All Forum Posts by: Jim Goebel

@Brian Smith

I can't tell for sure if you're contemplating doing your first deal or if you've already done it - but the challenge of financing and the 'time lag' was something real that we've dealt with.  I don't know how helpful this might be as it may sound cliche but definitely try to think one or two steps ahead of your next one.

I think the biggest thing is to be ready to WORK, because even in an up market there is equity to be built by simply being willing to do the work that others don't want to.  When you accept what your realtor tells you is 'market' and pay 'full market' you end up waiting a long long time for that $200-400 cash flow to get you anywhere, which I'm guessing is what you're alluding to...

When you look for that first deal, look for something that ultimately you can handle (ie: the risk profile of the projects isn't too much for you) but where you can build a substantial amount of equity just by getting the place to tip top.  There's always equity lines, refinancing options etc at that point.   

That's of course if you want to go quick.  If you are OK going slower, buy in an area with a higher chance of appreciation, and make your payments.  Eventually you're in a great equity place and presumably somewhere where you have more time and flexibility with your work schedule to take on the more aggressive projects.

Good luck!!!

Cool! If you hit your numbers you'll have a quick payback.  Kudos to you for taking it on.

Seems pretty reasonable to me and if you are doing the work yourself I think you'll find some of your numbers are high and some are low (but you won't know that in advance).  How are you doing counters for $300?  I have posted in the past on doing granite and would highly recommend using a hard surface (for longevity and beauty) but of course not at retail prices.

Talk to her broker.  Start posting stuff online.  Get a new agent.

@Rob Gillespie

In general I agree with your post on this thread however I thought one thing in particular I take exception to.

You essentially communicated (I don't know how to do a quote like others do here) that you don't care about the opinion of those that don't validate you.  I think this is EXTREMELY dangerous and I would say that it is a huge sign of maturity to seek critical feedback. 

Of course knowing the intent of where that critical feedback is coming from is also very important (is it coming from a place where someone is actually wanting to help you)

@Tom Lipps

We've done an egress project to add a bedroom I think 3 times now to add value to a house and the payback has been phenomenal every time. A lot of investors overlook the deals/opportunities that are already easily within grasp of their existing portfolio.

Your analysis seems apt to me, obviously the 'your time' is hard to quantify - I'm not sure that the jump from 2 to 3 bedroom would enable getting less needy tenants - at least with what we're doing - I think this would actually typically be the reverse if I had to generalize.  So I'd dig into that assumption.

Seems like a good payback.

Few words of caution and thoughts------ may or may not be relevant for you:

• Make sure you get the water thing nailed when doing those egress projects.  It's easy to mess that up by not digging deep enough, putting in proper rock and possibly tying to a drain tile (easier said than done), oh and sealing the new hole in foundation properly.  Consider a well cover over your well, as well.
• Consider doing the project with the tenants there.  What we did on one of these was to do the project after we learned that they were already utilizing the bedroom as a bedroom anyways (against the rules) - we didn't increase rent right away but gave them a year at current rent, and gave them visibility into what we thought market rent was going to be after some time and the option to stay at the increase...  That way they get the benefit/functionality but don't feel like they're getting penalized in rent increase.  Benefit obviously is that if you can do this, you don't lose rent while they're there.  Also, many basements this works well because it's kind of easy to section it off from the rest of the house while work is going.
• It seems like your costs are pretty high to be honest but I don't know what you're dealing with.  Best candidates for adding bedrooms downstairs for us have been basements where there is NO/MINIMAL risk of water intrusion as-is, and where there's already some finish (or mostly finished space), but just not the official bedroom.

@Cara Lonsdale

I understand what you're saying but disagree with the use of 'you get what you pay for' 

I can't stand that saying!

I have gotten great value out of low priced labor on many occasions and I have gotten little/no value by many a high priced (and google advertised/reviewed) contractor before.  

Can we just officially 'debunk' that saying?

I think we're veering off topic a little but I guess perhaps this is related.  

@Charles Manuel

I have an uncle/aunt combo with 3 kids that just started getting into the RE game outside of their full time jobs. I think they have 4 SFH rentals now.

They are both teachers.  They live in the Daytona Beach / New Smyrna Beach area.  I'm not sure if it'd be of any use to talk to them Charles.  Maybe PM me and we can figure out if there'd be any usefulness to an intro.

If nothing else it may be a data point on the investor side of things, especially folks that are a little new to it.

@Doug Prahst

Hi Doug

Yes we do own a rental with one gas meter and one water meter.  The electrical on that one is split.

For us, and the option without knowing any more I'd recommend is to : We found the easiest thing to do was to pay the bills yourself and simply build what you think is the average utility bills attributable to each space into the rent price.

In terms of marketing, market the place at the lower so you don't turn away people and then negotiate you paying those bills (the increase in rent functionally

That said, there are other options but of course they involve cost.  Option 1: New utility meter ---> Cost will heavily depend on the configuration of your existing gas lines.  Often your jurisdiction will require a separate T off the main line, which would involve trenching to get to a 2nd meter.  The inside gas re-routing cost will heavily depend on how accessible the existing lines are and the configuration of your unit(s).  I don't have good 'rule of thumbs' for you there on a per unit (for instance per foot) cost.  Black pipe is not too bad, it's just the labor and knowledge to do it that really gets you.

If you have the aptitude to do this, you can go for it.

Option 2: Meter it yourself and manage the billing yourself ---> We looked into this but it just didn't sound like something we wanted to mess with and even with this, it would heavily depend on your existing configuation as far as the cost/feasibility.  At some point in your system your two units will 'split' the black pipe line to get to your two separate units.  If it's a 'clean split' meaning if that split goes to both units entirely - and that split is accessible that's a WAY easier deal than if you for instance have one trunk line that goes through the whole place and say, Ts off 7 times to get to all of your appliances - with alternate Unit 1, Unit 2 along the way.  If the pipe is not visible/accessible you're talking about a lot of work/cost to get to it and even figure out what you would do........

@Timothy J.

I don't have any experience with this directly as far as forming an LLC, however we have bought a few investment properties using leverage under our name(s). Although you'll get different answers from different people - I'd advise to consider not using an LLC. If you have good insurance, the LLC doesn't really do much extra for you. Of course many lawyers would tell you otherwise.

Of course, one possible advantage (if this is important to you) is that an LLC provides a layer of obfuscation if for some reason you are looking to make it harder for someone to find out you are a landlord through public records. They'd have to search in two places and probably would have to know what they're looking for.

For most people, this doesn't matter.  However I don't see your last name on BP here so it may for you.

One other note:

I tend to be extremely aggressive in negotiations (I'm a capitalist).  So, my intuition tells me that what happens as a result is that people feel slighted or want to 'pay themselves' to make up for the fact that they bit off more than they bargained for - so they walk off with tools.