All Forum Posts by: Logan Searles

Hello! I am looking to make my first real estate investment and would appreciate any advice on what to do with this property

Situation time: I happened to come across a property (4 bed, 2 bath SFH) in a small town about 30 minutes northeast of the Quad Cities listed for $29,900. The property isn't in shambles, but it is in need of a full remodel, including a new roof, water heater, furnace, and AC unit, all of which are at the end of their lifespans. This would be on top of refinishing a majority of the flooring, 2 bathroom remodels, a kitchen remodel, and several other items. I've estimated a conservative full renovation with everything included to cost between 70 and 80k, but I think I could DIY a lot of it to cut down on labor costs. ARV on comps in the area looks between 105k and 140k+ for similar square footage and bedrooms. One issue with the idea, though, is that I live in Wisconsin and have a semester of school left before graduating. I have family in the area and an uncle who does construction with connections to people in the area. As of now, I have a comfortable 35k saved up with no debt and good credit.

I've been talking to the seller's agent about offering 10k cash, no contingencies on the property. One thing that has been brought up as advice to me was adding a clause saying the offer must either be accepted or countered upon presentation (thank you, James!). Should I try and get a tour of the property before making any offer? I haven't seen any photos of the foundation yet, but with no contingencies, an inspection won't change whether or not I could back out of the deal. I am currently unrepresented and am wondering if it'd be best case to reach out to the seller's agent to represent me or if I should find someone else.

I'm also conflicted on whether or not I should fix and flip, or rent it out. Either way, I'd need some kind of loan for the construction and then sell or do a cash-out refi. Cash flow, even with a middle-of-the-road $1200/month rent, would only be netting an estimated $425 a year in positive cash flow, and anything below that would be bleeding me out or awfully close to doing so. The bright side is I shouldn't have to worry as much about those CapEx expenses, but it's still riding a fairly thin line with any bigger expense netting me negative. Renting in a smaller town may also be harder to find tenants, but since it is an SFH there's a better chance they'd be longer-term tenants. An easier way out might be to flip and sell, but I'd like to try and build long-term wealth. Long distance ownership, I know, has its struggles, and being new to this, I'm not sure if that's something I should do.

Questions:

How should I approach this deal? (As in should I, and if so, who, have someone represent me through this process)

What steps should I be taking before making an offer?

What can I be doing now to best prepare myself if I were to purchase the property?

Are there things I am missing that I should be taking into account?

How would/should I go about financing this deal? Construction loan>cash-out refi/sell? Another way?

If I do follow through, what should I do with the property post-rehab?

I refuse to get stuck in analysis paralysis, but purchasing an out-of-state rehab seems like a big step into the unknown as a first investment. If I do, I'm excited to learn and learn from my mistakes, but I'd like to do my due diligence before I cripple my investment journey before it even gets started.

Any and all advice is much appreciated, whether in part or in full!

Thanks!

Logan

Thank you for the advice! I will hop onto that and start creating that team. Thank you!

Hello! I am fairly new to the world of real estate and have been doing my due diligence to create a solid foundation before I take a dive into water that is only a foot deep. Building connections, I've learned, is a big part of that, and I'd love to start creating those connections! Are there events in the area that I could attend to start meeting people? Online and BiggerPockets is great and all, but I would like to build personal rather than transactional relationships. My goal is to live within an hour's radius of West Bend (I will be drilling there weekly post flight school), and I'm interested in learning about the surrounding markets. If anyone has at least a starting place for any of this, it would be much appreciated! I am open to any comments or criticisms on where to start and details about goals for the future. Thank you!

@James Derry Hey James, thanks for the reply!  To reply to your question, no I have not. I've was going relatively off mortgage estimates, but that's certain something I'll look into with more detail. 

Based off what I can gather from 1100 miles away, it appears to be around a c class property in the c class neighborhood, which makes me question how much rent could really be raised, but based off markets rates in the area that I've seen through Zillow, Facebook, and Craigslist, the absolute cheapest 2 bed in the area is going for $600 a month. 
The place was built in 1981 and I've reached out to the agent about getting numbers on some of those expenses as well as age of some of those CapEx items, but there is already a 10% management fee in place, and I would definitely lean towards the higher side of insurance rates and capex costs.
My big thing with the property was that because it's been on the market so long, can I turn essentially break even if not under into a great deal. That 1% rule is realistically consider purchasing only if it got close to a 2% but the deal definitely has to be stretched to make that. Is this too far of a stretch? Is it really even worth my time to be looking for places here if my long term plan is to live in or around Wisconsin? I know long distance management can be a pain, but I'm not sure if it'd be better to wait out, get a property in AL, maybe purchase a property in WI while I'm in AL, or any of a million other options. I guess with my situation, I'm not sure which best step the right first step. I know it relates to my goals, which is to be fully involved in my children's lives and have 3X cash flow by age 40 (currently 22) but I'm sure which path would be most effective to get there.

Hi, I'm fairly new to the real estate investment world and have been looking into a house hack near Fort Novosel to start my investment journey. I will be coming down from Wisconsin and will likely only be living in the area while I'm in flight school. There is one property that has particularly caught my eye: a 4-unit, 8-bed, 4-bath multifamily listed for $190,000. It has been on the market for 508 days as of today, which seems like a big red flag. The current rents are $450 and are going to be raised to $475 on their next leases, which is significantly lower than the other two-beds in the area ($700-$1000). I could currently relatively comfortably invest 30k in the property to start, and have been looking at an FHA loan to finance with, but even with a good face lift, that cash flow is quite negative, especially if I am living in one of the units. Because it's been on the market so long, and how low the current rents are, would it be unreasonable to give a low-ball offer, say 125k, and then raise the rents once improvements have been made to say $800/unit? Are there laws against raising rents that much? Is this even a reasonable property? Rather than saying it can't work, I've been trying to ask how can I make it work, but I'm not sure if this is too far of a stretch.

Another thing is, I would be living here temporarily while in flight school, which is about a year and some change. Would it be better for me to wait and invest back in Wisconsin? I know time is of the essence, and I want to kick-start my journey, but with this weird buffer in time, I'm not sure what my best option really is. 

Again, I'm quite new to this, and I feel like I've built a decent base of knowledge, but I want to start off on the right foot and not make a decision that turns into more of a headache than progress. Thank you for any advice!