All Forum Posts by: Kuriakos Mellos

@Olivier H. California is great - but yes, expensive for sure.   Not sure what your situation is but there are opps all over the country.   However, sometimes you would be surprised what you find in your own backyard.  

(Pictures above are of the unit with Tenant B - referenced below - caused issues about)

Hi all!  So - just over a month and a half ago I posted about locking in my first round of tenants in my units.  I am a investor by mistake, but now obsessed real estate guy. I was happy as all can be - two units rented about a month apart from each other. Each cash flowing a very hefty amount.  I used the same property manager for both and used the same background screening and credentials.  They manage the clients fo me. 

Fast forward to today...

A) Tenant A - Has been amazing. He is in a SFH, we had a minor plumbing issue the first week in but have not heard a peep since then - been paying on time and has been nothing but THANKFUL for the service and the property. I even took him over some deserts for the upcoming Thanksgiving holiday as a 'thank you'. He is paying more a month than tenant B.

B) Tenant B - Condo. Saw the listing online, NEVER saw the unit in person.  Warning signs should of been from the get go.  They needed like 17 copies of the lease sent back and forth before signing.  They kept moving their move in date - changed it four times.   (And this is an elderly well to do off couple who is also in real estate).  I rushed to get the unit ready - pics attached - and they came in mid October to get the keys.   

The next day..they tried to get out of the lease and said they had found a 'free place to stay'.  My property mgmt company stepped in and supported me (CANT SAY ENOUGH OF GETTING SOMEONE ON YOUR SIDE!) and told them they had a lease and needed to keep it place.     They then played the game of pretending not to be able to move in, and also started requesting additional items to be done PRIOR to officialy moving in.   I caught them lying about having moved in after they stated they did and started putting in 'service requests' for minor things that they could of easily done on their own (Removing an air-conditioning unit - changing the dial of a radiator, etc).    They began being a time suck for me AND my property manager.    After almost a month of NO movement on my tenants behalf, and 'requests' continuing to pile up - we both agreed it would be best to part ways and find a tenant that would appreciate the unit. 

I gave them a 'penalty of two months' of which they later accepted a penalty of one month to move out by 11/14/ I came back into the unit to check it out. Not a scratch or issue left behind (because they never moved in) but with a vacancy going into the winter months of Chicago I am taking a risk of vacancy for a few months.   I am willing to take the risk rather than absorb the issues of a 'problematic' tenant and damaging my relationship with my property manager or the condo building the unit is in.  

Personally, going with that 'gut' feeling that something wasn't right with these tenants I am hoping helped me avoid future issues with them.   Several of the contractors that came in to do work on the unit mentioned to me all the benefits of the location that was in - these tenants could not appreciate that.

Lesson learned, if you do NOT feel right about something on the onboarding process of a tenant, there is a reason for it. Go with your 'gut'.  If you catch them flat out LYING about issues - even more of a case to part ways.  Rather be free and clear of issues than having to deal with someone hanging around.

K-Man

@Rashaad Harper I hear you!  Be professional in all communication - if you are going to be building a brand for yourself you want to be known as a professsional.  If you have any current deals (sales in the line) I would read the fine print.  I know that for my parents, when they wanted to stop working with a particular agent there was a $500.00 fine.   Without further context, or what situation you are in, it's a bit hard to help. 

@Olivier H..  I can barely hammer a nail in the wall - I am getting better - and I try to watch every time a contractor does something but the MOST CRUCIAL thing in finding a contractor is  A) Making sure they are licesned and B ) ask for references.  If they are a true and legit contractor that stuff should be readily available.  One of the nightmares I had was that a contractor told me he was licensed and insured but it was under his brothers name - and he went over the timeline of the project we had agreed upon by over two months.  And almost a year later, I am still having to have people come by and clean up issues and messes he made.  I am currently invesitng and buying in my area (northern IL - Chicago metro area mostly) Where are you?

@Michael Scaramella the best deals to be honest are found before they hit any MLS. (Chicago is a market where hot houses are sold in HOURS and I have lost several bids to complete cash offers - which I am in no position to be able to do.). This might sound crazy but...Estate Sales. See if there are any Estate Sales going on in any of these multi families and try to find a family that might be trying to off load a property. My cousin found a young couple trying to offload their grandmother's building and it was a win win for everyone.

Hey @Brandon Fuhrman welcome to the game!  I love Louisville! The best way you will see if you get any appreciation is at the inital price/deal you can find. The lower your costs on the property the better YOU can control what your cash flow will be. Minor updates, higher rent etc will HELP your cash flow.  Appreciation is nice, but uncontrollable and NOT guaranteed.  Ex: Who would of thought the whole covid pandemic would of arised this year.  That for sure has had an affect on appreciation growth in certain markets, while boosted suburban markets faster than normal.  

@Olivier H. do not let BRRR scare you. I messed up a great BRRR opp because I was scared of the work that had to be done and someone walked in right behind me and did exactly what I could of done. It might be daunting but ( I hate to sound like a broken record) but it is OK to mess up and along this game you will make mistakes.

Analysis Paralysis is common. I still have it and I am working on renting out a fifth unit.  It does get easier. 

Deals are hard, but let people know what you are doing and getting into. If you find a listing you like, call the agent directly and introduce yourself. I have done that and while I still have not bought a unit from this particular agent he now calls me when he has units coming that are not on market yet.  You have to advertise YOURSELF as a real estate investor.  Also rehabs - don't go overboard - yes, we all love nice units, and we want to make them marketable but make any rehab work affordable (restore hardware resller shops, online, craigslist free, ask contractors if they have spare floors/tiles you can buy) youi would be amazed.

@Summer Cherry Sounds like a win to me!

I am not sure what your new rate is going to be - but I was able to save quite a bit of money on the 'points' of the closing costs. How?  Get one or two bids - one of them will always have a better percentage.  Ex (I am not sure if we are allowed to put lenders on here but I will just refer to them as lender A and B).

I wanted to refinance my primary condo (as it would net me about $300 a month in savings - which is almost the equivalent of investing in a new property!). Lender A - who I have the current primary with - quickly approved me for the refinance but gave me a point charge of 3.35% of the cost ($5360) of the loan on a $160 K loan. When you apply for any sort of mortgage application, you are able to show around without any additional hits on your credit.  Lender B kept calling me and I finally answered and I am glad I did! Their 'points' cost me only 2% of the cost of the loan of $160 (total costs of $3200) - saving me quite a bit of money.

While my numbers are reflective of a primary condo, I suggest to you that you shop around and see what deals you can get on points and other closing costs. You would be surprised!

@Olivier H. how I so wish I had discovered BP three years ago. Doing a house hack sort / primary purchase move would be my go to.  Why? 

A) You can go in with lower money down, and not tie down your savings/money.

B) If you get a chance to get a multi family - you can work on getting other people to pay your mortgage. 

C) You can quite frankly mess up in the process of remodeling, rehab, finding contractors etc and it makes you better for future projects. (I had a NIGHTMARE of the disappearing contractor on my first unit I tried to do some work on.)

D) If you do a 3.5 % down FHA loan, and you are able to, you can rent the property out after a year and then go do it again.

E) If you bought right, this property could be BRRRed out and then you can take out money to buy the next one.

 Best of luck and go for it!

@Melanie Stephens - I messed up what was a PERFECT BRRRRRR! (Still punching myself) I got excited of the thought of going and doing my first out of state investment and made an offer and went into contract with a VERY delapitated house on the southside of Milwaukee. Purchase Price was $89,000. It was a small ranch - 2 bed room - on a massive lot. (I should of kept it and had it as an opportunity to add bedrooms, baths etc down the line.). I could of easily gone back to the seller and gone down on the price, done a rehab of about $25 K. and then had a new value of about $150 K - which ALL the houses in the area were going for. The thought of doing work in an area where I did not have a 'team' scared me and I quickly cancelled the contract. The property manager - there is a silver lining here - had other houses in the area going for $1500 a month - so I missed the opportunity not only to get a BRRRR property started but also to produce a cash flow property.

The positive! The property manager that I found in Milwaukee - actually turned out to have offices in the Chicago land area - and in turn - I have used them locally to rent out my first unit that is cash flowing $500 a month and have them working on two other condos.   They are aligned with my mission and always sending me leads to scale the business.

In short, sometimes it is OK to not have all the pieces of the puzzle in place. Take a breather and not get overwhelmed with what is in front of you - I should of taken the opportunity to slow down, get a second opinion and see what costs would of been to rehab the unit.  I think I was two weeks into BP at that point so lesson learned and on to the next one!