All Forum Posts by: Kevin Hofstee

I recently acquired a duplex in Muskegon, MI - need to fully update one side of it, the current bathrooms are not up to code, so the work will require creating an entire new bath of out a storage area, and knocking down a wall between the existing baths.  Looking to move quickly!

@Peter Walther that sums up my experience pretty well, ultimately just jumped through their hoop to get that money back out for the next deal (well given how long it took the next deal already closed and I needed a 401k loan to bridge me over - but I’ll promptly pay that back now)

@Drew Sygit they sent their required definition, which of course said nothing about originals. I jumped through their hoop and went to my lawyer’s office to get the original, I did get the title company to cover shipping back and forth at their expense…fortunately am on paternity leave right now so was able to get out there on short notice.

@Charles Kao good to know about recertification

For anyone curious bank is LMCU and title company is First American Title Insurance Company. Will avoid both on any future deals, not to mention it took more than 2 months for them to execute - when my local broker offered to do it for me in 2 weeks :/

@Greg Scott I did wait the full year per my bank's policy, and did end up getting lucky with market appreciation. The property was appraised for $175,000 so pulled of the perfect BRRRR. Cash flow will dip to $250, but none of my own money in the deal! Should also be able to raise the rent in the fall when the current lease is up.

Using a local community bank in Michigan for a cash out refi on a BRRRR. The property is currently held in mine and my wife's respective revocable trusts. I live out in Oregon, so they sent a mobile notary, we get to a page and then there's a note saying they need originals of our trust documents…except these are kept on file with the law firm who created the trust.

Firstly, they never even asked for this before final close (they have digital copies). Secondly, I’ve closed multiple other properties with simply the copy of my trust document. I’m doubtful they legally require it, but I’m not sure…can anyone here shed some light on what they legally need to close?

Thanks in advance!

I'm looking to learn more about Appfolio's AI Leasing Assistant Lisa.  Does anyone here use it?  If so care to share your thoughts about it?

United Properties of West Michigan is expanding to support Muskegon I believe, could be another good option.

@Greg Scott you're correct re: the investment I put into the rehab, was about $37K in total. Was my first deal post, I wasn't sure what I was supposed to write :) At the time I estimated the ARV to be about $130K, since I found this on the MLS I wasn't expecting it to be a full BRRRR deal, but am hoping to be able to get the rehab cost back out. The community bank I did the deal with requires a 1 year seasoning period, am hoping to build that relationship so am waiting that out before a refinance.

How long have you been investing in Grand Rapids?  I made a trip there just prior to COVID, so managed this all remotely!

Investment Info:

Single-family residence buy & hold investment in Grand Rapids.

Purchase price: $85,000
Cash invested: $58,000

Value-add out-of-state single family home purchased @25% down - cash flowing $580 a month (12% cash on cash before refinance, which is not done yet).

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

After sitting on the sidelines for too long, finally decided to take action. I was looking for a value-add opportunity of a property that would also qualify for conventional financing.

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

Brought to me by my realtor (who is also a licensed builder and an investor himself). He did a walkthrough and a rough estimate of the amount of work needed. We expected to be in a competitive bidding situation, and went over asking - but after conducting an inspection and identified the full list of issues, we were able to negotiate back down to their original asking price. They actually didn't counter, so doing so again - I'd be more aggressive in my discount ask.

How did you finance this deal?

Conventional financing with 25% down at a local community bank that offers an additional reduction of interest rate of 0.125% if paying the mortgage from one of their checking accounts.

How did you add value to the deal?

Added a half-bath, tore down a wall to make a bigger living space, new flooring and paint, added an additional counter top in the kitchen to make more usable space, put-in stainless steel appliances, added washer/dryer hookup.

What was the outcome?

The rehab took about 3 months (could have been done faster), but we're cash flowing $580 a month (after PITI, 5% each for vacancy, OPEX and CAPEX, 10% property management) and are getting a 12% cash on cash return (will change if we do a cash out refi).

Lessons learned? Challenges?

The rehab took longer than planned, largely because we weren't sure what to do, nor who to have do it - we've been building up our contractor contacts over time - joining the local area Facebook Investors group was the best decision we made. We did miss some minor things during the rehab, like one room had no heat source, and we let the contractor make design choices a couple of times, which we ended up re-doing in or two instances. Overall a great learning experience!

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

Our property management team from United Properties of Michigan led by Tim VandenToorn was great an onboarding a new investor and connecting us with a great realtor / builder.