All Forum Posts by: Kuriakos Mellos

@Lee Ripma thanks for the reply. These are both individual units, one is a SFH and one is a condo. SFH just had a new roof and siding - two years ago; and garage door - as well as other minor appliance upgrades. The condo had a regut last year so don't foresee anything major coming up soon. Do you keep individual accounts per property?

Also, I know a lot of people have said to stay away from condos, but if HOA's are low, and the numbers work - isn't a good deal a good deal if you can make it work ;-)

It happened..don't really know..but it happened! After several no's, being beat out by cash offers, going in above asking and not getting contracts, going thru HORRIBLE contractors, finally securing a property but realized it was a disaster and having to pull out, not being able to find a stable property manager and a million other things that happened during the last few months - I was able to leverage the fact I was home, get lost in Biggerpockets books and podcasts ( as well as other articles, news) and will now have two doors bringing me income starting next month.

Both of my properties needed work to get going, but I was very conscious of budget and tried to limit additional debt that I took on (although I put it on a 0% interest card) - to allow more funds for a potential future purchase of an investment property.  I leveraged my day job to pay as much of the costs with money coming in as to not 'fall behind'. (Debt makes me nervous!)

So two questions:

A) While I will begin placing vacancy funds and operating future funds in SEPARATE accounts for each property - what is a good goal to reach ? 6 months worth of PTI per property?  Is it wise to maybe put a little more in those reserves each month being that I do not necessarily really need the cash flow right now?  I think I had heard Brandon Turner say in one of his podcasts that he never goes below $50 K in savings for his properties. (I am assuming that is for multiple units - and obvioulsy he has been doing this for a much longer time.)

B) Do I use the first few months of cash flow to pay down the debt before pocketing it? Saving for future investments? What have you all seen as a normal amount of debt acquired to get a property ready for business? I definately was guilty of maybe making a few things too nice for renters, and something I will work on that moving forward - but as a ball pack is there a percentage that is used?

I truly appreciate the help! And your podcasts and comments have been great to read the last few months.

Quick update here ! So while the numbers maybe worked INITIALLY the inspection report came back extremely negative so I pulled out. Mold ! And many many other unseen issues - the poor lady will be lucky if she gets half of what she is asking for.

Some take aways:

A) inspections are worth it! (I got trigger happy but so glad I had them walk thru and give me the feedback I missed .  Learned on items to look for as well for that area)                        

B) more than ever want to go the sfh (or duplex way) no more condos like I do in Chicago.  

C)
Found a great inspector  

D) was introduced to a very responsive and kind propety mgmt firm who met with me and sent me great info on rents for certain markets. (Thanks for the idea Marcus!)

E) Was introduced to some contractors via the propety mgmt company 

While the sale price was $88 K - the place needed min $25 K worth of work - so before any chance to even get it rented I would be over $40 K in the hole - with a rent closer to $1100 - glad I passed this one up and much more inclined to find a higher priced property that is a little more then key ready.

@Chaim Lampert - awesome man. Yep  - my brother said throw some air conditoning units in for the time being.  I love Milwaukee - from Chicago here and up there qutie a bit. 

@Marcus Auerbach I really appreciate the feedback.   Upon further details (and searching) you are right! The property around the corner that they rented does have a basement indeed.   I would be even OK with a $1100 rent.  But I am going to push down on the sell price to see if I can get a better deal and get a better rehab cost.  Maybe then it would be a better deal?      Marcus - I actually have met and work with someone on your team who I really enjoy!  I am trying to get him to help me lock down a deal.

Hi All! Need some guidance here as I am getting a little out of state first time anxiety buying fears. During covid, I have been doing research, interviewing property mgmt companies, talking to banks, and doing visits to Milwaukee (Great city) to try and find the right first property to invest in. I thought condos was the way I was going to go, but increasingly was sold on the idea of a SFH. To be honest, never thought SFH's were such a good rental property. (Any feedback on how it's been for you would be awesome.)

Neverthless, I found a little  house on a 1/3 of an acre lot in a great area, walking distance to a charter school that has stellar reviews - park around the corner and lots of young families moving in. The area is immediately south of Bay View (For those of you familiar with WI.)   

The house:  about 670 square feet, no garage, no basement - newish roof - great exterior - AWESOME huge yard - but the person who got it to try and flip it did a horrible job (he bought it for $66 K two years ago) and did not finish it.  Seems he ran out of money, is a destressed owner and is using his mom to help him sell it.

I drove up and saw it once, liked it - made an offer. Went a second  time with a contractor who pointed out a few things that could be fixed - gave me a rough estimate as the costs. And going a third time to go with the inspector to make sure structually the sound is good, and going with a friend who is very handy with contractor work to give me his opinion.

Maybe I am being over paranoid for this first time, but I want to get this first one right and Milwaukee is only a 1.5 hour drive from me.

The numbers and where I need help/guidance:

Listed for only $95 K, in contract for $88 K.  Down payment will be $17.6 K, Closing Costs another $4ish K - Rehab costs (which I can put on a card  - gotta get them points!- will be about $12 K ).  Total costs = $33,600  The property mgmt company I have partnered with is convinced I can get $1400 if I add airconditioning - which I am considering - other wise we are looking at about $1100 to $1200.  My monthly P+I+Taxes would fall under 600 plus 300 aside for maintenance, cap ex and vacanty I am just under $900.  Cash flow approximately $300 a month.  Annual cash flow = $3600

If I do my math rate for this my return is about 10.7 %?

My hold up - do I try and rent right away - take the lower rent for now and add air conditioning later?  Is this a first good deal?  Do I invest a little more on the upfront costs to get the higher rent?  Am I over anayzling?

ANY AND ALL FEEDBACK WOULD BE APPRECIATED.  THANKS ALL!

I want to get some feedback here is I’ve been fairly loyal to my real estate agent and company since I began buying properties. Now that I’m moving into the second phase of trying to buy multi family units, I reached out to another agency who i’ll be going on showings with, but have my current agency wanting to help as well.

I appreciate the hard work that my current gentleman has done as far, but I also think it might be a wise idea to diversify the people I work with on the “” team’’ I work to build.

Has anyone used this tactic of mixing professionals ? Agencies? Lenders?

Thanks!

Kuriakos

Hi there,  after reading a few posts and going thru one of the books Brandon wrote - I realized that I might be able to find a much better deal by just heading north of the border of IL to WI.    Has anyone gone thru the process of buying their first multi unit outside of where they live ?  I would obvioulsy have to work with property managers so a bit nervous about that - any feedback as to who to partner with ?  I found a pretty solid realtor but anything else I should keep an eye out for as I dive into this ?  I could get a two or 3 flat for the price of a condo in Chicago, and turn it cash flow positive almost immediately.  

Thanks!

Awesome. Thanks for the insight - my lender suggested the same for me.  Relooking at the multi family and pushing down the price - what are the thoughts on using apartment hunters that help fill units ?

Hi all!

First off, I have to say I am so excited that I stumbled on to this forum.  Glad to see there are so many other people as passionate and willing to learn from eachother.  My story at short is that I have a career that I am fortunate enough to love and have been able to put some money aside for projects.    In the last 18 months, I have purchased three condos in which I have:

A ) moved into one (instead of rent) did some work in it, refinanced it and get it appraised already at +13,000 more than I bought it just 6 months.

B) Bought a unit across the hall, with the intention of eventually activating it for rental but holding it with a family member for now.

C) Bought a unit for my mom - only get one mother ;-)

None of these are 'making me money' just yet, but figured for the price of owning two units and living in one of them - it was almost as much as the rent I had on a two bedroom down the street.  While not building a cash flow yet from these - I feel like the loan being paid down each month and getting some natural growth in value over time will help - or at least I hope for these two.

I made a ton of mistakes during these first purchases (and this is coming from someone that knew NOTHING about real estate or had any friends/family who gave me advice.)  But the thing is that if someone like me who knew not even on how to apply for a mortgage right was able to figure it out, the tools and support are increasingly there to get where you need to go. I think the underlying line here is HUSTLE is what will get you what you want, not only here with realestate, but in many aspects of life.

Just some of the mistakes I made, and glad to share stories directly with others , which were a good learning curve were:

Not shopping around for rates once I got preapproved,  I was dumb and accepted my first offer and did it with all 3 units.  Looking back, I could of saved thousands of dollars upfront and during the life of the loan.

Being told I could not refinance from a current lender and waiting months to do so, when all I had to do was ask another bank.

Being lied to by a seller's agent that a unit could be a short term rental property several times in writing and text only to find after inspections and deep diving by my lawyers that there was an addednum added to the condo docs which striclty prohibited - completely sunk costs there and pulled out of that deal. 

Not getting certifcates of insurance from contractors (delays, stress, had to hire more workers to complete jobs.)

Pushing on discounts where I could (inspections / laywer fees etc)  Never hurts to ask! $50.00 here and $100.00 there do add up.

Doing a better job of keeping receipts for work done - I have transitioned and use cards now so I can easily track stuff.

I am hoping will help me now that I am moving forward to a second phase of investing and to being making some cash net flow positive units occur - and this is where I need some guidance/help - motivation/support - feedback? Who knows - open to ideas.  This is where my questions begin:

I am looking at finding a property or two that can be used for MINIMAL cash flow in the first year - obviously both come with a little risk but wanting to put as little down as possible - to have some in reserves if it takes a while to build up or get rent coming in: for your knowledge these units are in the greater Chicago land area.

Option 1 - 1 bed 1 bath condo - Investment Property - Listed at 170,000 good shape - needs no work and could be ready for rent right away - currently empty - looking at about $34 down plus closing costs (another 5 or 6K?) : monthly costs are just over $1,000 - thinking I could turn this into a rental and charge at least $1500 for it?  

Cons: NO idea how to find good renters and what kind of paper work is needed but have a friend who helps find units for people: might be vacant for a little before being rented.

Option 2: 3 flat out in the burbs - listed currently at $610 - FHA eligible - put about $31,000 down - get 3 units - have to live in one technically because of the rules of the FHA but two are currently rented out bringing in about 3000 a month. This unit would not be able to go cash positive for a while, but I would be getting 3 units for the same amount I put down for Option 1.

Ideas? Did people start out with single units first before trying multi units?  Appreciate you all from advance!  Thanks