All Forum Posts by: Mitch Kennedy

who hurt @Account Closed?

Welcome! You're in an awesome market! I currently invest ~45 minutes west of Appleton but there are a ton of communities in and around appleton that have great cashflow & appreciation at a much more affordable price than you'd get in a big city.

If possible, I'd recommend staying in the property for 6 more months. Based on the situation around the country, I'm guessing you've gained a pretty serious amount of equity in the home and if you sell now you'd have to pay capital gains tax. If you stay in the property until 2 years you wouldn't have to pay tax on up to  $250k of your gain.

I work with Tom Smith out of Waypoint Financial in Waupaca! I'd highly recommend! 

I'll get reading on the Subject-to piece, thank you so much for the valuable information. Appreciate the help from my fellow "Mitch" crew :) 

Thank you for the responses and info @Mitch Messer @Brenden Mitchum! I reached out to the lender and he said I can't assume their loan... and the seller could only seller finance if the $96k loan is paid off.

I dug into comps today and it could actually be worth closer to $220k based on a duplex sale from October (let's call it $200k to be conservative), but based on what the seller wants from the sale they'd sell it for ~$140k. 

I'm seeing the property on Thursday so I don't know 100% what work is needed inside but she mentioned some cosmetic updates would likely be needed, $5-10k max (I'd do the work myself). I'm not sure about HVAC/water heater age, but roof is 2.5 years old as well.

My current capital is a bit limited which is why I was looking to get it with seller financing and limiting my down payment and then paying back the seller the rest of their $ once I refinance but that isn't looking too promising. It looks like I may have to pull some funds together and go at it the conventional route... if numbers make sense once I re-run them.

Hi BP! 

A seller contacted me after receiving one of my pieces of direct mail and is interested in selling their duplex. She mentioned she's willing to do seller financing however she still owes $95k on her loan. I asked her what she'd be willing to sell it to me for and all she said is she wants to walk away with $35-40k. She's a family friend of my wife's family and is open to working with me on how we can structure this that benefits both of us.

Each side is a 3 bed/2 bath, tenants have been there for 5 - 9 years and are currently paying $650. The property is only ~25 years old and with some cosmetic updates could rent for $850 each at least.  

Is there a way that I could structure this deal using seller financing where she get's a chunk of her $35-40k now and the rest once I fix up the units and refinance? Appreciate and advice from you creative financers out there. I'm in Wisconsin if that helps. Thanks! 

@Monique Pett I only have one :) Actively searching for me next 

Hi! Congrats on finding this deal, the numbers look great! A few thoughts:

1. You mentioned you're purchasing it with cash, do you plan to continue owning the property outright with no mortgage or do you plan to refinance to property to BRRRR?

2. Not a major expense, but will you be paying for garbage? If it's a single family the tenant may be able to cover that but if it's a duplex that may need to be covered by the landlord.

3. don't forget to factor in capex, as mentioned above already. Even after factoring this in you should still be able to cashflow $400+/month but your COCROI will drop a bit. 

4. I'm with you on the management fee as a self-manager, even though others may disagree. I'm self managing my duplex so I didnt for that into my analysis even though at some point as I grow I will hire a PM, but that won't be for ~5+ years. By that point, rents will have increased and I'll have that cushion to then add a PM and still be able to cashflow.

Hope this helps, and congrats again! 

Investment Info:

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

Purchase price: $89,900
Cash invested: $23,380

1 bed 1 bath downstairs and a 2 bed 1 bath upstairs. Separately metered.

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

Listed on the MLS. Listed with tenants in place, photos made it look like trash, which is probably why it sat on the market for 2 months. By the time I checked it out the tenants had actually moved out and the units were in pretty good condition!

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

Listed on the MLS. Listed with tenants in place, photos made it look like trash, which is probably why it sat on the market for 2 months. By the time I checked it out the tenants had actually moved out and the units were in pretty good condition! Ran the numbers and asking price made sense... There was 1 other offer coming in so I just offered asking.

How did you finance this deal?

Funded by me through a 20% down conventional loan

How did you add value to the deal?

Cosmetic updates. Flooring, light fixtures, vanity, new tub/shower surround, counter tops, paint, painted cabinets, tore down old wall paper. etc.

Estimated $5k for cosmetic updates all done, came out to ~$5,500. Overage due to a crack in one of the shelves of the tub/shower surround (Missed this during my walk throughs). I hired someone to replace the moldy drywall behind the shower and put up a new tub surround.

What was the outcome?

Previous tenants rent totaled $925. After the updates I made, I'm renting the property out for a total of $1,300.

COCROI: ~20%

Lessons learned? Challenges?

-Rehabs take way longer than you think....
-They say not to rent to family or friends. I would also add friends of family or friends of friends to that list.
-Building more relationships with handymen/contractors before tacking my next property is a priority