All Forum Posts by: Greg Gaudet

Aloha All,

Just wanted to provide a quick update; we closed on this purchase last week! Seller got his head straight. I honestly am starting to think he just really enjoys screwing people over (he screwed me and his PM/realtor over many different ways). But hey, we bought a $1m 4 unit home for 850k that doesn't need any rehab and is cash flowing 2k/mo at closing, and we're locked at 2.875% interest for 30 years on it. So even though it's very far from a home run; in today's market on Maui we're very happy with it. 

And to celebrate: we put another house under contract! (a SFH on Oahu we are wholesaling).

Thanks for your feedback and support everyone! Jay you da man! 

Investment Info:

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

Purchase price: $855,000
Cash invested: $25,000

Single family house with detached ADU (cottage), and 4 total rental units in Kihei a block from the beach. Bought for about 150k below market value, no rehab needed, just a few repairs. Rents are under market, but we'll be keeping them as low as possible to add value to the community. Gross rents to 7k/mo. Market rents are around 8k/no.

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

Cash flow and appreciation

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

Direct mail and we offered to take on the repairs that the seller would’ve paid much more than we will pay to get done.

How did you finance this deal?

Traditional mortgage

How did you add value to the deal?

Working with my engineer to obtain a LOMA from FEMA to get the house removed from the flood zone (which will save us $350/mo in flood insurance, and increase cash flow by 350/mo), Buying at record low interest to increase cash flow, buying off market to save commissions, and getting my crew to handle the repairs.

What was the outcome?

Closed for about 15% below market value - not a textbook BRRR but a good one nonetheless

Lessons learned? Challenges?

Never trust a seller on estimates and deposits with vendors! Seller said plumbing repair estimate was 16k and he paid 9k already, so I agreed to pay the approximately 6k that was still owed after I get work finished. During escrow I got the invoice and the seller put down 6k, total was 19k,
So I’ll have to pay them 13k, instead of the 6k we agreed to.

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

Marnel Lozano from destination Maui realty. She’s a Realtor and PM that was the sellers PM and she was very helpful and professional.

Reminder that Maui's investors meetup is today! 

We'll start at the usual time, 4pm, since I did not update the time under the event info. 

Join Zoom Meeting
https://zoom.us/j/6082407875

Meeting ID: 608 240 7875

NOTE: this is a zoom meetup, but I entered it as in person so it would show up when you search for Maui events.

Join us Thursday 4/1/21 from 5pm-6pm (and we usually hang around for a while after talking story) to network, learn, and grow your business! To attend, first click the blue button towards the top of this page that says "Attend event'" (this is important! It will keep count of how many people plan to attend so we can be sure to have enough openings for all attendees to call in, and so we can let you know about future meetups), then at the time of the event, click the link below to join our investors meetup networking event from your laptop, tablet, or smart phone.

There's no speaker or topic. We've found tremendous value in just having open discussion for anyone to share deals they want feedback on, ask questions, share lessons, network, etc. If you have a deal you've done, are doing, or considering that you'd like to discuss please feel free to share. We require confidentiallity in this group, and anyone that does not respect that will be banned from the group (and won't be in business long on Maui anyway, too small of an island). As the host, I'm always happy to lead by example and share deals I'm working on, as our regulars can attest to. 

Invite: 

Greg Gaudet is inviting you to a scheduled Zoom meeting.

Topic: Maui Wealth Builders 10th Real Estate Investors meetup

Time: Apr 1, 2021 05:00 PM Hawaii

Join Zoom Meeting

https://zoom.us/j/6082407875

Meeting ID: 608 240 7875

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UPDATE:

@Damaso Bautista - I mentioned this but it was in response to other comments.. 

The seller has rescinded his request to cancel! What a relief. It was over a week stuck in limbo, and I strongly suspected he was playing games based on his actions. But in the end, I suspect the real issue was that he was not aware of HI's HARPTA withholding. The state withholds 7.25% of proceeds from any non-resident seller to make sure they pay HI's taxes. Once I had escrow clarify the terms for him, and I gave him some hints that the damages would be well in excess of six figures, he rescinded. 

Side note: many commented on repair requests, and my contingency period being over. Just to clarify, my contingency lapsed because the inspectors are booked 3 weeks out right now and the seller refused to sign my addendum extending the contingency. Regardless, I still chose to send a written request (addendum) requesting the credit, because I've always believed the worst case is he says no. I never would've imagined that his response would've have been an attempt to cancel! There's definitely way more to this story that he is not sharing. But we're moving forward and closing in 2 weeks, so that's all that really matters now. 

@Jay Hinrichs

Thanks for your feedback Jay!

I typically do not use the HI HAR contract. My attorneys advised me that almost everything in that PC is standard HI RE law, and applies even if it's not in the contract. Also, in Hawai, escrow will automatically send the parties to mediation if they don't resolve after 14 days (but this gets funded by buyers EMD so I wanted to avoid it unless absolutely necessary)

Would love to meet you if you ever come back out to Maui!

@Jay Hinrichs

Thanks Jay! Yeah in Hawai’i I believe anyone can submit docs to the bureau for recording.

@Damaso Bautista

That’s what I was worried about too. But he would need major motivation to invest that much into dragging it out. And my lawyer was adamant that we’d have a good chance of having him pay all attorney costs if/when we won.

@Clint Votruba

To clarify, the inspection took significantly longer than usual due to the market. I sent an addendum requesting to extend the inspection contingency, but the seller refused to sign it. So my hands were kinda tied.. couldn’t force him to give me more time. And couldn’t really request a credit without knowing what was needed. Honestly he didn’t even know it expired.. he has no clue what he’s doing in RE.

My lawyers did review all of the docs and communication/emails and confirmed I have a very strong case. They advised me to pursue, amd had a demand letter breaking down nearly 200k in damages.

Thankfully he rescinded the cancellation so we won’t need to deal with any of that - what a relief!