All Forum Posts by: Jeffrey Holst

I started thinking about real estate after reading Rich Dad and watching Carlton Sheets in the late 90s but I didn't get started investing until much later.  When I was in law school in 2005 or maybe 2006, I partnered with a friend of mine on a quick flip he was working on,  I basically handed over a piece of my student loan check (around $3500) I made a small profit ($2500) very quickly which I used to pay for a trip to Paris with my wife for Valentines day.  It was mostly a lark, but hey I made some money and I moved on.  

It wasnt until 2010 or 11 that I got a little more serious about investing.  My friend and partner (law school flip guy) had continued to flip houses in Metro Detroit and Detroit and had started to build himself a portfolio of properties one day he mentioned to me that he had a deal lined up to buy a condo for 30K that was a bank owned foreclosure, the mortgage on it had been for about 100K and being this was 2010ish the market was way down but he still felt it was a good deal.  I agreed to put half the money after costs and a light rehab it came to about $17,500, (pretty much all my savings). 

The numbers looked like this

We bought it for $30,000, put about $1500 in renovations and ended up with an ARV of $45,000 and a rent of $700/ month or $8400 per year. The costs for taxes and insurance was about $1000/year and the HOA dues were (and still are) $175/ month or $2100 per year.

The net result is with no vacancy that first year we made $8400-2100-1000= $5300 (over a 15% return) of course this doesnt account for future cap ex or vacancy but still it worked out pretty well and the costs really havent gone up since.  We still own that unit and another in the same building both of which we now rent for around $900 per month and vacancy has been very low.  We did go in and remodel one of the units that was more dated a few years ago but that ended up costing like 2K .  The best part is these properties are now worth about 90K a piece.  

I am not going to walk you through every deal I have done since because that would bore even the most dedicated readers (myself included) but if you want to find out more about what I am doing now check out my blog and this article where I talk about how we are making a transition for single families in to multi families and how we have acquired 31 apartment units in the last 4 months and plan to go to 100 by the end of the year.  The pic at the beginning of this post is our 19 unit building.

@Richelle Bryan I like the "I'll cash in the amount I put in" idea i did this before this last correction/crash and I am super happy I did.  Now I dont stress at all on the values I feel great about holding and waiting to see

I think everyone is over thinking this. Budget for capex when you buy to make sure the numbers work then forget about that number forever. Next put a chunk of cash away to cover any expected capex costs. If you draw down you account below a certian level then put all cashflow back in to your capex savings until you have a comfortable amount in there again.  

Then repeat.  

So I think private lenders might do them and some local banks might if you present the deal correctly but I have not see too many interstate only options.  

Great meet up tonight thanks.  

Also, if it doesnt cash flow at 3.5% its probably not a great deal anyway.  

@Jordan D LeClaire, I promise that if you want an FHA loan and want to put 20% or more down they wont stop you. 3.5% is the minimum they allow there is no max in theory you could put 99% down and get FHA

Biggest con is that hard money lenders typically are expensive. The rate will be higher and the will want upfront points, Also they will likely want it paid in full in 12 months or so. FHA for a place you plan to live in is a much better option if you can qualify for it, IMO

I am assuming we are talking small multi like duplex-quadplex.  

Thanks for the update.  How was the how was the j Scott book?

Quick update,  I am still listening to one plus podcasts a day and have posted 151 times this year.  I also just posted my second blog post.  Let me know what you guys think if you check it out.  Leave comments here or in the comment section on the blog. 

Also check this out.  If you look up in the upper right of your screen assuming you are on the non mobile version you can see that I am officially the top contributor for this forum.  How fun is that.  Onward and Upward my friends.  Keep it up and stick to those goals.