All Forum Posts by: Drake Espenlaub

Sherwin Williams is my employer.

I don't mind the advice to clean the walls just be mindful of how much moisture you are putting into the walls, especially if you are planning to use an oil based primer. Quickkk tip. Smoke you need oil base primer to seal the stains. Mold/mildew you DO NOT want to use oil. This is my concern with saturated the walls with moisture. If the walls are still damp or you create a situation for mold to grow, the oil based primer is made of organic compounds, mold is organic..you are essentially giving it food, and the primer seals the wall so there can be potentially mold growing behind the film of the primer. See this a lot in exterior projects where people want to use oil because they associate it with being "stronger". Oil for smoke or stains, Acrylic for mold mildew, acrylic is a synthetic resin so it will not feed the organic growth, it is resistant to it.

@Brian Pulaski Sounds like a bit of user error, as I use a lot of our products and can push one coat coverage with less than superpaint. Depending on color use a half inch nap and keep the roller wet. The marathon is a great cover to use. A lot of times people buy the "good paint" and go cheap on the covers. This is essentially like buying a Jaguar and using 87 octane gas. Don't over roll it you will pull the paint back off the wall. A lot of times people are scared to apply the paint, make sure you load your cover and apply a solid uniform coat should cover in one no issues. I would imagine you had success with your mural because it was a lot of brush work, and the paint was properly loaded.

Go to your local Sherwin Williams and ask for pro block oil base primer. Tell them you are a real estate investor and you want to set up a wholesale account, that someone told you it ran around $22-$25 gallon. You need a solvent based product because it seals in the stains and wont allow it to breathe out. Water based coatings have more porosity in the make up and allow the stains to bleed.

I enjoy talking about coatings if you cant tell, any other questions or secrets to get hooked up at sherwin, feel free to ask.

This may help me and other out who read.

Income in (Job no investments) $2,200/mo

Income out - all expenses - $210 student/auto + $1,150 (all mortgages) = $1,360 Living exp vary $550-$700/mo

Potential income (planned to be realized fully starting february) 

Duplex 1 - Lower $1,100 Upper $750 = $1850

Duplex 2 - $500 per side = $1,000

Duplex 3 (turnkey 1 rented, other filled by foy - $400 + $525 = $925

Totaling = $2,775 All buildings have new roofs, and will have new hvac. There will be expenses but unsure and hoping not anything huge for the first couple years. 

Potential rent on 5-unit $2,575/mo 

All of these rental numbers look great to me, but as of right now it is all a pipe dream as they sit vacant and in need of a remodel. I have always been one that feels comfortable being uncomfortable and I like being under the gun, just making sure I am not squeezing the trigger on myself with all this.

Skip to cliff notes for shorten version, numbers, and main question if you don't feel like reading a long post. 

I have made an offer, and am meeting the owner of an off market deal on a 5 unit of four 1/1's and a 2/1. He is asking 110k, we have settled on 104k sharing closing cost. We are meeting Monday to tighten up the deal and began to write the contract. 

Here is the rent roll on the property, if you were curious. I honestly feel the property is worth in the 150 range, it is located in a historic part of downtown in my city, where property value is rising, and there are in the process of building a new medical school 2-3 blocks from this location.

A - 1/1 - lease from 6/12/2017 - $525

B - 2/1 - vacant

C - 1/1 $525 lease from 6/16/2017

D - 1/1 $425 lease from 11/12/2010 - these tenants are likely to live in the unit until they pass away. Older couple.

E - 1/1 $450 lease from 7/26/2006 - Middle aged male likely to continue to stay for an extended time.

Taxes on the building would be roughly $2500, Insurance estimate $1200. Owner pays utilities now, however it has 5 meters, and I would change that, generating a possible 7k increase yearly in income. 

I started investing roughly 6 months ago, buying my first duplex in May (54k pp, owe 48k on mortgage) payment with TI is $480/mo, no tenants as it is under remodel. I have since purchased two other duplexes, 1 is vacant and in need of remodel before I will be putting tenants in it as well, payment with T&I (38k pp)  $350/mo. The other is turn key, has 1 side rented for $400/mo, I plan on having a tenant in it shortly after closing at the end of this month. Payment $350/mo T&I included.

My other monthly payments include $150 school loan, and $60 car insurance. I have no other debt. I bring home $1,100 every two weeks. I have roughly 10k liquid, but am using that amount to remodel the second duplex. As the first is planned to be completely finished by February (I am doing most work myself), is my thinking process flawed..bare with me.

I am wanting to refi my first duplex purchase asap, I can do it after 6 months there was no seasoning on the original mortgage. I see the duplex as appraising from 95-105k, and would like to pull the equity out of it to use towards the new 100k 5 unit deal (35-40k). 

1. The main 1st duplex has been painted on the outside, the lower level has the new windows installed, both units have brand new high effenciency furnaces and a/c, which the upstairs never had duct a/c always window units. I added a 37x15 bedroom in the basement that will be finished in the next week. Will have some very nice finishes. That bathroom is also complete. The lower unit should be complete by end of year. Can I refi it before or right after the lower unit is done, or would it be better to wait until both are complete to get max equity. In my area I know "drive by" appraisals are common, maybe this is a question for the bank.

2. I sent this in email today to the seller, the creative financing was off the top of my head, I feel like it is fair for both of us and if I default he wins, if I go through with it, he wins. 

Dear,

That all sounds fair, I would love to buy you lunch Monday if you have time. Otherwise we could just meet for a cup of coffee somewhere or at your office. Let me know what works for you. Also, I have approval for financing, but if you would be interested in working an owner financing deal I would entertain the idea, as it would be beneficial to me while I have other deals in the process.

I would need to speak to my lawyer as I have not done a contract deal, but I would be interested in doing something like 5k down, and a balloon payment of 99k due in June. Interest only payments for the 6 months (no payments come off the principal) This may give you an opportunity to make extra money on the deal and give me an opportunity to close on my current deal the bank is working on, also holding cash back for my current remodel. I would forfeit the funds and you retain the property if I don't complete the transaction. That is off the top of my head, we could talk if you are interested in working out those details.

If that does not interest you I can go traditional financing and we can likely close after the holidays. Something we can talk about if you like when we meet.

Thank you,

Drake Espenlaub

Associate Broker

Keller Williams

Thank you for any advise or guidance on the situation. My reasoning for the creative finance offer, is I need to hold on on the refi of my 1 duplex to really have the cash to support all properties. Does this mean I am over leveraged? I feel comfortable with my payments, and will have enough to put into a reserve account for cap x items when the refi is complete. Thanks for the read.

Cliff Notes.

Read all bold print.

@Tyler Watts I am going to manage it myself, I have learned a lot of the handy side of things and don't have any fear of fixing the small stuff, also have built a network of handymen as far as having hvac guys, plumbers, electrician, dry wall finishers, I am confident I have that side covered. I also have been a manager in the business world for the last 8 years, so I think the management side will come to me after some learning curve. Thanks for the advice!

@MichaelPlante I wouldn't know as I am finishing up rehab and am yet to get a renter in it.

The rentals around it are in much lesser shape, the interior of the home is pretty close to econimcal obsolescence I would say. That being said, I wanted to try to make a change and attract a better renter because I do believe the area has future value. After weighing them out I think it is something I am willing to pursue. Thanks for the tips.

CoC return would be 600% just using money down, but there was roughly $20,000 out of pocket for hvac, windows, remodel. I would say I will likely have to do $3500 in repair for the unit when they leave, assuming the floors will be ruined. Really as a new investor I am trying to think of worst case scenerio other than them burning it down, which wouldn't be terrible 😂

As for renting to college students there would be no zoning issue as it is a smaller city and probably 35% of the side of town it is on is occupied by student renters.

A friend of my parents has a son in college, and came to me asking if I knew of anything to rent close to the school. I have a rental I am finishing up, but have put nicer finishes in it planning to not rent to college students.  These students will be freshman, and are "planning" to rent together for 4 years. Having been young at one time, I know this is not a reality. However, I do see it happening for 1 year.

It is a duplex 4/1.5 down and 2/1 up. Fenced in side yard, single car garage in back, parking for 4-5 cars. 

In talking to her she had said her son and his buddies are looking for a place to rent, they had all planned to take extra money from their loans and pay their rents a year in advance.  I was unsure about renting it to students because of the finishes I chose. Knowing her son fairly well, I know he/they will be partying in the house, likely to do 2-3k worth of damage. However she said there are 4 of them, they are all likely willing to pay for a years rent up front. Question being.

In the 4/2 - If you can get $500 a head for a year from each student up front (essentially 6k per student) $24,000 for the year in one payment, knowing it will be trashed, are you doing it? 

2. This will likely hurt my chances for tenancy upstairs in the 2/1, unless it rents to students as well.

3. Are you just adding eviction clauses in the lease that have to do with noise complaints, unpaid bills, as well as taking a large deposit for damages?

4. Am I an idiot if I don't do this?

The 4/1.5 would likely rent for $1100/mo with the 2/1 around $750.

I am leaning towards doing this, I am just trying to weigh my short term advantage vs the longer term set back.

Thanks

I made it through, I took it to my lenders attention that there is an hvac furnace in the attic and we got it through! Thanks for the advice!

Not that I want to get involved in a law suit, but I am wondering what constitutes one in the situation I am in. I have a deal on a duplex, where the financing has been delayed for several weeks because of the appraisal process. On my estimate I am being charged two appraisal fees of $450, and one reappraisal fee of $150. Only to receive and email from my lender stating the underwriter may not be able to finance the deal due to the fact there is only one furnace, one A/C unit and one set of duct work. 

I emailed my lender back as I have been through this house several times and after looking at the appraisal report and pictures there was nothing concerning the attic. I sent my lender back and stated had the appraiser went into the attic, which is not hard to find being as it is a man sized door when opened leads to a full size set of stairways leading up stairs to a standing room floored attic with a complete furnace and duct work running into the upper unit. 

My question is 

1. If the deal falls through and I lose my $1,000 earnest money can I then sue the appraiser for non performance? effectively also costing me a rental property that would generate $1,500-$1,800 monthly. 

2.  If the deal now does go through after making my lender aware, and I am being asked to pay $1,050 in appraisal fees, can I sue the appraisal company for non performance of those fees being that I am the underlying reason if the deal goes through it will be because of information I provided.

I understand no one in this forum is in any way to give legal advice, but this is just a general question and I am obviously frustrated as it is a fresh wound. Is it legitimate to be thinking this way?