All Forum Posts by: Clay Gradis

The podcasts have some great ideas about dealing with HMLs, make sure your loan period is no less than 18 months as your rehab and refi may go longer than planned, I have a HML out now, had it for 9 months and it came due, cost me $10k and 1% to extend the loan for another year. Be careful with HMLs.

One of the issues I faced is that the rehab on this property was far larger than I expected, I've dropped $100k into it so far and still need to replace the 4 roofs at a cost of ~$70k.  In the future, I will be buying newer properties or properties in better shape and no more flat roofs.  Check into the property you want to buy and know the rehab as well as possible prior to buying it.  Good luck.

Investment Info:

Single-family residence buy & hold investment in Dallas.

Purchase price: $130,000
Cash invested: $130,000

A 4 bedroom 2 bath house in a decent family neighborhood in Dallas.

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

I want to build a portfolio of income-producing properties to ultimately replace my W-2 income.

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

Memphis Invest had this property available for purchase.

How did you finance this deal?

I used Roth IRA funds and bought it outright.

How did you add value to the deal?

Holding and renting.

What was the outcome?

I've had my current tenant for more than a year now, everything is going smoothly with this property.

Lessons learned? Challenges?

I don't think rental properties are the best use for tax-protected investments. I should have bought this property with my W-2 income and used this money to invest in Syndications or for private lending.

Investment Info:

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

Purchase price: $330,000
Cash invested: $150,000

4 plex, all 2 bed, 2 bath units in townhome (upstairs bedrooms downstairs kitchen and living space) formation.

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

I love multi-family and am trying to build a large enough portfolio to replace my W-2 income.

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

Memphis Invest had this property available.

How did you finance this deal?

I bought it with a non recourse loan through a bank.

How did you add value to the deal?

I haven't added value, I bought it and am renting it.

What was the outcome?

It's a great rental property in a great location, I plan to give this to my heirs in my will.

Lessons learned? Challenges?

I bought this with my Self Directed 401k, while I love the property and think it was an excellent deal I don't think this is the best use of my retirement funds. I should have purchased this with my W-2 earnings and invested my retirement money into private lending or syndications.

It truly was an awesome buy.  This property helped carry me through a very difficult period with the 8 plex I bought a couple of months before this one.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Fort Worth.

Purchase price: $565,000
Cash invested: $280,000

8 Units, 2 beds, and 2 baths in each. This property needed a lot of work but will clean up nicely.

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

I was looking for multi-family to invest in when this showed up on a wholesalers list. It was a repo which had been poorly rehabbed and then populated to prepare it for sale.

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

Wholesalers list, I worked directly with the wholesaler throughout the process.

How did you finance this deal?

I financed with a Hard Money loan. Included with the loan were funds to rehab the property. The lender has been a pain in the butt to work with to get the funds released. I will never do this type of loan again. I'll take a loan to purchase but not a rehab loan were the lender has to verify work completed prior to paying out.

How did you add value to the deal?

I have rehabbed all eight units and am in the process of renting the units.

What was the outcome?

6 of the 8 units are now rented with a 7th looking like it will be rented this month.

Lessons learned? Challenges?

The rehab took a lot longer and cost a lot more than I expected. This process nearly ended my investing career.

Investment Info:

Large multi-family (5+ units) buy & hold investment in Fresno.

Purchase price: $1,000,000
Cash invested: $300,000

18 unit multi-family. Each unit is 2 bed 2 baths with a garage.

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

The purchase price was incredible. At purchase time we were 20% below appraisal. Rents were low at $620, we raised rents and will continue to raise rents until we get to market at about $850. Buildings need work but are in good shape overall.

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

We were in the process of buying another deal when our lender brought this to us. He said to finish our current purchase and then he would show us this deal :)

How did you finance this deal?

We borrowed our down payment from a Heloc, friends, and family and took out a mortgage from a local bank for 70%.

How did you add value to the deal?

Currently, we are raising rents, ultimately we plan to redo all bathrooms and kitchens as well as the outside of the units.

What was the outcome?

Property is moving along pretty smoothly.

Lessons learned? Challenges?

Management is key, I talked with one property manager extensively and then hired them to manage the property. I should have interviewed several. So far the manager I hired is working out and we are getting used to working together.