts by: Christina Linn

Congratulations!!! I hope it goes better than you hope!!

@Marc Turenne I agree with @Jairo Ortega and would like to add that you can keep an FHA loan and move after a certain amount of time (I think it's two years, but don't remember) if you are doing so for a new job. That's something to consider when determine your path for your first investment. Some other subsidized loans require you to live on-site during the duration of the loan. I strongly suggest a multi-unit if you can afford the down-payment and get approved, as you can live for cheap or free and learn about landlording on-site. This is helpful even if you plan to be remote later

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $59,000
Cash invested: $10,000

This is one unit in a duplex (or townhouse) and it just fell right into our laps. The owner was losing her tenant and wasn't allowed to legally rent out the house, so she was going to allow it to be foreclosed on. The tenant is a lifelong friend of mine and contacted me about it, saying she would sell for what she owed ($41k-ish) - this was on Thanksgiving Day. The next day we got in the car to look at the house, thinking it would be so horrible we wouldn't want it.

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

The price was amazing. I am extremely familiar with my market and I know that these townhouses (they should really be called duplexes) sell for $115k after days on the market. They are the only houses that consistently sell quickly in our market. The price was it for me though!

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

Like most of our deals it fell into our lap. The tenant was buying a house and felt bad that the owner was going to let it go to foreclosure, as she lived out-of-state and had a type of loan that didn't allow it as a rental. There was no negotiation necessary. We offered $41k or balance on mortgage, whichever was less and we offered to cover all closing costs. When liens of $27k came up I taught seller to negotiate with collection agency and they settled for $17k. We paid just over $59k.

How did you finance this deal?

We put it on credit cards... I did not want something else to come up as far as liens and didn't want the seller to get cold feet, so I put on credit cards to allow easy close. We refinanced just over a month later and took out equity to pay off personal debt.

How did you add value to the deal?

I am still working on this house (2/24/19). We will paint the interior (exterior this summer), replace carpet, we put tile in bathroom and kitchen, replace appliances, and hang new doors. This is a big home and we are going to finish the basement with a theater room to add value as a STR. We will use it as STR to cash flow more, but may convert to LTR later, depending on convenience.

What was the outcome?

I did a couple days worth of work on this deal and made $55k right off the bat. Since then we have added tile floors and will finish the basement, which will increase value about another $15k. This will cash flow very well and will be a great property to sell if we fnd ourselves in the position of needing to sell.

Lessons learned? Challenges?

It was nerve-racking to put this house on credit cards and it dropped my score significantly until we refinanced. As with most of our deals, I learned that thinking outside the box and making decisions that will be fruitful are usually worth it. Of course, I was painfully aware that something could happen to prevent a refinance and then I would have nearly $60k in credit card debt. As it was though, I prevented paying closing costs for two mortgages, as I knew we wanted to take out equity.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $59,000
Cash invested: $10,000

This is one unit in a duplex (or townhouse) and it just fell right into our laps. The owner was losing her tenant and wasn't allowed to legally rent out the house, so she was going to allow it to be foreclosed on. The tenant is a lifelong friend of mine and contacted me about it, saying she would sell for what she owed ($41k-ish) - this was on Thanksgiving Day. The next day we got in the car to look at the house, thinking it would be so horrible we wouldn't want it. It needed some walls patched, new flooring and paint. Ummm... OK, where do I sign. We went under contract tht night. It did, of course, get more complicated when the seller had liens against the property for $27k (even if we paid those it would still have been a great deal!

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

The price was amazing. I am extremely familiar with my market and I know that these townhouses (they should really be called duplexes) sell for $115k after days on the market. They are the only houses that consistently sell quickly in our market. The price was it for me though!

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

Like most of our deals it fell into our lap. The tenant was buying a house and felt bad that the owner was going to let it go to foreclosure, as she lived out-of-state and had a type of loan that didn't allow it as a rental. There was no negotiation necessary. We offered $41k or balance on mortgage, whichever was less and we offered to cover all closing costs. When liens of $27k came up I taught seller to negotiate with collection agency and they settled for $17k. We paid just over $59k.

How did you finance this deal?

We put it on credit cards... I did not want something else to come up as far as liens and didn't want the seller to get cold feet, so I put on credit cards to allow easy close. We refinanced just over a month later and took out equity to pay off personal debt.

How did you add value to the deal?

I am still working on this house (2/24/19). We will paint the interior (exterior this summer), replace carpet, we put tile in bathroom and kitchen, replace appliances, and hang new doors. This is a big home and we are going to finish the basement with a theater room to add value as a STR. We will use it as STR to cash flow more, but may convert to LTR later, depending on convenience.

What was the outcome?

I did a couple days worth of work on this deal and made $55k right off the bat. Since then we have added tile floors and will finish the basement, which will increase value about another $15k. This will cash flow very well and will be a great property to sell if we fnd ourselves in the position of needing to sell.

Lessons learned? Challenges?

It was nerve-racking to put this house on credit cards and it dropped my score significantly until we refinanced. As with most of our deals, I learned that thinking outside the box and making decisions that will be fruitful are usually worth it. Of course, I was painfully aware that something could happen to prevent a refinance and then I would have nearly $60k in credit card debt. As it was though, I prevented paying closing costs for two mortgages, as I knew we wanted to take out equity.

Investment Info:

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

Purchase price: $83,000
Cash invested: $16,600

This property is not what we would typically buy, as it is a C class property with only some potential. After some deliberation, we decided to offer $80k - suggested by seller's realtor. The seller checked her payoff and countered at $83k, which was just enough to pay off her loan and all her closing costs. This is now a STR and has turned out be a great investment!

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

This one was more about investing somewhere and helping an old lady who wanted out of real estate. The property itself was nothing special, but had been maintained fairly well. One unit was rented, which helped us make our decision since at least the mortgage would be covered.

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

A realtor called my mother-in-law and pretty much had it all spelled out already. We offered the suggested $80k and the seller countered at $83k. There wasn't much else on the market and we were ready to invest again, so we went for it.

How did you finance this deal?

We used traditional financing with a 12 year fixed-rate mortgage at 5.25%. We put 20% down.

How did you add value to the deal?

We didn't intend to add value to this deal, but after my son and I stayed in the front unit while working on other rentals I realized it might be a great STR. I listed on Airbnb and the rest has been amazing since. We will improve the unit during vacancies.

What was the outcome?

We learned about the value of STRs with the 1/1 unit in this duplex. The tenant in the 2/1 unit moved out and I am currently getting it ready to STR.

Lessons learned? Challenges?

Being open-minded certainly helped us here again. This property took us up to 18 rentals and I felt that we had enough steady cash flow to experiment with STRs. It turns out that I have made the most return on this property because of that. This started as an okay investment and turned into a great learning experience. The nice thing is that if at any point the STR thing doesn't work we can easily convert to furnished LTR.

Investment Info:

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

Purchase price: $225,000
Cash invested: $10,000

This is directly across the street from our laundromat. It's the only property that we don't own outright (we have a lease option on it) and is the least nice property we own. We bought it to live in. The facts that it's across the street from the laundromat and we live for free are awesome!!

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

We thought it would be awesome to hang out at home and have the ability to quickly make it to customers who may need help. We knew we could keep cameras up at all times, so it made a lot of sense to us.

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

We were looking at this when we found our laundromat, but never would have bought it without the laundromat. We overpaid for it and the seller was non-negotiable on price which is why it was sitting there for a couple years for sale. For us it was worth the $10k risk to see how nice it would be to live across the street from the laundromat. And it is amazing!

How did you finance this deal?

We paid $10k for a lease/option. The current owner is interested in owner financing, but if that falls through we will get a traditional owner/occupied loan.

How did you add value to the deal?

We have put a new kitchen in our unit and will redo other units as they come vacant. This is actually not a good investment if only numbers are considered, but it's amazing to sit at home with my now 2-1/2 year old and run to the laundromat when necessary, rather than sitting at the laundromat all day every day.

What was the outcome?

That is still to be determined, but we have decided that we will exercise our option; it's just a matter of how at this point.

Lessons learned? Challenges?

Sometimes making an investment for reasons other than money is worth it, although I wouldn't suggest it in most situations. The numbers aren't bad, but they're not good. We do live 100% for free though and that is awesome! Learning about options other than purchasing through traditional channels was a challenge for me with this one.

Investment Info:

commercial investment investment.

Purchase price: $180,000
Cash invested: $110,000

This investment has tons of potential and started making us money on day 1. It's an old outdated laundromat turned new, comfy and cozy laundromat.

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

I was interested in freedom and this seemed to have some answers towards that goal. I hated the idea that it was in Wyoming, because I didn't want to live there again, but I realized I could easily manage a laundromat with my one-year old in tow. The huge office helped, because my husband wants to work on his own software and that is an excellent place to do it; it means we could easily be on-site while accomplishing other things as well. The 4-plex across the street made it more interesting.

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

Like most of our investments, it just so happened that we found it accidentally. We were not looking for a laundromat, but it was interesting. One of the things I love the most about us is that we are open-minded and that is what allowed us to explore and ultimately go through with this deal.

How did you finance this deal?

We needed to tap into equity for this deal, so we refinanced all our SFH and financed the laundromat in a portfolio loan. It was the most exhausting loan I have closed to date. We are thorough and very particular about our numbers, so it was surprising that the bank wanted even more than I did on this deal. We got it done on a loan at 5.15% with a 5/5 ARM on a 25 year amm and 10 year balloon. On this deal I got to call some shots on terms (5/5 instead of 5/1 ARM and lower int than quoted).

How did you add value to the deal?

We mostly gutted the laundromat. We bought brand new washer extractors, took out the horrible floor (we painted it), added a play area, and carpet/paint to office. We are still working on the laundromat every chance we get, as it's not even close to done; however, customers are in love! We bought recliners, table and chairs, offer high-speed wifi, and carpeted a play area for kids. It's a hit! The washers are the most amazing part to me, but customers love the atmosphere.

What was the outcome?

I guess I already answered that. Our customers can wash AND dry their clothes in under an hour or less than the competition; they can lounge in the recliners or work on their laptop with our wifi; their children can play with toys instead of ask when they get to leave every 3 minutes. The outcome is relaxed customers who are thankful that we listened to their suggestions from the survey we put out before we closed on the laundromat.

Lessons learned? Challenges?

Sometimes even conservative numbers can be low. We don't cash flow as much as our very conservative numbers said we would, but we also only have a total of 12 washers (4-4 load washer extractors, 2-6 load washer extractors, 4-4 load washers and 2-1 load top-load washers). It is an excellent investment and we hope to grow in the coming years. Everything was a challenge with this deal, from the asbestos tiles to the toddler who got into everything I was trying to clean/fix.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $90,000
Cash invested: $28,000

I had a real estate agent send me a message on facebook and say she knew of a great deal if I was interested. It turned out to be an exceptional investment. This house was smoked in for decades and smelled horrible, plus had animal waste everywhere; however, we spent $10,000 doing simple repairs and paint/carpet to turn it into a great investment. The house is a 4 bed/2 bath tri-level.

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

A real estate agent contacted me and told me she had a great deal. I knew we wanted to invest in more real estate, but we didn't really have the money after having just bought our 8-plex in May. I reluctantly looked at the house without even telling my husband I was looking and it was interesting because of it's size, location and price.

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

The deal fell into my lap. The man selling it had moved out of state because he was ill and wanted to be closer to his children. The house smelled horrible, so it sat on the market for a very long time. After I looked at it I called my husband and told him I wanted to put an offer in on the house. It had been listed for $160k, but the price dropped to $120k the day prior to the real estate agent contacting me. We agreed that if we could get it for $90k it was a no-brainer. He accepted!!

How did you finance this deal?

We financed through a local bank and closed the deal in 1 day!! It was amazing! We got a 5/1 ARM with 25 year amm for 5.25% interest. We put 20% down and put cash into repairs to get it ready to rent.

How did you add value to the deal?

We painted, replaced flooring, added a wall and door to separate basement (made a mother-in-law apartment) and cleaned lots of grime.

What was the outcome?

This house turned out to be an amazing investment. With $100k in we could sell today for $150k, plus we made it into two rentals and collect $1525 a month in rent. I love this house! We could easily turn it into one rental again by simply removing and framing inside a door opening.

Lessons learned? Challenges?

We learned a lot with this deal and I learned how to remove emotion from our deals going forward. I put an offer in that I knew would not be accepted, but it was a starting point. I was shocked that the seller accepted our low offer! I made a big mistake of lacking understanding of agents and how the contracts can work, so I hurt a friend (the one who contacted me about the house) by contacting another agent to represent me. The disaster this caused pushed me to get my own license.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $118,000
Cash invested: $30,000

This was the house I grew up in. My parents had divorced years earlier and my dad passed away. My brother and sister were hard up for cash (their part of the inheritance) and literally begged us to buy the house. We foolishly paid top dollar for it as to not cheat anyone out of money, but it's been a great investment. This was our first intentional REI.

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

I wasn't really interested in buying this house, but my brother and sister couldn't afford any type of utilities or repairs, so it was our safety from footing all bills until the house sold. Houses typically sit on the market for 6+ months here.

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

We did no negotiating at all. We agreed to buy it for $118,000 after comparing to other similar homes on the market.

How did you finance this deal?

We used traditional financing on a 30 year fixed mortgage to purchase this house.

How did you add value to the deal?

I spent months fixing things that needed fixed, including sanding and staining the cupboards. I repainted the entire house, shampooed carpets, patched holes in walls, fixed plumbing and refinished the deck.

What was the outcome?

This house taught us that money can actually be made in real estate. We cash flowed over $600/month with our first tenants.

Lessons learned? Challenges?

Treat family like everyone else. There's no way we would have paid what we did for this house if we had bought it from a stranger and we shouldn't have from family either. Lesson learned... I also spent way too much time trying to make everything perfect. I should have gotten things ready and rented the house and then fixed things up between tenants, rather than trying to make it perfect the first time around. Tenants do damage anyway - our first ones in this house did over $5k in damage.

@Emad Nasser you can make money with any class. I prefer B-C, but one’s preferences are definitely unique. I would not buy a class A property to rent out, but there are plenty of people who make lots of money doing it.