All Forum Posts by: Keenan Fitzpatrick

Allen nailed it. You got a home with basically no money out of pocket (god job!) but this isn't a sustainable model. You can't scale something with such little cashflow because any maintenance or vacancy runs the risk of your house of cards falling down. You will have debt pay down and interest right offs (good news again!) but those don't make it a good deal, they just make it less bad. So you're living there and it's probably affordable compared to other options and you got it on great acquisition terms. While there you're going to improve the cosmetics. That is your best ROI. Hopefully you can sell it and make some money off the improvements. In the meantime you had somewhere to live, which you needed anyway, and you got it on good terms. That's where I see the "good investment" is on the payday when you sell it. I'd recommend putting that money down on an owner occupied 4plex that you treat exactly the same with improvements.

Awesome! Looks like you're well on your way! 

Thanks! It's been slow to start and now I"m moving as fast as I can and still stay safe. In total I got this deal, am doing another right now that I'll buy with 20% down, and I wrapped two other fourplex's last year as well. Hard money lenders are getting tight but I'm looking for another flip now and also looking to tear down the house behind my current fourplex property to build a new one if I can get financing.  

I'd be careful. You had recent success with negative cashflow being outweighed by appreciation. The market as a whole is not forecasting success in that strategy. What happened to the $66k you made? If that's held in reserves then maybe this would work. If that's being put down on the new house then it seems like this may be over-leveraging. I love the enthusiasm and optimism but don't forget the first rule of investing. We find success not in the great opportunities we get to "cash out big time" by holding a property for a year but in continuing to be real estate investors for the next 40 years. I think the market will go down. Maybe it's only briefly but highly leveraged deals with small or negative cashflow is a bad idea right now. Maybe you can stay where you are and pocket the $66k for a deal coming in 3-6 months? Maybe you can use that money to afford to sell the condo at a loss and get your new house with the ADU/MIL and that would be a win for you? Just a couple thoughts... If you could keep both, then I 100% agree that values and rents will go up in about a year with inflation. I hope this helps.

@Leif Weisner how did this deal turn out for ya? @Brian G. had a couple great suggestions. Another idea is to get that HELOC and use it for flipping and/or hard money lending and use those profits to buy multifamily. Keybank does HELOC's up to 90%.

Investment Info:

Small multi-family (2-4 units) other investment in Anchorage.

Purchase price: $250,000
Cash invested: $120,000

Myself and some partners bought 2 fourplex's right next to each other for $250,000 each. They both got about $120,000 of renovation and I used my profits to buy one of them with my FHA. So this was a owner occupied BRRR multi family. It has worked out great. I have great tenants, vacancies are filled quickly, the building is low maintenance and cashflows better than other buildings in less condition and it cost me nothing to acquire.

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

I was able to acquire a deal on a fully renovated 4plex with no money out of pocket.

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

I am a licensee. I originally put it out to my investment group and clients but nobody took advantage so I did. Now, it's my favorite strategy. The negotiations were less on the purchase and more on assembling the team needed to make it happen.

How did you finance this deal?

With an equity partner.

How did you add value to the deal?

I found it, structured the deal and assembled to team.

What was the outcome?

It worked out as planned and everyone was happy.

Lessons learned? Challenges?

Get a roof inspection regardless of what people say. I also learned how to be proactive and provide then needed info to an appraiser to make sure we get the value we need when operating on the top of your market.

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

I recommend the crew at First Rate Financial in Anchorage. They are some of the top producers in the country even though they put the most emphasis on the relationship with their clients. I would not be where I am today without their influence.

Better yet. Talk to @Nick Williams

I see someone on Instagram from Fairbanks sometimes. It looks like they flip a few a year. I think you can find them (or maybe me too) by searching flipping Alaska. You can also call the Walden/Madden team. They’re the biggest real estate team up there by a huge margin and can probably get you pointed in the right direction. DM me and I can send you some direct numbers if you’d like

Great points Bill! I agree that the entry point is high and things cost more. On the other hand, things seem to be more stable. In 2008, our economy and real estate market was largely unaffected. Now, I'm also a little concerned with how hard Alaska will be hit due to recent events and the layoffs, oil being so low, tourism being hurt this year and I even heard about the fishing industry taking a hit. I think it may dip down a little this year and then fishing and tourism will probably be back full force next year. We still have a huge construction industry and health and human services is the biggest sector followed by retail. I still think buying cashflowing assests may be a good idea especially distressed and/or foreclosed ones that you can purchase with equity in them. The forced equity and additional cashflow should be able to weather the storm of difficult times. 

When it comes to a VA loan and a high entry point, I consider that to be an advantage. I always recommend the biggest loan possible if all other factors, especially cashflow, are the same. You'll get more tax advantages, debt pay down and appreciation. Maybe not a good option for the OP since he'd have to owner occupy up here but I thought it was worth noting for when he does use his VA loan.

Yes, of course. I'm not sure exactly how much but if I were going to Vegas I would bet that laying off a huge amount of people will have a negative affect on their ability to pay their bills. I think values will go down first as the market slows then there will be foreclosures shortly after. Showingtime is down 60%+ as well as the stats previously mentioned.