All Forum Posts by: Kara Beckmann

Has anyone tried to refinance one of their properties without having two years of self-employed tax returns? 

My lender is suggesting that I create a trust and then use that trust to claim trust income while we are refinancing for a cash out loan. Once the refinance is complete, I can then close down the trust. 

Is this my only option?

Thank you in advance for any advice!

I have been wanting to get into commercial real estate this year and I have come by what could be a great commercial deal, however I am realizing just how different commercial is from residential when it comes to running the numbers. 

Current building is 5,200 with 61 parking spaces. Current site plan attached uses the existing building and permitted construction drawings have raising the roof and a whole new facade with a drive thru. 

The seller is willing to do seller financing on the deal, however how will I be able to pay the seller during construction and if I can't place a tenant right away. 

The numbers alone are seeming hard to get exact figures on- future assumptions, fixed - paid expenses, projecting rent, cap rate, tenant improvements, etc.. 

I would love to bring a partner in on this deal who is more familiar with this industry, however I don't know the numbers to present to them. 

ANY ADVICE would be greatly appreciated!

@Ryan Swan I have a rental in Tempe and it has been great. I currently have 4 tenants who's lease is up August 1, and I am looking for a new property management company. Do you have a management company that you would recommend? Thank you!

@Larry Turowski Thank you! There are more pictures of this home (including before and afters) on my website: http://www.beckmannhouse.com/kings-ave.html

I interviewed a number of different contractors to get the lowest price on the addition since I knew that would be the largest portion of the renovation cost. 

@Brad Baker You are exactly right! I held this house just a few days longer than the 4 month mark. The renovation took approximately 3 months, and then the buyers had a 30 day close. I put 20% down for the down payment, and financed the rest of the loan. I used my own cash to do the renovation. I was still working a full time job at this time, which helped with my cashflow. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $302,000
Cash invested: $138,850
Sale price: $550,000

This deal was full of firsts - It was the first property that I added on a full addition, the first deal that I paid all cash, and the first deal that I brought on another investor. That investor happened to be my Mom. We split everything 50/50. I managed the construction, design and entire renovation process while she managed the sale of the property as she is a Real Estate Agent. This turned out to be a home run deal for us both. We added on 820 square feet onto this home.

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

I knew the neighborhood, and there was a huge side yard that made me realize we would be able to add value to this deal my adding on square footage to the existing home.

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

My realtor (my Mom) found this deal on the MLS and sent it to me. We negotiated the deal down by $18,000 even with other offers on the table. We met the home owner and had a really good connection with her.

How did you finance this deal?

I brought my Mom in as my investor and we were able to put our funds together to fund the purchase and renovation with our own cash.

How did you add value to the deal?

This would not have been a good deal without the 820 sqft addition (added on a large open concept kitchen, powder room, 4th bedroom, laundry room and dining room). It was priced too high per square foot when we purchased, however we were able to do the addition for $110 per sqft and then sell for $265 per sqft. This was a major (and beautiful) remodel, and everything in the home was replaced - new A/C unit, new duct work throughout, new irrigation system in the backyard and designer features!

What was the outcome?

This was my first investment listing in the $500,000's and I wasn't sure how fast this would sell in that price point. It went under contract for $562,500 in 14 days. The appraisal came back at $545,000 the buyers agreed to come up with an additional $5,000 to get the deal done. It closed at $550,000. We had $138,850 into the remodel (I budgeted for $135,000) and the total profit was $92,000. We each made $46,000 and I immediately re-invested into another fix & flip 1.3 miles away.

Lessons learned? Challenges?

This was the first time an appraisal came back so much lower than the listing price, even when we had comps to support the listing price. I will now get appraisals done before we list the home to have on hand to support our listing price.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $302,000
Cash invested: $138,850
Sale price: $550,000

This deal was full of firsts - It was the first property that I added on a full addition, the first deal that I paid all cash, and the first deal that I brought on another investor. That investor happened to be my Mom. We split everything 50/50. I managed the construction, design and entire renovation process while she managed the sale of the property as she is a Real Estate Agent. This turned out to be a home run deal for us both. We added on 820 square feet to the side yard of this Scottsdale home. This made room for a large open concept kitchen, powder room, laundry room, 4th bedroom and dining room. I budgeted $135,000 for the renovation and even after a number of unexpected costs, we did the entire renovation and holding costs for just $3,850 over the budget. This is where all of my spread sheets and budget shopping came in very handy. The total profit on this remodel was $92,000 - we each walked away with $46,000. I took the profit and immediately reinvested into my next flix & flip just1.3 miles away.

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

I knew the neighborhood, and there was a huge side yard that made me realize we would be able to add value to this deal my adding on square footage to the existing home.

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

My realtor (my Mom) found this deal on the MLS and sent it to me. We negotiated the deal down by $18,000 even with other offers on the table. We met the home owner and had a really good connection with her.

How did you finance this deal?

I brought my Mom in as my investor and we were able to put our funds together to fund the purchase and renovation with our own cash.

How did you add value to the deal?

This would not have been a good deal without the 820 sqft addition. It was priced too high per square foot when we purchased, however we were able to do the addition for $110 per sqft and then sell for $265 per sqft. This was a major (and beautiful) remodel, and everything in the home was replaced - new A/C unit, new duct work throughout, new irrigation system in the backyard, new artificial turf in the front, new flooring, plumbing fixtures, cabinets, and designer features found throughout!

What was the outcome?

This was my first investment listing in the $500,000's and I wasn't sure how fast this would sell in that price point. It went under contract for $562,500 in 14 days. The appraisal came back at $545,000 the buyers agreed to come up with an additional $5,000 to get the deal done. It closed at $550,000. We had $138,850 into the remodel and made $92,000 in profit.

Lessons learned? Challenges?

This was the first time an appraisal came back so much lower than the listing price, even when we had comps to support the listing price. I will now get appraisals done before we list the home to have on hand to support our listing price.

@Alex Bekeza You are exactly right. It really was a Harvard Level Education for my future projects. It was an 8 month term at 9% with two points up front. 

@Branden Pfaff It was brutal at the time. Glad you can learn from it and not have it happen to you too!

@Kris L. Thank you. That contractor is no longer in business. It was a good lesson to learn early on in my career though.