All Forum Posts by: Jeff F.

hey @Joseph Bratt - come to the real estate meet up in town, i think june 17 (3rd tuesday every month, in the evening)

hi @Tina S.

Done think of it as having 2 mortgages, think of it as buying cash flow. 

For instance if you have to put 10% down on a 100k property, and you cashflow 150/mo, you've paid 10k up front for 150/mo as long as you can stand to collect it. Obviously it's not quite as simple as this, but it helps me.

hi @Cody DeLong

I purchased a building with inherited tenants that had many of these same issues and the owner didnt take care of it at a huge discount.

they ALL smelled awful. Carpets, cat piss, smoking and more that I have only heard stories about. 

I'd raise the rent on all of them as planned and just leave the smoking alone for now. Go through all the units, and determine which ones are in the best shape, and how you'd like to tackle rehabbing them. 

Take the current tenants money for a while, put it aside and then once you've got enough, start getting rid of the smokers or putting them on a no smoking policy. If they move out, you've got money to turn their unit (KILZ Paint here would likely cover most/all your issues) and can bring the rent all the way up to market.

Rinse & repeat. 

Hi @Tina S.

Welcome - or at least, hello if you're not new. We have a meet up group and meet about once a month to talk real estate. Look for cheyenne real estate investors on meetup.com and you should be able to find one. 

The CPA Is rob johnson, and most of the people in the group use him. 

as for the people who say you are off your rocker. Dont listen to them - they are just afraid of something (likely failure) and want to hold you back. 

hi @Richard Smith

Welcome - here's the information for our meet up, and feel free to pm me if you've got questions

https://www.meetup.com/Cheyenne-Real-Estate-Invest...

Jeff

Another Update:

Spring leasing season picked up quite quickly in Cheyenne, so after sitting on a studio apartment for 3 months and dropping the price by 75/month, I was able to get that rented. In the same week, the Abandoned unit was also completed and leased, leaving me with 4 units that have been turned and leased, 1 existing tenant, 1 empty and 1 currently under rehab.

I've spent a lot of the last few months getting everything together and getting some of the common areas done - stairs painted and kept up, etc. While those have not brought a direct ROI, they do look much better and make it easier for the tenants.

#5 was able to rent for what I had figured, and it went so quick that I will likely go for a higher price point on the one under construction than I have tried for in the past. I'm a bit behind on my estimates (approx 125/mo) based on an early penciling of the numbers and I think a lot of that was due to things going for so much lower in the winter than in the summer. I decided to take a bit lower rent and a shorter term lease (so I could correct the issue) this summer.

Plan at this point is to finish the rehab and get everything rented out, then likely refinance into a longer term loan and hopefully i'll be able to pull all of my cash out of the deal. if I cant pull it ALL out, but still can pull out some i'll consider it a win. To have about 10-20k of my own money into a property worth approx 400k sounds alright to me.

I looked through a few of my old posts, and I was taking calls and dealing with issues on this place what seemed like every day for 3 months. I'm glad to report that is no longer the case and Im glad that I dont have to spend nearly as much time as I did - now it's just spending money. 

I'm starting to see some checks from the property manager which is nice, but I know it pales in comparison to what I've put in to this point. Im itching to get my cash out of this project and move on to another project, but need to be patient. at this time in 2016, i owned no real estate and now I have a 4 unit, a 7 unit and a SFH that will be turned into a rental.

April Update:

Good news this month. The studio that has been ready to go since jan 1 or so is finally leased, so i'm no longer carrying that. It went for a bit less than I had hoped, but that is what it is. 

Unit 5 also was finished, and leased within the week. Seems like things are on the up swing. 

I'm organizing my pictures of all units, and will post in a bit. Apparently some are having issues.

I'm also losing one of the better inherited tenants through attrition, which will give me a bit of time to take a break and get the rehab started in there or just wait. 

Hi @Joseph Woodman -

Nice to see you. We've got a few people investing from northern colorado that I know, and a few people that come up for our meet ups to discuss the market. We try to meet mid month on a mon/tues after work. Find us on meet-up.com for info, and of course, drop me a pm with questions, etc

Jeff

A much needed update:

Im starting to get this thing back to the point of profitability, instead of just at a point where I'm not LOSING a ton of money every month. 

I have completed rehab on 3 units.  There are 2 units that I have rehabbed that are filled with tenants. There is 1 unit that is rehabbed and is empty.

Rehab is actively happening in one unit (the one that was abandoned in January). It should be done by March 1 or close to that.

Demo has happened in one unit, and it needs a significant amount of work. I'd like to do some/most of that myself, as it's quite expensive. Im hoping I can get some time to do that in a while. 

That makes 5 Units, The other 2 are still full of inherited tenants. 

After the one that's almost finished is completed, i'm going to have work done on some more of the common areas, etc. It appears as though I WAY under-estimated the rehab costs. So much of what was done early on was unfocused and slow. That was my fault. I also didnt really consider improvements that were needed on the exterior of the building when figuring my rehab costs (ie, 28k worth of windows/siding). I also was planing on doing a lot of work myself, until I realized I did not have time and the building would slowly bleed me dry prior to me getting anything completed, no matter how much money it saved me. There was/is a lot of slop in this deal, but I'm beginning to wonder if I'll be able to successfully BRRRR this building. Right now, i've got 30k into it, and am carrying a bit of debt (even after the refi) from some of the rehab that i'm doing and have done. I'll need to get this thing profitable (not counting the rehab costs) for a while so that I can walk away from this with at least some cash.

I had initially put the value at 380-415k. I was able to rent the first rehabbed unit for a nice price that subsequently made me feel better about the valuation (higher than I had guessed) but the one that's currently empty is not going for anywhere near what I had hoped, and the property manager is pushing me to go even lower - which will kill the final valuation (and my BRRRR) if I go too much lower (i had figured on 575 I think, and the PM wants me to go to 475).

While I am not quite ready to worry yet, I do see how important it is to estimate rehab costs accurately, because if there wasnt a huge amount of margin in this deal, I would be sunk. I am still worried about not being able to walk off with any cash, but if the worst case scenario at the end of this investment is something that's putting off about 1200/mo after expenses in 2 years, that's not exactly the worst thing in the world. 

Hoping to get the studio rented soon, as well as the one that's currently under construction. Below are a few photos from how the unit was left, and 1 photo of an original (unstained) wood floor in the unit that was under the carpet. The hardwood in other units was painted over (wtf).

hi @Sam Rust -

I did an interim refi on the property that finished in january. I had a tenant leave (abandon) the property as well that month. Things are a bit tight, so I think i'll have to have some upgrade work paused for a bit while I build up a bit more capital and get some units full. 

Right now, I've got 3 completely rehabbed, and 2 of those are rented, with one still vacant (its tough here in the winter), and i've got another unit almost finished rehabbed (should be done mid-late feb) and one unit in complete disarray & needing some significant work. That makes 5, and the other 2 are occupied by inherited tenants, who I am content to leave in there as long as possible until i finish the other units. 

Hopefully I'll have a bit more time to share more in a bit.