All Forum Posts by: Greg Gaudet

Mahalo Matt. It's Harbor Lights in Kahului. You can't really buy em for 30k though.. Everything on MLS is listed for 140k-190k. I just scored with this one :) I've paid 70-95k for the other 4 I have at Harbor Lights, and they even work for a BRRR at 95k with an 80% mortgage. Still produce $500/month in cash flow. I love that building, just have to screen your tenants really thoroughly because there's a lot of section 8 tenants there since it's the cheapest place on Maui.

Investment Info:

Single-family residence buy & hold investment in Kahului.

Purchase price: $30,000

Contributors:
Ryan Murdock

Purchase Price: $30,000. Rehab estimate: $15-20k. ARV: $140,000. As is value: $100,000.

Purchased direct from an off market seller who hated being a landlord. Unit is rented by the same tenants for 20 years paying $1,250/month so I won't be doing the rehab until they are ready to move out. But it cash flows $600/month and my bank will let me take out $76,000 as is, so it's a homerun BRRRR.

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

I own 5 condos in this building. It's the only property on Maui that I could afford to buy when I started investing, and it produces solid cash flow and 25% cash on cash returns for a very minimal investment. Now that I have 5 units there I will be looking to other properties to diversify.

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

This was an off market seller that called me and said she inherited the unit 10 years ago and it's nothing but headaches for her. On our first call I asked what she would like to get for the property and she said around 30-50k so I knew she was exactly the seller I've been looking for. So I scheduled a meeting with her, made an offer for 30k cash with no contingencies and 10 day closing.

How did you finance this deal?

All cash.
The day after closing, without doing anything to the unit, my Bank offered to give me a home equity loan/or line of credit at a fixed rate for 25 years and give me $76,000 (more than double my cash invested). So I'll be taking that to get my cash back to buy my next one, leaving the tenants in place and cash flowing. It's making $600/month now, and will make $200/month after taking the loan - but once I increase the rents it will go back to $600/month cash flow after paying the loan.

How did you add value to the deal?

I bought it at the right price. I increased my next worth by about 70k overnight just by closing on the unit for such a discounted price. But whenever the tenant moves out I will do a full rehab and increase the value even more.

What was the outcome?

Currently letting the existing tenants stay in place (the mom is sick so we don't want to cause any stress for them) and making about $600/month cash flow. I will probably increase the rents slightly, maybe $100, but not up to market rents because the unit is in bad condition, and mostly because I want the tenant to be able to take care of his sick mom and not stress about affording their rent during this time.

Lessons learned? Challenges?

While this deal is a screaming hot home run deal, it also feels really good to be able to help the tenant (knowing that many other buyers would either kick them out or jack the rents up to market), and help the seller. Everyone in this deal is happy as can be with the outcome.

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

No. I found this deal through my own efforts and there were no Realtors or lenders involved. But Ryan Murdock came with me to the meeting with the seller just for fun, but he ended up playing a huge role in breaking down the seller's guard and helping me negotiate the price and lock up the contract. Thanks Ryan!!! Also used Twyla Kukahiko from Title Guaranty, highly recommend! I use her for all of my escrows and she rocks.

UPDATE: Gannons did not have a table for us tonight! I sincerely apologize and hope that no one drove far to come. There was some confusion and Gannon’s is literately over booked all night and can’t squeeze us in. 

We’re havibg a small get together at a friends house nearby. Text me or Christian for the impromptu location. 

I'll also add to @Mike Roy -  Fear and lack of education held me back for 15 years. The craziest part was that I had been in real estate since the day I graduated, I was an appraiser, an escrow manager, then a property manager. But I knew nothing about the fundamentals of investing, even with all of that professional experience, I thought investing was all about appreciation. I made tons of offers over the years and thought I was safe if the property could break even. It wasn't until I started listening to podcasts and found BP that I got the real education I needed. Then I bought my first deal within months... And my second 3 months later.. and my third 3 months after that...

Long distance BRRRR You sound like the perfect candidate for the book on long distance investing

I would say lack of enough capital for the price of the deals I've been finding - or you could say that I'm waiting for the right deal to come up because I'm looking at higher priced properties now (there's a promising one I'm working on). I have about 100k accessible for the right deal, but that would include borrowing from a heloc, so it would have to be a really profitable deal to justify that. 

I'm in a high priced market, of course; but last year I was able to buy 3 condos for under 100k each that rent for 1600 each (the first one has already doubled in value). This year I'm going for a 700-800k property with 3-4 units that will gross 8k in rents. Slightly lower COC returns, but much greater appreciation potential. But because the numbers are much bigger, I'm taking my time and analyzing them very closely. The good news is I pass up deals all the time just because I don't have the capital to pursue them all!

But I do close on another condo next week, brought a partner in on that one, she put the 100k in and I brought the deal and will manage the rehab and the rental. So I'm not - not doing deals - just being very careful to make sure the next deal is as good as the last few, especially with the uncertainty of where the market could be in a year or so. Also making sure that if I bring a partner in, there has to be a good enough return for everyone to make money.

Let’s do kihei maui brew co! 

Thanks  @Clifford Paul I agree, the BS is a big turn off for me too. I’m trying to keep mine as honest as possible. But apparently the BS does sell lol I just can’t imagine who to... buy just like the ugly yellow postcard is ridiculous in my opinion; it’s been proven, somehow it works! 

Mahalo @Mark Pedroza and @May Emery! Good points! 

Aloha BP

I’m wondering what message everyone’s using in your direct mail campaigns to find deals in today’s hot market? Are you sticking with the same message you used years back?

Since I’m asking for your message I think it’s only fair that I share mine; I’d love to hear thoughts from successful direct mail marketers!

My yellow postcard says in red handwritten on the front:

Aloha John Doe,

I want to buy your property at 123 Main Street. Regardless of its condition deferred maintenance problem tenants etc. Call us today for a quick cash offer, no inspections repairs contingencies or commissions.

-My name phone and email-

Then the back says:

We buy houses and condos (big and bold)

Problem tenants?

Inheritance/probate?

Behind on taxes/HOAs?

Divorce/bankruptcy?

We’re a local couple that can handle any situation and we love to provide housing to our community on Maui.

Call for a quick offer -555-5555