All Forum Posts by: Joe Hermanson

Investment Info:

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

Purchase price: $135,000
Cash invested: $40,000

Two story (2 Unit) Victorian from 1889 that I moved into and fixed up. I rented top unit and 5 car garage and then moved out and fixed up the first floor for rental. It's currently fully rented, but I may add 3rd unit to basement at some point.

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

After reading Rich Dad Poor Dad I knew I had to do something and after my uncle tried to sell the property for 5 years, I decided it was time to give it a shot.

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

My uncle was having trouble selling it, so I bought it through a land contract.

How did you finance this deal?

I moved in with a land contract (5 yrs to close), and after posting two years of Schedule E's on my taxes, I closed on the house with a conventional fixed rate loan.

How did you add value to the deal?

I did an extensive rehab upstairs and I did an almost full gut on the first floor unit. I Replaced all five garage doors and a new roof on the garage.

What was the outcome?

It's cash flowing over $500 a month, with a ROI and a Cash on Cash return of 16%. The house is worth around $500k now. It still needs some work to get it where I want it though.

Lessons learned? Challenges?

Pay to have the work done instead of doing it yourself. While you can do it, you loose more money in the long run than what you save. Only do the work yourself if you don't have the means to get the full amount of cash/credit. Everything takes longer and more money than you expect.

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

Not at this point.

Welcome to the Forum. 

Jake, that is what I'm seeing, a lot of 1% possibilities.  I was hoping for closer to 2% with finding an off market property/preforeclosure/shortsale property that needs some work that I could fix up and charge market rent.  I'd like to cashflow around $300/month on a property to make it worth the effort.  So I guess I may need to start direct mailing people or look for a wholesaler who has an opportunity.  

I'm looking for a real estate broker who can help me find investment properties in the Naperville area that can cashflow. Normal MLS focused realtors that I've met and started to use, don't seem to have the same mindset needed to understand landlording and what can cashflow. I'm hoping someone here could recommend a broker who understands what can cashflow in the Naperville area. I'm looking for mainly single family homes or Condo's. I don't think I'm ready for Multi-unit buildings yet. Any help would be appreciated. Thanks.

Any updates on this thread? I'm looking to start attending local Naperville REIA groups to meet other Real Estate investors. I see that there are some groups on Meetup.com and I'm not sure which would be the best to attend.