All Forum Posts by: Alex Olson

Investment Info:

Single-family residence buy & hold investment in Kansas City.

Purchase price: $53,000
Cash invested: $96,000

3bed/2bath, 2-car garage, 1412 sq ft, 1952 yr built - SFH

PP: $53k
rehab: ~$44k
All-in: ~$97k (PML $90k)

Appraised: $142k
75% LTV: $106.5k
cashout refi after closing fees: ~$102k

Current rent: $1020 ($995 + $25 pet fee)

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

I live in Hawaii, where it is extremely difficult to cashflow. I chose to invest in cash-flowing rental properties and build long-term wealth through buy-and-hold.

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

Found it off of Craigslist! This was from a wholesaler who actually had the motivation to close quickly (closed in 5 days). This was listed for $65k, but because the wholesaler wanted to close before his family reunion, we were able to negotiate down to 53k.

How did you finance this deal?

Mostly through private money lenders (PML) and some out of my pocket.

How did you add value to the deal?

Did a full rehab - floors, paints, new bathrooms, electricals, fixtures, etc. Spent ~$44k.

What was the outcome?

Rented out for $995 + $25 in pet fee = total rent $1,020/mo
Appraised for $142,000 and did a 75% LTV cash-out refinance on a 30-yr fixed.
Cashed out ~$102k after closing costs - 97k (all-in) = $5k in my pocket + NO MONEY left in the deal!

Lessons learned? Challenges?

Extensive weather delayed the project significantly and completed just before Thanksgiving. Had a difficult time placing a tenant during this time and it was vacant for nearly 60 days before getting it rented. Rented about 100-200 lower than I would've liked.

The refinance process took over 3 months due to the appraiser requesting a structural engineer to assess the basement crack. This took additional time to get quotes and coordinating with the tenant & the foundation company.

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

This was my very first project and I worked with my mentor and friend, CJ Calio. I was able to use his contractor who has been work with CJ for several years. He recommended me a few of his property managers that he's been using and I hired one after interviewing them.

Here’s the hypothetical situation:

I sell an investment property for $1.5mm. Then 1031 to buy another investment  property at $1.0mm. Difference of $500K.

1. Can I use the $500K difference as a down on a second larger property (say a $2.0mm investment property)?

2. Can I use that $500K to buy a smaller investment property outright for $500K.

I honestly don’t know if I’m understanding 1031 so hopefully this makes sense and thank you in advance for anyone’s help! Explanations in simple terms would be much appreciated!!!

https://mokslaw.com/ Julie Anderson in KC

Hi guys i have a question for everyone and hopefully someone can help me out about me selling my home. I bought the home in February of 2017 and i rented it out in November of 2019. My tenants are moving out this end of the month and i am selling my home. The question is am i good on keeping all of the capital gains or do i need to prepare for a 1031 exchange? I live in the house for almost 3 years and rented it for a year. Thanks in advance

Thanks Alex. I've done all my own taxes to this point, but they're pretty straight forward as a W2 earner with tax deferred and taxable investment accounts. I read both BP tax strategy books, and if nothing else, they've taught me the importance of good book keeping, tax planning, as well as getting a good real estate CPA. 

@Alex Olson- unrelated, but given that I'm in Springfield, I'll keep you in mind if we/I decide to make some real estate moves in MO. Thanks!