All Forum Posts by: Jay Orlauski

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $125,000
Cash invested: $85,000

1 bed 1 bath home from a wholesaler for $125k - added a room to make it 2 bed/1 bath. During construction of the addition, the city happened to be working on the street and noticed our unpermitted project. They red-tagged us and we were forced to pay for plans to be drafted, approved, and several inspections before they permitted us - set us back several thousand dollars and an extra two months as a result - still, we were able to complete the project and still appraised for more than we spent.

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

The opportunity to add value to something that needed some TLC

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

It was sent to me through a wholesaler and as soon as I saw it I knew that I wanted this to be my next project - I was able to negotiate a little off the top - but overall was satisfied with our purchase price

How did you finance this deal?

Down payment was my own cash , hard money lender for the balance, and credit cards for the rehab

How did you add value to the deal?

Add 1 bedroom to the house, HVAC and ducting throughout , rewired interior electrical, all new dual pane windows, replaced doors, new carpeting in the bedrooms and wood plank flooring in the living room, tile in kitchen and bath, added new baseboards and painted interior, replaced all doors in the house, granite countertops, new cabinets, all new appliances, a laundry room / new closet, remodeled bathroom, new tile in shower, redid some roofing, and painted the entire exterior.

What was the outcome?

A beautiful 2 bedroom 1 bath house that has become our next rental and is already rented out

Lessons learned? Challenges?

Don't do construction without permits while the city is working on the street in front of your house - also don't pay for cheap labor - you'll just end up spending the money having it done the right way at the right price. Timing was really bad - the contractors lined up to do the work were not available by the time my lender funded, so we sat on the backburner a couple of weeks - just in time for the city to be doing work in front of our house and notice our project had no permit - major delay

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

I am my own agent, but it was a wholesale deal anyway - also worked with a local hard money lender that I will NEVER use again - not naming names, but I'll tell you if you ask me. We refinanced with Owning and we were pretty happy with them for most part -

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $125,000
Cash invested: $85,000

Started off as a run down outdated 1 bedroom 1 bath home in Sanger - was purchased from a wholesaler for $125k - Added 1 full bedroom to the house, replaced wall heaters and window AC with HVAC ands ducting throughout - replaced old circuit breaker panel with new updated one and rewired interior electrical, replaced all windows with dual pane windows, replaced most of the doors, laid new carpeting in the bedrooms and wood plank flooring in the living room, tile in kitchen and bath, added new baseboards and painted interior, replaced all doors in the house, granite countertops, new lower cabinets, all new appliances, added rails to the front porch, converted an older closet into a laundry room / new closet, completely remodeled bathroom to make way for a new door to the new bedroom ( not shown in pics), new wall tile in tub/shower, redid some roofing, and painted the entire exterior.

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

The opportunity to add value to something that needed some TLC

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

It was sent to me through a wholesaler and as soon as I saw it I knew that I wanted this to be my next project - I was able to negotiate a little off the top - but overall was satisfied with our purchase price

How did you finance this deal?

Down payment was my own cash , hard money lender for the balance, and credit cards for the rehab

How did you add value to the deal?

Just read the description - almost every part of the house has been updated

What was the outcome?

A beautiful 2 bedroom 1 bath house that has become our next rental and is already rented out

Lessons learned? Challenges?

Don't do construction without permits while the city is working on the street in front of your house - also don't pay for cheap labor - you'll just end up spending the money having it done the right way at the right price. Timing was really bad - the contractors lined up to do the work were not available by the time my lender funded, so we sat on the backburner a couple of weeks - just in time for the city to be doing work in front of our house and notice our project had no permit - major delay

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

I am my own agent, but it was a wholesale deal anyway - also worked with a local hard money lender that I will NEVER use again - not naming names, but I'll tell you if you ask me. We refinanced with Owning and we were pretty happy with them for most part -

@Steven Navarro  based on 9 other 3 bedroom units within 1 mile - they are getting on average $1400 - $1500 / month per unit - you may be able to go up a little for a brand new build - but the chances of $2400 per unit are slim to none - you can rent out a mini mansion in Clovis for less than that. I have looked into building a 4 plex previously but got caught up in all the regulations and school fees - in the end it was not going to profitable so we shelved it for another project. At the time we going to buy the land for a great discount but even at a discount the construction costs put us way over budget. Not saying it can't be done - but be sure to do all your due diligence and understand all the costs involved.   Sounds like you've done a lot of legwork already so your starting to get your beak whet - feel free to reach out to me if you ever want to discuss anything. I'm always happy to provide a some perspective.  

I was wondering if it was in Pinedale also ... that would make a difference-  I have always maintained that it could be a great location if enough investors got behind it and started to rehab the area .. I've even seen a few projects already started .... if you want to build in opportunity zones - take a look at the Better Blackstone Project - they are proposing to provide  incentives for investors willing to build high density housing in the area

Hi Keri - it looks like you have already received a lot of good info concerning moving forward or not .. I'm going to address your question about "feeling bad" for backing out.  The inspection period is your opportunity to uncover as much information as possible about your purchase. As an investor - the only thing you should be concerned with is whether you are going make money or lose money on this deal. If the seller was truly unaware and "shocked" at the findings then he will understand your hesitation since this was a  surprise to both of you. When buying properties - you cannot feel bad for passing on a project that is not profitable - it's a numbers game and you are going to look at a lot deals that don't make any sense - and you are going to see deals that look good on the surface but start to unravel when you peel back the layers - that's OK . You have to make deals that make sense to you first and foremost - if your numbers indicate that the purchase price plus repairs is going have too thin of a profit margin or even no profit at all... then you have to back away from it - regardless of any perceived "bad feelings"  because you are going to feel a lot worse when you're staring at your mortgage statement and you can't pay it because the property isn't producing the income it needs to. Moral of the story - DO NOT FEEL BAD IF YOU HAVE TO BACK OUT OF A DEAL THAT IS BAD FOR YOU - real estate agents deal with this kind of thing all the time - your agent needs to know exactly what properties work for you and which don't - it's not about being too picky - it's about setting parameters and using those as a guide to identify cash flowing properties. As a newer investor - it may be able a little harder for you to determine what is a big deal and what is not  - but if you use trusted contractors to give you quotes and timelines - you will start to get an idea about how much money and time it's going to take to get up and running with a project - cross check that with your numbers and before long you will get better at recognizing good deals and passing on bad deals with no guilt. Best of luck to you - I look forward to seeing your updates on this project. 

Hi Everybody - Just to clarify - the Fresno Deal Seekers meetup is open to anyone who wants to attend - the $25 due is for those who decide that they like it enough to attend regularly. I always encourage anyone to come out to a few meetings first and see if it's something that is a fit for them. Our doors are always open to anyone who wants to just stop in and check us out and you are more than welcome to join us for free on any meetup day. My goal with the group is to connect with like minded people who love real estate - the fee is a token fee to help cover some of the administrative costs like the room and the website  - I would never want for a fee to keep people from benefiting from the networking and education that comes along with meeting other local investors.  So if you've ever though about joining us at lunchtime to talk about my favorite subject in the world ( real estate) ....bring a friend , a notepad , and some business cards - no reservations required. 

Just curious for those of you looking for multi family properties in Fresno - what kind of cap rates are you looking for? Also - what kind of cap rates are you seeing where you currently invest.. thanks

Hi Christine - one piece of advice I would give you is to be sure that you have some reserve money put aside - not only for unexpected repairs - but for your mortgage payment. When you have a SFR that you are renting out - you take the chance that the tenant don't pay their rent - if that happens then you are on the hook for that payment so it's in your best interest to have enough put aside to cover 2 -3 months rent. That way - if you have to evict- you have something set aside to help get you through it -

As Chad said ... your agent should be able to connect you to  some trusted property managers - if not - I would be happy to help you out.  Managing a single property shouldn't be too difficult - but some people are just not cut out for property management - i.e  - they are too nice or don't like confrontation - you have to ask yourself if are able evict a pregnant woman who is 2 months behind on rent...are you willing to raise your tenants rents each year? Are you willing to take late night calls about emergency issues and do you have the contacts to handle it. These are the types of issues that can come up and some people have no problem making it work while others struggle with it. If you do decide to self mange - it's a good idea to brush up on the law concerning property management to avoid getting yourself into any trouble. It's not as difficult as people make it out to be ... it's also not as simple as it looks either... but with some education, the right paperwork , and a willingness to keep learning... you should be able to manage one property on your own. 

Best of luck!! - keep us up to date on your first investment... would love to hear more about your experience. 

keep an eye on Fresno -  there are areas where revitalization efforts are taking place and there could be some great opportunities for those who can buy and hold... also still plenty of homes to flip here too if you prefer that route. The Better Blackstone project offers incentive to investors for building high density housing in areas where they need it.  Might be something to look into if you can build multiple units. 

Hi Dale - one other thing to consider is that you mentioned starting with a SFR before diving into multifamily but I can tell you from experience that if you can purchase a multifamily then that is a better option - the problem with SFR is that if your tenants stop paying the rent or are late then you are responsible for 100% of the payment - of course if you buy all cash then its a different story - also - you spread the expenses AND the risk over multiple units - insurance for a duplex is cheaper than insurance for two seperate homes .. etc. For beginning investors - I think multifamilies are a safer bet to start building your portfolio. When you find the right market to invest in - look towards a multifamily to generate cash flow - once you have enough income to cover a missed payment you can start looking into SFRs. ALso - looking on the open market in California is not likely to yield a high cash flowing property - you need to look off-market for situations like foreclosures, divorces, moving out of state , frustrated landlords, etc. Start sending out some letters / postcards and try to get something off market - check with you local wholesalers too - sometimes they have some good deals to and have done all the marketing already. Best of luck to you.