All Forum Posts by: Austin Fruechting

Awesome work!!! I'd live there!

I just had these professionally resurfaced in a duplex. It cost me $250 per tub and they look brand new.  Much cheaper than having a new tub and surround installed. 

Initial COST of WORK estimate: $19,000

Actual Cost of Work: $23,100

What was the difference? There was an additional $500 in plumbing stuff we had to take care of and a few other little odds and ends. 

But the biggest thing: I have never had this happen before, but the seller took the appliances!  So I had to buy all new appliances, and since I did that I decided to do the backsplash. The special garage door openers cost me an extra $570 total. 

The good news is that I was estimating $700-725 per unit, but we were able to get $750 per side and got it pretty quickly.  Leases are already signed.  One person moving in Tuesday, the other June 1. 

TIME LOG:

• Tuesday April 11 (evening): Receive notification of property for sale (and a few photos). Do preliminary analysis: Did a tax search. Google street view to see what's around it. Roughly calculate renovation costs. Look at what other multi family are listed at as compared to rents and finishes. Estimate what I could sell for renovated. Decide I'm interested.
  
  • TIME SPENT: 15 minutes
• Wednesday April 12 (morning): Drive to property. Walk the exterior only & estimate repair costs. Adjust renovation numbers. Look for major issues (none). Call and say I'll take it.
  
  • TIME SPENT: 1.5 hours (1.25 of that was driving)
• Thursday April 13: Sign contract for cash purchase. 5 day inspection period, 15 day close. Figure out where the money will come from. Offer 12% to a private lender for $50k (who said yes). Then $30k from one of my LOCs, $10k +/- in the account I will use.
  
  • TIME SPENT: 15 minutes
• Friday April 14: Walk through interior of property. Make sure there are no surprises and nail down what work needs to be done. I have my property manager and contractor meet me there. After we go back to property managers office, figure out what work will add value (both in rents and in resale value). Put plan together. Drive back. Use drive time to get costs for plumbing and HVAC and schedule them.
  
  • TIME SPENT: 2.5 hours (about 1.5 was driving)
• Monday April 17: Get official bid from contractor. Discuss one of the optional items his cost to do wood treads. Call my flooring guy, get rough cost on carpeting stairwell (decide to carpet). Call my appliance guy for costs on 2 washer/dryer sets. Update excel with final numbers.
  
  • TIME SPENT: 30 minutes
• Wednesday April 19: Receive check from private lender. Go to bank A to pick up check from LOC. Go to bank B to deposit both checks
  
  • TIME SPENT: 1.25 hours (1 hour driving)
• Friday April 21: Drive to property. Pick exterior colors. Go to flooring contractor, pick out the vinyl and carpet. Drop off check with GC & paint colors.
  
  • TIME SPENT: 2 hours (1.5 driving)

• Friday April 21: Drive to property. Pick exterior colors. Go to flooring contractor, pick out the vinyl and carpet. Drop off check with GC & paint colors.
  
  • TIME SPENT: 2 hours (1.5 driving)

• Friday April 28: Closed on property. Had to go get the cashiers check then closed at the title company. Stopped by the property, then took the keys to the contractor and dropped off a couple checks.  
  
  • TIME SPENT: 2.25 hours (1.75 driving)

• May 1-16: Work weeks. It took two extra days then planned, but we added a few things.  I went to the property one time just because I had to pick .  I have good crews.  My time was just choosing appliances, backsplash, finding garage door openers that would work since normal ones wouldn't fit. 
  
  • TIME SPENT: ~4.5 hours (1.5 driving)

• May 17: Work completed. Went and did walkthrough with contractor and paid him. 
  
  • TIME SPENT: 2 hours (1.5 driving)

Total Time So Far: 19 hours (11.5 of it was driving) 

I should just have 1.5 hours-2 hours whenever I find a buyer and close. 

@Cori Chekhovskiy - I generally got much better returns in MF than SF. There are some savings in the CapEx and some other expenses. But the biggest reason MF provided better returns than SF was the rent to purchase price was almost always better. With the SFH you have to compete against buyers that are wanting to owner occupy which makes it tougher to find the margins. All my SFH's have come from foreclosures or from a package deal from another investor.

What do you consider a good return without BRRRR?

Work is done. Leases being signed tomorrow for both sides. $750 per side, $1500 total. Asking price will be at $120k.

Jason Mak - I know that my assumption is "invalid"... because it doesn't exist and that was the point. My answer was to frame that your entire question is a non-starter. It's a question that can't be answered because the comparison does not exist. It is impossible to just say quality vs quantity because there are so many other factors that it's not, and will never be, an apples to apples comparison.

Why are you investing in real estate?  What's your long game/end goal?  If you don't have a concrete idea of where you're heading, then you're going to lose motivation.  A general goal of money, wealth or financial freedom probably isn't be enough of a motivator.  

My goal was financial freedom, but it was much deeper than that.  I thought about the life I would want to live if I didn't have to work.  Then budgeted out what that would take, and that was my target income.  It wasn't the idea of financial freedom that drove me, it was the idea of the life I was going to be able to live when I got there... and I got there in under 7 years. 

Also, consider hiring a property manager with all you have going on. 

@Suzanne Roberson - Even if you only made $25k per flip on two smaller flips, you have your entire mortgage paid off.  But I would keep rolling into more flips to generate more money for retirement. 4% is cheap money on the mortgage.  So as long as you're getting 5%+ somewhere else you're ahead. 

To add to what @Scott Trench said:

When looking at the interest rate for private lending or hard money vs your credit card, make sure to look at the amount of origination points charged for the first two.  That could change the amount paid by quite a bit. 

Secondly, your goals will play into the decision too. If you are wanting to do a full blown flipping business and run multiple projects all the time, developing a relationship with a private lender or and HML could be worth an extra point or two at the beginning. After proving yourself, they'll be willing to lend more and more for other projects... and the rates will probably come down a bit. If that's not your goal, I would be willing to pay an extra point or two on a CC just to not have to deal with other people and the hoops to jump through.