All Forum Posts by: Ryan Kozuch

Thanks! What's your background with REI?

I'm in south Milwaukee off Oklahoma Ave and 79th - ish.

Hello,

Just wanted to share my recent real estate success story. To review the original post I had about acquiring the deal you can read this pre-deal information and story.

So, my wife Brittany and I purchased our 3-plex in Milwaukee, WI on 08/30/17 and have been busy moving in and getting settled, but so far I'm hooked. Owning something is awesome, and living in that "something" that I own is even better. I have an immense sense of pride in being able to acquire this deal without having all the details figured out before we committed to it.

If you read my initial blog post, I didn't even have financial approval and more importantly wife approval at the time I realized this building was going to be a good fit for us. It definitely sent me scrambling to try and figure things out to get a bid in, but now that we are the owners, things are settling down.

I'm not actually too sure what the big ordeal is about "trying to get into real estate." As I mentioned before, I basically just decided I wanted to do it and threw money at it and it all happened rather easily. The only trying thing about it was all the communication and paperwork between the seller, the seller's agent, insurance quotes, the underwriters, but it's all fairly straightforward.

Regarding actual ownership and landlord items; I have been to Home Depot more times than I care to admit. Not, however, because I messed up in getting the right things - just chipping away at acquiring necessities as I go - but every couple of days I feel like I need 15 new things.

I've already done some demo work in the kitchen to open things up, bought and installed two washer/dryer sets (whoever did the plumbing was on drugs), and dealt with other little repairs that the current tenants had been nagging the previous owner about for months.

In order to recoup costs from having a vacant 3BR unit (where the seller lived) for this whole month of Sept, I got a short-term tenant in until the end of the month at a slightly reduced rate. I have since been scheduling showings for the unit and hope to have a decision made by the end of the week or early next week on who to accept. 

At the end of the day, I should be able to just about cover the mortgage, PMI (I did FHA), home owner's insurance from both units. We plan to live here about three years basically rent/mortgage free, but once we move out we should collect about $700 cash. I need to double check on the term limit for when I can refinance, but I plan to take the equity out and buy more property.

Moving forward I want to do this more seriously and commit more time to it. I am so very cash poor now, but I want to start getting involved in the real estate groups through BP and connect with people and hopefully partner on something that makes sense. I've done this deal all by myself because that's how I like to learn things, but I want to leverage someone else's experiences and honestly, money, to be able to tackle more deals quicker than I could on my own.

I've heard it mentioned through all the BP resources to be valuable and/or helpful to people and partnerships will happen, so that's what I hope to start doing. I have time, energy, sticktoitiveness, strong communication/sales ability and a passion for continued learning and growth so I will ride that "unfair advantage" and see what happens.

Thanks for reading!

Ryan Kozuch

@Marcus Auerbach Good advice all around. I think you're right about having finances in order, it was more of just a timing thing because I/we weren't looking that seriously and all of a sudden this slick deal showed up.

We actually knew exactly what we could afford and swing for a down payment using FHA. Anywhere within the $5-10k down is what we were comfortable with. We basically just extrapolated from there to figure out how much debt we wanted to take on, which resulted in looking for tris or quads.

I actually have the pre-approval copy/confirmation, so while you are correct about being cautious, in this case, it just-so-happened to work out. Phew, right?

Thanks for the insight!

@Account Closed I want to make sure I understand your question.

NOI after the mortgage is paid off in its entirety or NOI after the mortgage payment and other expenses are subtracted?

-With the mortgage payment, vacancy, cap expense savings, taxes, I will perhaps be only -$200-400/month.

-Once we move out in a year hopefully, that will be $+400-600/month. 

-With Mortgage fully paid, we it will be at the 1% ($2400) rule which is typical in Milwaukee

I definitely considered those suggestions and tried to account for it when searching for properties. For instance, the roof and water heaters in this place have been replaced within the last 10 years. Nothing is ever guaranteed obviously, but you have to make a sound decision with the information you have and factor in whatever amount of risk you are willing to take.

The numbers I ran for comp models are always super conservative so I tried to leave myself plenty of wiggle room with some of these properties.

Depending on the inspection, I could potentially drop my cap expense savings down from %50 of monthly income to something like 35-40% and end up paying nothing to live there. This place is the nicest apartment building I have seen for the price by a long shot. There isn't much I believe that I would NEED to repair. Things are dated but in great condition.

Howdy Y'all,

I'm not from Texas, but I really like saying "Y'all!"

--- I am adding this after the fact, but I guess I didnt really realize it was such a saga of events. So many little plates to juggle. Anyway, I hope you enjoy! ---

Well, the recurring theme from BP seems to be "participate," So I did.

I started in real estate when I was perhaps 10 helping my parents out with weeding, snow-shoveling, and even some eviction cleanups. I had a large hiatus from the time I was in college until now (age 25), but I figured it was always something I wanted to get into. It just makes so much sense.

The backstory is long and probably boring, but I was financially unable to get involved in real estate because I never had the capital to do it, whereas my now fiance (hereafter referred to as Britt) had a way better job out of college but doesn't have much of an investor's mindset. That left me with figuring out a way and/or waiting until I could get her onboard for the long haul and have the resources to pursue it.

I know. I know. I could have partnered up without having any money and helped out with my time. We pursued that possibility briefly a couple years ago with my older brother who purchased and lives in a four-unit building, but I had no authority when it came down to following through because Britt had the money in the bank, shawty whatchu drank at the time. 

Either way, I always liked doing things on my own to see if I can do it. I find I learn more that way too. So I waited. Moved my way up in my job very quickly. Sadly, we have a logistical nightmare that is a wedding to finish planning for and pay for.

But.

I ABSOLUTELY KNEW I wanted to get into a multifamily property using an FHA loan and apparently "house hack" it like my brother did.

Literally, only about one month ago I got the green light from Britt to at least peruse the market. In that time I listened to a bunch of BP Podcasts (thank you commute), read a bunch of blogs and other materials, and scoured the market for data on relevant info. I realized I was slowly whittling away at her stubborn W-2 working ways because she was fine with me getting a realtor. 

I decided to use a realtor for the first deal because while I am confident and know some ins-and-outs of the business, I basically don't know anything besides the heavy research I did for four weeks. So, I vetted about 10 realtors and interviewed the first one I met with at our first showing with an exhaustive list of questions I found and it turns out he was an excellent fit. 

He is an investor himself, he used to have a kitchen remodeling business, and he isn't in his twenties - go experience! 

Over the next few weeks, we scheduled multiple showings, which ended up being crazy because I had to go all over the Milwaukee Area and then still fit my work commute in. Thankfully, I am more or less in control of my own schedule so I made it work.

Frankly, I was kind of disappointed in what I was seeing. Really expensive, extremely dilapidated three and four family houses. The numbers worked out on some of them just okay, but I wasn't thrilled with anything. On one the Podcasts, I had heard it mentioned that you should find a place that you would actually enjoy living in and that shifted my perspective a bit. Especially considering I was pursuing this with a picky fiance who wasn't sold on the idea to begin with.

Last week happens and we had a showing scheduled for a three unit that he scooped up outside of the MLS search parameters we had setup. I roll up to this place and it is IMMACULATE. The lawn is all mowed, the exterior looks resplendent in the morning sun in all it's glory, and the neighbors all had homes equally as well-kept.

I spot my guy and we head inside and the nicest old lady walks us around her pristine living space and I am just in shock after having come to expect the average place to be the next best things besides junk.

It has a 3BR1BA and two 1BR1BA, the latter of which we will live in. The other 1BR1BA has a long-term tenant who is paying under-market rent, but I will figure that out later.

Anyway, this ol' gal is coaxing us around, leading my by the hand, patting me on the back. It was pleasant. She wanted to downsize finally after all these years. But, all the utilities are separate, all the appliances are included, three garage spots, a decent yard (which I will fence of) for our Bernese Mt. Dog. It was prime real estate for an asking price of only $250k. 

If you don't know Milwaukee, you can pay that easily for any three or four unit building even in terrible shape. So we got outside after having said our thanks and goodbyes and I told my guy I wanted to move on it.

THE THING WAS...

We weren't even pre-approved yet, because I was basically taking my time to slowly get Britt onboard. It didn't help that she was on her bachelorette party that weekend, so I'm like "Realtor, what do we do?!" He laid it out for me and I got cracking on things. 

I had spoken with the banker previously about a pre-approval, I just hadn't done it because Britt works as a night shift nurse, so it's sometimes tough for us to even see each other. 

I called the banker and he says "oh I'll just give you a pre-approval, it's my job to know what people make." I thought it was weird, but I rolled with it. I met with the Realtor an hour or two after that to sign an offer of $240k.

I included a hand written letter with a picture of Britt and I stating how, "We can tell the love you put into the place and hope to do the same," and "Your home will help us get a great start to out future." Ya know, the stuff you would write to your grandma.

Anyway, I finish everything up and then I head out to Chicago for a buddy's bachelor party. The Realtor says the seller asked for an extension for a couple days because selling agent was out of town and the lady doesn't own a computer. I thought it sounded fishy, but my Realtor says he knows the guys personally and he wouldn't play dirty.

Saturday midday, I get the call. Counteroffer at $245k. Other offers were being made, so I didn't even have to think of it. Accepted that sucker and now we have all the little closing minutia to get through.

The inspection is this Saturday morning. I'm not expecting any huge items, but you never know. We are working on finishing up all of the bank requests for underwriting, but I don't expect any issues.

It's perfect timing because we needed to decide whether to resign our rent lease by the end of this month (rent agreement is over at the end of Aug), wedding is Aug 5th, and I just acquired five more branches for my day job to oversee and the building close by. The stars are aligning.

It's safe to say I have been bitten. This stuff is great. I'm thankful to have a seemingly great deal fall into my lap.

It's funny though because buying a place is easy really. You kind of just say, "I have the money to throw at it, here's roughly what features I want, and let's do it."

I believe the work will come from managing tenants, staying on top of the numbers, and growing quickly but cautiously.

If you bothered to read all this, thanks much.

Now that I am a real estate mogul, who wants to do a deal? Just kidding folks.

Ryan