All Forum Posts by: Kristi Kandel

Investment Info:

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

Purchase price: $540,000

Cash invested: $150,000

4plex with 2 - 3 bedroom units and 2 - studios. Once studio was completely remodeled and turned into an airbnb and the other 3 units are rented long-term. The exterior was completely upgraded as well.

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

It was time to finally start investing in larger properties than single family homes. It's the only viable way to scale and is the same effort as a single family house.

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

I mailed letters to about 70 homes in this area. The seller and I built a relationship over 6 months and one day he decided he'd come down to my purchase price and we bought the property less than 2 months later. He had another investment he'd prefer to spend his time and money on and was ready to dump the 4plex.

How did you finance this deal?

We used a credit union portfolio loan to only put down 16.91% instead of the standard 25-30% down on a traditional commercial loan.

How did you add value to the deal?

We remodeled one of the units and the exterior. The remodeled unit is on airbnb as a VHR and we doubled the rent of a LTR unit. We also purchased the home 160K under the appraised value so we will do a refi-cashout in a few months and pull out almost all of our initial investment.

What was the outcome?

Overall this is a huge win. We are getting a 12%+ return monthly & after the refi cashout most of the investment we'll likely be 22%+ return. The property is also in an area that will most likely exponentially increase in value.

Lessons learned? Challenges?

1. agents can ruin a deal that the seller and buyer worked out and spoon fed to the agents.
2. seller turned power off a day early creating unnecessary "fires" to put out ahead of time
3. tenants need boundaries (immediately) to limit unnecessary interactions
4. if you buy a home warranty remember you bought it.... or you'll pay more out of pocket unnecessarily
5. The tenants will try to take advantage of new buyers.

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

Mountain America Credit Union has great portfolio loans but if you can get the same loan somewhere else do that instead as we've yet to encounter a competent employee. However, MACU's portfolio loan is amazing so to us it's worth it...

Investment Info:

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

Purchase price: $540,000
Cash invested: $150,000

4plex with 2 - 3 bedroom units and 2 - studios. Once studio was completely remodeled and turned into an airbnb and the other 3 units are rented long-term. The exterior was completely upgraded as well.

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

It was time to finally start investing in larger properties than single family homes. It's the only viable way to scale and is the same effort as a single family house.

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

I mailed letters to about 70 homes in this area. The seller and I built a relationship over 6 months and one day he decided he'd come down to my purchase price and we bought the property less than 2 months later. He had another investment he'd prefer to spend his time and money on and was ready to dump the 4plex.

How did you finance this deal?

We used a credit union portfolio loan to only put down 16.91% instead of the standard 25-30% down on a traditional commercial loan.

How did you add value to the deal?

We remodeled one of the units and the exterior. The remodeled unit is on airbnb as a VHR and we doubled the rent of a LTR unit. We also purchased the home 160K under the appraised value so we will do a refi-cashout in a few months and pull out almost all of our initial investment.

What was the outcome?

Overall this is a huge win. We are getting a 12%+ return monthly & after the refi cashout most of the investment we'll likely be 22%+ return. The property is also in an area that will most likely exponentially increase in value.

Lessons learned? Challenges?

1. agents can ruin a deal that the seller and buyer worked out and spoon fed to the agents.
2. seller turned power off a day early creating unnecessary "fires" to put out ahead of time
3. tenants need boundaries (immediately) to limit unnecessary interactions
4. if you buy a home warranty remember you bought it.... or you'll pay more out of pocket unnecessarily
5. don't do too much too fast or only do exactly the repairs you say you'll do. The tenants will try to take advantage of new buyers.

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

Mountain America Credit Union has great portfolio loans but if you can get the same loan somewhere else do that instead as we've yet to encounter a competent employee. However, MACU's portfolio loan is amazing so to us it's worth it...

@Scott Dixon I plan on living in this one for a while. However, if the right owner-occupied deal comes along I'll move out in a heartbeat. I'm just not attached to stuff. Since I was able to buy below market I would be able to rent and cash-flow a decent percentage. That just depends on if I refi and cash out or not. Since I have a decent savings and essentially gutted the place I'm not too worried about large repairs outside of replacing the furnace for 2K in 2-4 years. I also own and manage other rentals in the area so a single family residence in the same area shouldn't add much to the LL perspective. I bought it for a long-term hold and the value exponentially going up compared to standard appreciation. Thus, I'm not too concerned about the cash flow % being well into the double digits. 

Investment Info:

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

Purchase price: $540,000
Cash invested: $150,000

4 plex with 2 - 3bedroom 3 bath units and 2 studios

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

multi-unit deals cashflow and are less risk overall - also it's in a prime market getting a private and public overhaul

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

I sent a letter to this specific community and offered fair market value. The owner initially was interested in August of 2018 but wanted 600K and the deal just did not pencil. We did not want to buy too high and force a huge rent increase and kick the locals out as we already have a severe housing shortage. So we tabled the 4-plex. A month later the owner informed us that maybe another owner would be interested in selling. In late November the original seller agreed to 540K price and we bought.

How did you finance this deal?

This is the key to making the deal pencil. We found a credit union (MACU) with a special portfolio product that allowed for 16.91% down for a conforming loan and 4.875% interest rate. The next best offer was 25% down and 6% interest. While MACU gave a 30 year loan the note is actually due in 15 years. We decided by then we'd refinance, pay it off or sell and that 15 years was plenty of time.

How did you add value to the deal?

By negotiating the purchase price down and buying off market we closed with 160K equity. The appraisal was 700K and we bought for 540K. We are remodeling one of the studios completely, remodeling the master bath of the 3 bedroom, scraping and painting the exterior, reinstalling the privacy fences, fixing the balconies & added a shared laundry room for all 4 tenants.

What was the outcome?

In July we'll refinance the deal and pull out 130-150K or almost our entire investment. We'll maintain a double digit return and hold the property long term. This home is in a market where the rental housing inventory is non-existent and a waiting list on open units. We plan to keep the current tenants and not raise the rents beyond the minimal increase we did following our purchase.

Lessons learned? Challenges?

Have stamina for the deal, be creative on the structure and never count on a professional to do their job right. ALWAYS double check their work. From realtors, escrow agents, lenders, etc. If you can hack it you can find sick deals. Stay on top of your contractors to avoid budget overruns and to set realistic expectations.

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

N/A

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $355,000
Cash invested: $82,750

I live in the home right now. It was a complete fixer upper and I was able to add a highend master bathroom.

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

I wanted to invest in a specific area knowing the improvements and new construction happening in the next 3-5 years on the private and public sectors that will make home values skyrocket.

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

I mailed a personal letter to every home in this community. A few weeks later Grandma Shirley gave me a call. She was the original owner and had stopped living in the home about 7 years ago. Her long-term renters were moving out and in her words, "It's time to let this one go". She was an incredible sharp older woman but also knew that the house hadn't been maintained for several years. We looked at zillow and I explained why my offer was 45K lower than a comp. She accepted the first offer.

How did you finance this deal?

owner occupied 5% down FHA loan.

How did you add value to the deal?

I remodeled the entire interior, exterior paint and new deck, cleaned up the yard and weatherproofed the shed and added power. I also added a master suite bathroom.

What was the outcome?

I still live in the home but have significant equity. I'll either take a HELOC or refinance to pull cashout to invest into another deal. This house is a long-term hold though due to the significant community changes and improvements coming to this immediate area the next 3-5 years.

Lessons learned? Challenges?

Hand dig around all water meters. The utility districts may not bring a direct lateral into a property meter. In my case they wrapped it around the exterior of the meter and we busted the water main while trying to add a shut off value which led to the necessary replacement of the corroded main line. Shower tile trim is very detailed and takes time to do it right.

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

Norm at RPM Mortgage. I've bought 3 properties with him.

Investment Info:

Single-family residence fix & flip investment in Stateline.

Purchase price: $395,000
Cash invested: $60,000
Sale price: $525,000

owner occupied and simultaneous short-term rental property in Stateline, NV

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

I had lived in Southern California at the time and had just started my own commercial real estate consulting company. I wanted to relocate to Tahoe but was unsure if I could actually relocate full-time. So I bought a property that could double as a vacation rental even when I was home, and made 30K a year in additional income.

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

It was on the market. I ended up paying the asking price as I needed a 90 day escrow so I could file my 2nd year of self employment taxes. However, it was the exact property I wanted to live in so I was fine paying asking price.

How did you finance this deal?

Owner occupied 3.5% down FHA loan.

How did you add value to the deal?

I remodeled the entire home a couple months after I purchased the home. Again with the intent of living in the home for quite a while.

What was the outcome?

Life situations changed, I adopted a dog and the property values in Tahoe went up by $100 PSF since my purchase. I was starting the refinance process so I could remove PMI and that's when I realized the improved value price for my home. I'd bought and moved into a single family home with a backyard that was more ideal for my dog and after an issue with short-term rental guest I decided to just sell the townhome and move on. I netted a 6 figure return in 21 months.

Lessons learned? Challenges?

So many lessons.... I posted in a forum. I would say that buying in an HOA should be avoided. They are a pain to deal with and not worth the "benefits" that the HOA and clubhouse amenities offer.

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

Norm at RPM Mortgage makes deals happen. He knows how to work with all the pieces to get to closing. I had to bring him into the sale of my property to get the buyer a loan as her two prior lenders had underwriting issues they couldn't overcome.

@Ned Carey my experience in commercial real estate (day job) has proven over and over that you have to double check everyone's work regardless of what certificate/license/etc they hold. Residential investments are proving the same as well. Bottom line the only person looking out for your best interests is yourself. 

2 weeks ago my business partner and I closed on a 4-plex. Needless to say it was not a seamless process. By the  time we finally closed instead of feeling excited we just were relieved the mess was behind us. 

This was an off-market purchase that resulted from a letter I sent to the neighborhood stating I wanted to purchase in the area for fair market value. The seller previously in August wanted 600K and by December when he reached out again he agreed to a 540K purchase price. The appraisal came back at 700K. So an immediate 160K in equity. This is a fixer upper with all 4 units fully rented in a market where there is pretty much 100% occupancy with waiting lists. 

We were able to find a credit union with a special portfolio product that allowed us to put about 17% down instead of 25% down at a 4.875% instead of 6%. Mountain America Credit Union. The catch is that while it's a 30 year monthly payment the note is due in 15 years. Our plan is to refinance well in advance of the 15 years so we are locking in the lower down payment and interest rate. However, the level of professionalism and competence was incredibly low. We just kept pushing through all of the incompetence knowing that we were getting an excellent deal for the purchase. 

While I'd struck a deal directly with the seller he wanted to use his own agent to close and that's when things got muddy. The seller's agent was incredible difficult to work with whereas the seller had been great to work with. At least 3 times during the process the sellers agent almost made us tell them no deal out of principle. However, we had a good feeling it was a deal we shouldn't pass up so we put up with all of the petty crap. 

Since it is a 40 year old building with obvious leaks and damage we brought in HVAC, roofing, plumbing and electrical experts for an additional walk thru. While there appeared to be issues that needed fixed non of the issues turned out to be a big deal that required immediate repairs and the roof was in great condition. So we decided to proceed with closing. 

Since the building had tenants and deposits we had to figure out how to transfer the money at closing since we were literally closing on the 1st of the month when the tenants would be paying the seller. Several ideas were passed around by the agents, including an option to just push closing another 5-10 days, and then I suggested that we just put the rent along with the deposits in escrow and have the tenants continue to pay the seller for rent that month like normal. Problem solved. No need to over complicate a simple solution.

The cluster of people and incompetence we dealt with continued to the escrow agents. I'll be honest, on the first 4 properties I've purchased I'd barely read the closing statement. However, with the incompetence we'd dealt with while under contract led me to request the closing statement ahead of time to make sure it was accurate. Needless to say if I had not thoroughly evaluated the closing statement we would have lost 2-4K in the purchase. There were so many moving pieces and new utility districts in the area that it just set the table for errors to happen. Makes me wonder how much money I'm out from the prior purchases. 

Since my biz partner and I are are not in the same town he had to sign first and then overnight the documents to the title company to then send a mobile notary for my signatures. The morning of my signing (closing was the next day) I woke up to an email from the seller's agent telling me power was off at the 4-plex and it was our responsibility to get the power back on. To the seller and his agent I simply replied that we did not own the property yet and it was the seller's responsibility to maintain utilities until the sale was complete. That went back and forth and the seller's agent was a complete tool telling us we need to get power on while she was still withholding things like tenant contact info and keys. However, we expected nothing less based on her actions throughout the entire process. In the background of course I then expedited the power turn on behind the scenes and when the seller tried to say he got it on a few hours later I informed them that I had pulled a favor with my power company contact and we actually solved their problem. While still not owning the house. 

Finally the next day the deed recorded and we owned the property. 

Then came the fun of telling the tenants there would be a fairly nominal rent increase that still kept the units all under market value for their condition but increased enough to ensure the proper ROI. We also had to let one of the tenants know that he was being evicted. Let me just tell you that rent increases and evictions are NOT fun. It's the worst part of real estate. However, the property is in a prime area and the only reason the current tenants are in the building is due to prior owners not maintaining the units or charging fair market value. In an effort to not displace locals, in a region where the housing crisis is VERY real, we minimized the locals impact as much as possible. We evicted only one tenant and remodeled that unit to then obtain the higher monthly rent that helped the deal pencil.

Our goal is to finish all of the exterior updates once the weather turns and then refinance and cash out mid-summer. The existing equity plus the remodeled equity should allow us to pull almost all of our cash out while still maintaining a very healthy monthly return. 

So on paper it's an AMAZING deal. In real life it was quite the ride to get to the point to own and take advantage of the great deal. Yet again proving that you must have the stomach and fortitude to make real estate deals happen. If you can hack it you can become a real player in the industry. 

@Chandler Burns and @Odunola Sowunmi thank you! Better to learn together than on our own. 

@Account Closed Ground up does not pencil. Off market properties is how I'm doing it. I found a community I wanted to buy in for various reasons and sent a letter to about 200 properties. As a result I now own 2 of them for well under market value. The property owners were both ready to let the property go for various reasons and were willing to sell to me for numbers that work. It's also a plus for LL's that there is an incredible housing shortage (for the past 20-30 years) and never a shortage of people looking for places to rent. I buy properties that need work and rehab them. There's pretty much nothing that can scare me from a remodel standpoint unless the house is ready to fall over. Everything else can be fixed and then refinance, cash out and buy again.