All Forum Posts by: Pat Lulewicz

Thank you @Keith Amado. Keep looking!

@Ashley Rummage - thank you! Figure my mistakes can save someone else thousands of dollars over the course of the life of an investment. This was straight MLS. I let 4 other ones in this community pass me by for lower prices before I realized I needed to go at list or higher, which is what I did. There's 2 of these which are currently under contract, so they're regulars to the MLS. Very close to NCSU, so you've got your pick of students or adults; nice to have options. Community was built in the late 90s and as of now, knock on wood, no issues with this HOA or any other one I'm part of.

Investment Info:

Single-family residence buy & hold investment in Raleigh.

Purchase price: $169,000
Cash invested: $42,500

4BR/4BA condo (private bathroom and walk-in closet for each bedroom) which is rented out by the room. Stabilized occupency with room to increase the rents slightly over time from current. HOA also allows mid-term rentals which would allow for higher rents for (ex) 6 month leases. Common area includes laundry, kitchen and living room. All utilities included in rent.

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

I was looking for properties in Raleigh for under $200,000, which are hard to come by, and these condo's met my criteria and the return that I look for in my investing.

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

Found the deal on the MLS and offered slightly above list which is ultimately where the property appraised at.

How did you finance this deal?

Due to the NOO concentration, this required a 25% downpayment, so used a mortgage originator to find a bank which would do the deal at the best rate possible. Unfortunately, could not find local banks which would keep the interest rate at a reasonable price due to the loan being non-warrantable.

How did you add value to the deal?

Tenants were 1-2 months from lease expiration, so was able to replace tenants at, or above, the prior rents. Fully stabilized in 3 months. In addition, updated the laundry appliances with energy-saving ones which helped my bottom line.

What was the outcome?

Currently fully-stabilized with no past-due rents. CapEx in laundry room, however no other large costs beyond standard maintenance. 11% annualized ROI.

Lessons learned? Challenges?

Going into the deal, I did not do ALL of my research on the leases/HOA. I did not realized that the HOA does not cover the water bill (which is what I was used to). In addition, I did not realized the tenants were not responsible for the utilities per their leases. Double whammy on my bottom line. Original ROI was at about 19%, however with the utilities, ROI drops to about 11%.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

None of BP.

Definitely hard to get good rents into a "construction zone" however being transparent that the kitchen will get a full facelift in the near future and planning the work accordingly with them could work. Same for bathrooms if they'd have to share together for a period of time. Otherwise, renovations between tenants is a quick and easy way to plan the work.

Utilities are something that people may not consider, but they will naturally go up (double? triple?) with 2+ other people in the property. Laundry machines running more often. Lights being left on when you aren't there to turn them off. Shower use. Toilet flushes. Everything increasing.

Also consider TV/internet packages. Tenant would generally like to have good internet if they're going to be paying good money for it. Or you can use it as a selling point to future tenants.

Remember that when you're looking to buy, run the numbers on the property as a house hack. But don't discredit running the numbers as a stand-alone rental since per-room will usually get you more rent than entire-house. Make sure it cash flows both ways!

@Angie Jean same as above on FB and CL. I'd also add that if you create an account on property management websites like Cozy.co and create a listing, those get syndicated to some other websites (like Realtor.com) to list your rental. Also "For Rent" signs around the neighborhood, or on bulletin board at certain supermarkets and religious locations (make sure its permissible) can work. Word of mouth is a great choice too!

@Nicholas Bohm - Raleigh, NC won't work for your numbers if you're referring to buying and rehabbing all-cash. If you're able to get any hard money which would offset your $100k all-in, then you have a chance, however it is a very tough market Given the rent v purchase price discrepancy going on, I'd recommend looking at cities in the "Triad" which includes High Point, Greensboro and Winston-Salem (plus the areas around and within that triangle).

If you didn't like them when you met them and got an awful vibe from the start, why did you allow them to apply in the first place? If you do paper applications and run the credit/background checks yourself, before they pay you an application fee (which can be a good chunk of someone's monthly income in a rural location), stop the process. Alternatively, if you do all-electronic applications, simply don't provide them the website for application and don't make them waste their time, hope and (most importantly) money if you've already ruled them out from the start. I think doing the above is much more rude (and thoughtless) than telling someone you don't like them.

@Shiv I Soneja

Kenny - welcome. Live in Raleigh, work in Durham and invest in Winston, Greensboro and High Point, so definitely happy to connect and discuss what I can regarding the central regions of the state.

Matthew - although we'd all love to find the golden ticket, realize that you're asking for investment-grade cash flows AND no housing expense. It sounds like you might be double dipping at the party. The point of the house-hack is to (hopefully) pay for your housing cost so then you are living rent/mortgage pmt free. In theory, the amount that you AREN'T paying in rent/mortgage, IS your cash flow. If you want to analyze the house/property on a stand-alone basis, calc the cash flow based on renting out all 3 rooms assuming you aren't living in one. This provides you an actual cash-flow number, while also giving you realistic expectations for when/if you move out of it and want to keep renting it.