All Forum Posts by: Heath Jones

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $540,000
Cash invested: $120,000

This is our 16 unit apartment building.

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

Love multifamily. We want to go bigger, faster.

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

Funny enough, I found it on LoopNet. I negotiated (with the behind-the-scenes help from my wife) it all myself directly with the seller.

How did you finance this deal?

Seller financing and raising 100% of the down payment from family and friends via personal notes.

How did you add value to the deal?

Still in the process of adding value...

What was the outcome?

Will let you know when it is time to refinance!

Lessons learned? Challenges?

The cash flow represents when all of the units are rented. Keeping the place fully rented is currently one of the challenges. I receive calls and emails almost daily, but have a strict credit score requirement which turns most who are interested away.

Thank you Mindy,

  I wasn't able to do it from the app, but I was able to do it on my computer. Thank you for your reply! It is very much appreciated.

Have an excellent day!

Heath

Investment Info:

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

Purchase price: $133,500
Cash invested: $33,000

This is a four-unit apartment building.

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

If there is a vacancy in 1 or 2 of the units in a given month, I can still cover the mortgage and expenses with the rents from the other two units.

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

My wife found it on the MLS when it hit the market at 3 pm one afternoon. We worked with our RE agent to have a contract to the seller by 5 pm the same day and had it under contract within 24 hours.

How did you finance this deal?

Conventional loan.

What was the outcome?

Closed in a month.

Lessons learned? Challenges?

Move Fast!! Get it under contract and worry about negotiating during due diligence.

I'm looking for information about whether you can rollover funds in a TSP into a QRP, while still working. I have only been working for the Federal government for the past year and a half, so it probably won't be anytime soon. I just wanted to know my options if I decided to do this in the future. Here are some questions:

1) If you are able to, once you roll over what your TSP savings into a QRP, can you sill contribute to the TSP?

2) If you use the funds in the QRP as a down payment on a BRRR property, I imagine you would need to return the funds when you cash-out refinance, but does the cash flow from the property have to go into the QRP. My gut is telling me it does.

I'm sure I'll have more questions, but I think answers for these will set the foundation for the next set of questions. Thanks in advance!!

Are you looking to own more of America?

On this show, we discuss Multifamily Real Estate Investing strategies for the career professional to help you own more doors while keeping your day job.

Join Hutch “The Marine Investor” and Dr. Heath Jones as they speak with real estate professionals about the results of their multifamily investing “experiments”.

Each week questions about multifamily investing are systematically dissected by your two hosts and their guest as they work through observations and data to answer the question of the week.

You can find the show on Spotify and iHeartRadio. Check out the link below:

https://open.spotify.com/episode/2Eoa34xuuw4FWgcLd8Npcm?si=-JReI4cuS9qxDlifSPh8ew

Lesson #2 - Always, always, always get three bids!!

The next thing we learned is how tough it was to find good help. Contractors apparently are notoriously unreliable and even when we had one sign a contract to do the work we needed, they didn’t show up or call the day in the agreed upon day. This was in spite of the fact that we had verbal confirmation on the phone the day before that they would be there. When I finally got a hold of them, they told me they were too busy with other jobs.

My wife and I were stumped! We just figured contractors are always looking for work, so how could they turn down a job or just flat out not show up.In the end, I’m glad they didn’t do the job because come to find out, we would have overpaid significantly.

You’d be surprised at how much someone charges for the same work varies. It depends on a whole host of factors, but you can be assured that if the person sizes you up as someone who doesn’t know anything, you will be taken to the cleaners. Don’t get me wrong, there are several straight-shooters out there. The problem when your starting out is that you have no idea who is giving it to you straight and who is blowing sunshine as if they are here to help you out too.

The only way to get around this, is to get 3 bids. I also tell them that I’m getting bids. This won’t mean you always get a cheaper price, but you can be more confident of how much the job actually costs.

I keep trying to post on the Marketplace forum and I get an error staying I need to choose the post type or something like that.

@Nicole Heasley I did pay someone to clean the fridge and the did a half-butt job. Which is part of the second lesson I’ll be talking about regarding how and when to pay contractors.

@Nathan G. I did the exact same thing for the exact same reasons. I spent close to 5 hour scrubbing, bleaching, taking apart the fridge, gaskets, internal housing inside the freezer and fridge compartments. I even put newspapers with charcoal on every surface of the both the top and bottom to get rid of smell. It did a good job, but you could always get a hint of that smell. In the end, the freezer stopped working and I was just tired of trying to save that thing so I gave in and just bought one.

Tip for New Investors: Lowe’s will deliver a new fridge and pick up the old fridge for a $20 service fee. Well worth it because the dump charges you by the weight of what you are dumping. Plus, it doesn’t take any of your time away with loading it up and hauling it to the dump.

@Sarah Brown

Great advice!

1) I do have a Landlord agreement with the Power Company now, but as this all occurred within the first few weeks of taken over the property, not all of the units had been transferred to me correctly (this one being one of them). It has all been resolved now.

2) You are right. I actually did give a 2 day notice to inspect the unit on the same day I gave the notice to quit. Two days later, I went during the day and just quickly walked through, so I didn’t notice that the power was off. It also looked like the person was still living there. Believe me, I will always check if the power is on in the future.

In fact, new investors always give the light switches a quick flick to make sure the lights are on!!!

Here is a more accurate detailed review of the timeline to help you new investors out there:

We’re not legally allowed to remove anything under the Abandonment Clause of the lease until day 7 after a tenant turns the power off, or 14 days after the power being shut off due to lack of payment. This being the case, I gave the notice to pay or quit, 2 days later checked to see if anyone was home. It looked as if someone was still living there. I tried for another few days (before the pay and quit period was up) to contact person with no response. Once the period was up, I contacted the power company to see if the power was still on.

That’s when I found out the power was turned off exactly one week before and went to inspect the unit again finding that most everything had been moved out except a pile of junk (which was their “boyfriends” and a whole other story for another post) and when the notorious “opened the fridge” moment I wrote about occurred.

Since I was in my right under the Abandonment clause, I called cleaners to come remove the junk, and clean out the fridge. They weren’t able to get me on the schedule for another 3 or 4 days.

At this point the power had been off for almost two weeks and when we went in to haul everything out, I found out the top freezer on the fridge was full of meat. How did I find this out you ask? Because the fridge looked like the elevator scene in The Shining (google it ya youngins). Ugh!

Anyway, to all you new investors out there... get the power switched over to your name as soon as possible and make sure they put all of the units if they are all part of one property under some sort of Landlord Agreement so if the tenant shuts off the power, you are notified.