All Forum Posts by: Erik Stewart

@Johny Omaga

Looks awesome! Would love to get all the numbers on the deal and hours of work you have into it! Keep it up!

@Juan Abreu

My experience has been:

Purchased in 2009 with FHA owner occupied

Fefi in 2017 to conventional owner occupied

(Intended on loving there another year but didn't end up doing that)

2017 Used a new FHA to purchase a 4 Plex

2018 (1.5 years after purchase) I bought a house to live in permanently.

In essence I have done 3 owner occupied loans in about 4 years. 2 of which were conventional, only 1 was FHA because you can only have 1 FHA loan at a time (most of the time, exceptions can happen).

My guess is that I could keep doing this but I haven't confirmed with my banks, at least not on the owner occupied side.

Let me know if you have any questions!!

Best of luck!

Erik

@Diana Dorantes how is the process going so far? Is the property manager doing a good job handling everything? A death in a unit is tragic and stressful (for all parties). We always want to make sure we are compassionate and empathetic in difficult times for the family but also clear on what you need for next steps. I have had to help a family through this situation as well, and i tried to handle everything and make it super easy for the family because, when they were in shock and grieving a lost loved one, the least of their concerns was handling the lease and items. It was a difficult situation, but I by doing everything I could to help with the apartment side of things, I hoped to have made a small, positive difference during those difficult times. With your property management company as your proxy, they should hopefully have some experience handling this with grace. Good luck :)

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $25,000
Cash invested: $105,000
Sale price: $190,000

1950's Rambler Fix and Flip. Needed a complete remodel but the project turned out great for the first time with a fix and flip project. All while working my day job as a project manager. The images below are the before and during photos. Head over to Red River House Buyers, LLC on FACEBOOK and check out the full transformation.

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

I decided to start doing fix and flips and BRRRR strategy in order to quicken my ability to purchase more long term buy and hold rentals for passive income.

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

This is interesting: I met a handyman randomly at Menards and I told him I was looking for flips. He knew of a vacant house and I mailed the owner for about 8 months before I received a call. I got the call, the next day it was under contract, closed 2 weeks later.

How did you finance this deal?

All cash purchase.

How did you add value to the deal?

Rehab/Renovation

What was the outcome?

Good profit margin for my investor and for myself.

Lessons learned? Challenges?

I have an entire Evernote filled with lessons learned and ways to overcome challenges!!! From everything from marketing, mindset, talking with sellers, to contractors, city officials, realtors, and the disposition process.

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

I certainly did. PM me for more details or specific questions! :)

Investment Info:

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

Purchase price: $220,000
Cash invested: $55,000

1978 4 unit apartment building with (2) three bedroom units and (2) efficiency units. 2 Garage stalls and 2 parking pads.

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

There were a few things that attracted me to this property. The location is great, next to a school, jobs, and in a nice quiet area of Moorhead. Long term tenants in place, room for adding value, electric baseboard heat (tenant paid), 4 plex over a SFR helps with vacancy risk.

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

I found the deal on craigslist. Negotiations were done over about 6 months or so. The seller was unsure if they wanted to sell, took the ad down, and I followed up every month until they were ready to sell. The other buyers who were interested did not pursue or follow up so I didn't have much competition.

How did you finance this deal?

This was conventional financing with 25% down.

How did you add value to the deal?

I have done the normal repairs/maintenance however not a value add play. I believed at the time to be getting a good price that was about 10% under market value, and that was my value add. I can also update a couple units to increase rents as tenants turn over.

What was the outcome?

So far this has been a good investment. I have owned for 1.5 years and in 2018 the CoC return was ~4%. I chalk this up to "Stabilizing" the property during the first 18 months I have had it.

Lessons learned? Challenges?

Tons more lessons here as well. I have a section 8 tenant, so I learned a lot about all the regulations and rules surrounding that. Renting out 1 and 2 bedrooms in West Fargo is very different compared to finding tenants for eff. and 3 bedrooms in North Moorhead. Many many more!

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

Nope, directly with the seller. I would say the title company here in town. Otherwise, I have been building relationships with industry professionals over the last 10 years in general for my real estate investing endeavors.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $25,000
Cash invested: $15,000
Sale price: $30,000

SFR Rental house in my hometown. Market is super low price and I purchased from an uncle. I spent 5 years learning management from a distance, repairs/maintenance/rehabbing skills, and small town investing. Ultimately I sold this and rolled the proceeds into a 4 Plex in Moorhead, MN. I believe this to be a better use of the capital.

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

The goal here was to learn REI hand-on with a low risk investment as the barrier of entry was very low.

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

It was my uncles house that was sitting vacant at the time. We agreed on a little more than the city assessed value, for price.

How did you finance this deal?

This was a conventional loan with 20% down through the local credit union in my home town.

How did you add value to the deal?

I put a lot of money into repairs and improvements. Later I realized that I could spend that same amount of rehab time/money and generate much more equity in a bigger market like Fargo Moorhead. I consider this adding value to my way of thinking.

What was the outcome?

I sold this property after 5 years for only 5k more than I purchased it for. I had put at least 10k into it during the time I owned it.

Lessons learned? Challenges?

I like to say that I learned a lot from this property, more of "what not to do" than anything but it is still learning :) The challenges were driving 3 hours to get to the property, not having money to hire the rehab out, and operating in a small town where the rent is low. Might have been a better experience if the purchase price was low but the rents were high, but not the case here.

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

Nope!

Investment Info:

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

Purchase price: $261,000
Cash invested: $9,135

This is a 1978 4 plex building in a nice West Fargo Neighborhood, with the Cheyenne River in the back yard. (3) 2 bedroom units and a 1 bedroom unit. All units are electric BB heat that the tenant pays. Owner pays common area water/electricity/gas.

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

My wife and I wanted to continue house hacking but with our own personal space. So we moved out of a house with roommates and into this 4 plex. Great area for a rental after we move out. This particular property had been updated with new steel siding, windows, facia/soffit/gutters/downspouts, doors, and a couple units.

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

I found this deal on Craigslist and negotiated directly with the seller. It was a group of investors who were breaking up and wanted to sell and also save on commission.

How did you finance this deal?

This deal was another FHA house hacking property.

How did you add value to the deal?

Not a value add property per se. I did lawn/snow while I lived there.

What was the outcome?

I am going to keep it as a long term rental. I don't have much capital invested into as the FHA allowed a low down payment.

Lessons learned? Challenges?

I learned how owning/managing a house vs a 4 plex has very different qualities and different Pros/Cons. SFR's are nice because you don't pay for Lawn/Snow and you only have to find 1 tenant per lease period however on the flip side, the multi's you have to pay for lawn/snow (and sometimes heat and water depending on the setup) and you have a little more vacancy protection having multiple units. If 1 is vacant, 3 others are still bringing in income, but it is 4x the work placing tenants.

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

I did work with and continue to work with many great professionals, PM me for details as needed.

Investment Info:

Single-family residence buy & hold investment in Moorhead.

Purchase price: $152,900
Cash invested: $5,351

My first real estate purchase. An FHA loan used to purchase and this was during the time with the $8k tax credit for first time home buyers. This was during college. I lived here for about 7 years through college and after, all while having roommates. Later refinanced to a conventional loan with a 3.5% interest rate for 30 years and used the FHA again to house hack a 4 Plex in West Fargo.

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

I found the house on the MLS when I was in college. I didn't know much about real estate but it set my course to begin in my career of real estate investing. I believe I got closing costs paid for by the seller and got about 5k off the asking price.

How did you finance this deal?

FHA financing was used as I didn't have a lot of money in college. I just wanted to live for free by having roommates during college, which worked out great!

How did you add value to the deal?

Mostly a turn key property, I have done minimal updates through the years but have been diligent on the repairs/cleaning/maintenance.

What was the outcome?

The outcome is an OK cashflowing rental with about 50k in equity. Return on equity on this property is not super great and I am debating either utilizing the equity with a HELOC to help flip houses or sell it and roll profits into a higher producing asset.

Lessons learned? Challenges?

This house was my entire introduction to being a landlord, handyman, accountant, insurance agent, etc. I made tons of mistakes on the road to being the best investor, landlord, and husband I can be :)

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

Not during this deal specifically but I have built a team of fellow investors and industry professionals along the way.

I wanted to follow up on this thread over a year later and thank @Marian Smith again for your solution to my problem. Many of the comments were dead wrong and this just goes to show that when you say "I can't" you are turning your brain off, instead ask "how can I?" and focus on finding the solution. This was a huge lesson to me along the way and I have since been able to purchase another 4 plex and just started my first fix and flip by asking myself: How can I accomplish my goals and not giving up at the first sign of adversity. Thanks again for all contributors!

Good Afternoon BP Community,

First and foremost, thank you so much for being such an invaluable resource! The people and content here are amazing.

I would like to share with everyone a milestone reached yesterday: Closing on 1st Fix and Flip/Hold

I am humbled and very grateful to all who have helped and showed supported along the way. 

Details on the Property:

1940's rambler, 1100 sq/ft, near NDSU in Fargo, ND. 

2 bed/ 1 bath - attached garage converted into living space years ago

Home has been vacant 8-9 years. 

Current condition: 

The Good - Shingles and kitchen are about 9 years old and in great shape

Needs: 

• Foundation needs bracing, mortor work, drain tile, (basement is not tall enough to be considered living space, any ideas? Code exception from city?) 
• 2 new bathrooms
• flooring throughout
• painting throughout
• New plumbing, likely
• light fixtures
• windows
• landscaping
• garage doors
• interior doors/trim
• Exterior painting
• Garage shingles (barely any pitch but still has shingles)
• Garage slab 1" crash down the middle.
• Misc framing, drywall repairs, backspalsh, etc.

I will update the list as I am sure I am missing a few items and provide more pictures after the renovations are completed.

My initial estimate was about 70k in repairs. 

ARV for a 3 bed 2 bath, 1100 sq/ft totally updated is ~160k. Unfinished but clean basement. Could rent for ~1200, tenants pay all utilities.

If I can get a code exception and finish the basement, put in another bedroom and livingroom the ARV could go up to 185k for 4/2 ~1850 sq/ft. Rent of ~1600/ month.

I am aiming for a 2 month timeline, for my first flip and working a FT job that might be a bit ambitious, but that's what goals are for. 

I left out some info on purpose and will update as the flip progresses. 
Any tips would be much appreciated, especially with the basement and finding more value there. 

Thanks for reading!

Erik