All Forum Posts by: Megan Day

Central Bank has a construction loan I’ve used for a flip before. Give them a call!

I am looking for a contractor to build a relationship with in Cincinnati. Does anyone have any recommendations?

@Bevin Morgan the only way I could do 10% down not owner occupied was because it was an in-house non-complaint loan. They are hard to find and probably only available at local banks who have that flexibility!

@Matt Leber Wow! As I’ve gotten started in this process I’ve thought there needs to be more guidance out there on how to handle inheriting tenants. It’s a crazy world!

@Ryan S. It’s not all rainbows! But worth it in the end! I was told the first 3 should be ignored in the grand scheme of things - chuck it all up to a learning experience.

When I advertise rentals on Facebook I have the exact same response that I copy and paste to anyone who says they want to come look at the unit (basically a list of my tenant qualifications, which included that I do not rent to smokers). A large majority of people would not respond after that. Easy, quick way to deter people who aren't qualified and would have deterred your weed-smoking potential tenant. Also, this process, on any platform, ensures you are treating everyone equally and helps make sure you do not open yourself up to a discrimination lawsuit.

I'm not sure about commonality, but your best form of protection is to run your business/property through a limited liability company (LLC). This provides both liability protection and tax benefits. An LLC can hold title to one or multiple properties, or can serve as your management company. They are typically easy to set up and fairly inexpensive to maintain throughout the year, but you should contact an attorney in your area to make sure it's done correctly and that you follow the required formalities.

Next -- good insurance that is proper for your type of property/activity!

Finally -- a good attorney!

Investment Info:

Single-family residence other investment.

Purchase price: $61,000
Cash invested: $10,000

This project was meant to be a flip and had quite a turn of events. 2 month acquisition period because of title issues, 3 month full gut rehab, longer than expected on market (2.5 months) before it went under contract. Buyers backed out (with no legitimate reason) right around the time I needed a place to live - so I moved in, waiting to decide what to do. When I moved out of state for a new job I listed it on Airbnb and it almost instantly booked out for 6 months.

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

This was my first real estate project. I wanted to dive in and make my first deal big. Plan was to profit ~25k on the deal.

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

MLS. Negotiated through realtor.

How did you finance this deal?

Initially a commercial construction loan through an LLC. Once I decided to move in I refinanced under a 10/1 ARM, in house, non-compliant loan (because other banks required a 6 month seasoning period since the LLC was solely owned by me). Now that I have moved out and moved cities and plan to keep it with Airbnb, I'm refinancing again to a 30 year fixed rate in my personal name with a much lower interest rate which will lower my payment.

How did you add value to the deal?

Total gut rehab. ~80k worth of renovations.

What was the outcome?

Home is currently a thriving Airbnb! I'm working on improving systems/processes to make it more passive.

Lessons learned? Challenges?

I underestimated the difficulty of selling in this neighborhood. It's a transitioning neighborhood and a lot of homes are being flipped and improved, but it's not quite there yet. Thus, difficulty selling and inability to rent long-term for what I would need to cover my monthly costs. Luckily I could do an about-face and make Airbnb work.

Investment Info:

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

Purchase price: $181,000
Cash invested: $20,000

This is a duplex that I bought in poor shape planning to get rid of bad tenants, fix up, raise rents and re-let.

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

This was my first multi-family investment to work toward my goal of obtaining passive income through small multi-families.

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

MLS. Negotiated through realtors.

How did you finance this deal?

10/1 ARM, non-compliant in-house loan with local bank.

How did you add value to the deal?

Evict bad tenants, clean up property, make minor renovations/upgrades.

What was the outcome?

Bad inherited tenants turned out to be REAL bad. Stopped paying rent after first month of ownership and had to evict them both at once, which was unplanned and financially difficult. Rehab was more expensive than planned because they damaged the units more than expected. Cleaned up quick with my contractor I've used before, but has proved difficult to re-let (likely because of the neighborhood).

Lessons learned? Challenges?

Inheriting tenants provides a huge unknown. Be prepared for anything and do background checks on them before purchase. Request ALL due diligence docs re: current tenants from seller.

From this deal I have decided to be more picky about the neighborhoods I invest in. In the future I will forgo a little profit to buy in a clean, safe neighborhood where vacancies are easier to fill.

Investment Info:

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

Purchase price: $187,000
Cash invested: $8,000

I house hacked this duplex. Purchase price was 207k but we negotiated 20k in cash back at closing for improvements. Current tenant on second floor pays 1250 a month and after improvements I estimate to get 900 per month for the bottom unit that I currently occupy.

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

I wanted to try a house hack to save on living expenses and gain experiences managing a rental.

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

MLS through a realtor.

How did you finance this deal?

FHA.

How did you add value to the deal?

Sweat equity and hiring contractors.

What was the outcome?

Still in progress!

Lessons learned? Challenges?

I am learning the challenges of managing contractors. Be ready to be patient if you haven't done this yourself.

Knowing everything is negotiable -- I negotiated 20k cash back at closing which was really imperative for improving the property!