All Forum Posts by: Kevin Kroll

It all comes down to mortgage math in terms of what your income can support (debt to income ratios), cash on hand (reserve requirements), credit score, etc...

Buying a lot of properties quickly can be challenging, but it gets easier after you can show records of being a landlord for 2 years such that the income from your rentals can be counted.

I have purchased 7 properties in the past 3.5 years, and 3 within 3 months from October 2015 - January 2016, so it can certainly be done.

Agree with @Bryan O.I personally don't care for property management as in my area I don't feel they do as good of a job as I do in tenant attraction and retention, so bringing in a PM to me represents the cost of paying for their service + cost of lower rents than i can achieve + costs of longer vacancies than I can achieve. When I consider these costs in relation to the time I spend doing PM type work, the $/hr spent is really high, so I self manage.

I'd suggest focusing on systems and processes which allow you to continue to self manage, but to do so in a way that minimizes your time and headaches.

It depends on what is typical for your market. I am actually accepting new tenants with 3 pets myself in the next 2 weeks. My lease is written such that tenant has the option of refundable $300 deposit / pet or non-refundable pet rent of $25/month. I structured the numbers this way such that even if there is protest about what the pet rent stands for $25/month x 12 months = $300, so it is as if the tenant forfeited a $300 pet deposit anyway.

Tenant moving in elected to pay deposit, so $925 security deposit + 3 x $300 pet deposit = $1825 in deposit money, which is enough to make me comfortable with the increased risk of pet damage. 

@Jamie Wooley, are you saying it would cost you $308k just to buy the current land and property? Then the cost of tear down of the existing property + construction of new 4-plex would be in addition to the $308k?

That wouldn't be a deal I would be interested in, costs are too high, and it would take too long until I started cash flowing due to construction time, if i ever did cash flow...

@James Masotti 

I think you and I share similar approaches, all of my units are upgraded to the point that I command a $100-150 premium to neighbors just down the street. I upgrade all my kitchens, and then will upgrade flooring only if the current flooring is in poor shape and need of replacement. In the kitchens I always install granite, new under mount sink and faucet, and tumbled marble backsplash, I install stainless steel appliances only if the current appliances are not in good shape / ugly.

Countertops - I agree with upgrading to granite, but would suggest a lighter color with more variation, I use giallo ornamental. The reason being the black granite can appear dirty if not clean, whereas something win a neutral tone with variation can disguise crumbs and dust. This becomes important when you are turning a property and showing it prior to the current tenant moving out. Additionally black with wood cabinets is a bit of a dated look. Wood cabinets with light granite emulates wood + marble which is a timeless look that will stand the test of time. If you had white cabinets you could go with black in a honed finish to mimic soap stone.

Cabinets - I have replaced cabinets once before. I looked into both re-painting, as well as replacing doors, but for the cost of these options I could just as easily replace with RTA cabinets. There are lots of RTA options out there, I went with a simple white shaker style since it is a timeless look, and I can easily color match for touch up paint. Looking at your particular cabinets I would keep them and just add nice pulls, it will make a dramatic difference, especially when you add in coutertop and backsplash.

Backsplash - I have done white subway tile in the past and it has worked as it is again a timeless look, and it cleans easily. The problem can be, much like said with the black countertops, if you are showing an occupied property the backsplash may not be clean, and white subway shows it. I now do tumbled marble in all my properties as the neutral color and variation hides dust / dirt / grease better when not clean.

Appliances - The range looks fine given the competition. I personally would just replace the vent hood to also be white, the mismatch draws attention.

See pictures below for most recent property I purchased and updated in January. Total cost of improvements to kitchen + repainting the entire interior came to $2,303.88 but I structured a seller paid $1,500 credit towards the granite, for a total of $803.88 out of pocket:

if doing vinyl plank I'd just run that throughout.

If doing laminate, I've done laminate everywhere except bathrooms. You don't want laminate in bathrooms withe all the water issues

You would still have all other contingencies including inspection, you would just be waiving the financing contingency. So if you uncovered mold during inspection or something you could still walk away. The idea is to make your offer as strong as a cash offer which still had inspection contingency etc.

Now, the seller would probably still prefer an as-is cash offer, and to compete with that your friend would have to make an as-is offer, which holds a lot more risk.

Agreed with a lot of what Don said, but will add my own 2 cents.

I am actually thinking about trying to do something similar, by acting as general partner and taking on limited partner investors through a limited partnership. The key factors here are experience (and how well that experience transfers to the property / business structure in question) and relationships.

Using myself as an example, I currently own and operate 6 SFR townhomes. The property I am considering a small 8-unit complex of townhomes. So while i dont have a tremendous amount of experience I can approach investors with a binder of historical data demonstrating success in managing townhomes in this area, and that my projected numbers are backed by historical numbers with similar properties.

Second is relationships, the stronger the relationship the more comfortable someone will be investing with you. So if i pursue this property I will be reaching out to friends / family, all of whom I have a close relationship with, know me well, and have expressed interest in being a part of what I do with real estate. The less strong your relationship the more formal you will have to be and the stronger your experience will have to be.

I'd suggest pursuing a 4-plex through an owner occupied FHA loan with just 3.5%. Through the property you will learn a lot about landlording, especially since you would be living on site, as well as building your record of experience managing a multi-family property that will set you up better for partnership deals in the future.

Based on the little familiarity I have with Athens I would vote not to add the cornice. It might be a nice feature, and make the home look a bit nicer, but since it is a flip you have to be thinking about every $100 you spend along the lines of whether it will make someone want to pay $150 more for the house?

There will be some people who this will really appeal to, but not everyone, and it will likely be less important at the lower price point I assume this home is at.

I'd either apply the money elsewhere, or hold on to it so you can sell the house for cheaper and still hit your return targets.