All Forum Posts by: Chuck B.

@Luke MacDougall It's been my experience that you'll need a local bank that keeps their loans on their own books (doesn't sell the mortgage) to finance properties that are difficult to do so otherwise with a more conventional lender.  The money is more expensive (e.g. 6.3% ARMs that are fixed for five years and amortized over 7 to 15 years) , but they can be infinitely flexible.  Once you get it purchased and fixed up you can then refi into something more affordable.  

In short, the issue may be that you need a different lender.  

@Brent Coombs - I hear you and I know you're correct. There's a lot of smart people making great returns on big multi deals (I've been reading their posts off and on all morning). What I know about multis could fill a thimble. 

With that said, from the few deals I've looked at or seen purchased in my town, it seems like folks are buying them at 40k (lower end) to 80K (nicer areas) a door. I have trouble seeing the advantages when you can buy SFR for the same prices (with some digging and hustling). Scale must be a large part of it as it's certainly easier to buy 8 or 24 units in one purchase than it would be to buy and unload that many SFRs. From some of my reading here too it's always interesting how folks force appreciation on these as they're not valued the same way SFRs are. Right now I do love the low drama and turnover in my SFRs, most of which are low income areas. Hopefully one day I'll be in a position where trading tens of units at a time is the only right way to move the needle.

I have a lot to learn still, that much is for sure. 

Best,
 - C

I think that markets are different all over... San Fran is not Houston is not Louisville, KY.  The opportunities will somewhat be defined by the environment.  

Likewise, I think that some folks have temperaments that allow them to be better buy and hold landlords than others.   I've watched some investors nearly have strokes over what I'd consider small issues, not vet tenants to any worthwhile degree, not pre-qual their tenants before showings, etc.  

I think it's the same for low income rentals versus high income rentals.  Some folks are wired well to handle this sort of asset and demographic and others just are not.  If you know what you're looking for, you can find very reliable low income tenants (and if you know what you're looking for, you can find very reliable middle income tenants - Ha!).  

I can get into a 40K house that is fairly solid and rents for $850 monthly and I can buy a $75K house that is fairly solid and rents for... $850-$1,000 monthly.   I'm still going to send HVAC service to both of them twice a year, I'm still going to have to replace roofs or water heaters occasionally, but there's no comparison in the numbers if I'm looking for cash flow though.  This is just my experience here in my hometown, your mileage may vary, etc.

@Andrey Y. - I met with a realtor last month.  He said his father in law had a 24 unit complex that he'd worked his way into over the years.  After running it for a number of years he said he'd wished he had 24 SFRs instead.  I've never owned "multis" outside of duplexes but the idea of having to supply appliances or pay any utilities makes me a little sick.  

@Lauren Willoughby thanks for the good word.  It's not a big appreciation play but I do think there's room for that neighborhood to come up.  They cash flow nicely though.  The trick is vetting the potential tenants well (I do in home visits in addition to a lot of reference checks).

Are you related to an Amber Willoughby by any chance?  

Best,

 - Chuck

@Account Closed I dont have any in Russell but thanks for the tip, I'll check it out.  I did invest in a really rough looking (but nice inside) Portland neighborhood house and some commercial land last quarter on a bet on the warehouse district coming up.  Before anyone says it, I know... Bit of a long shot but there are some things happening over there.  

I was typing all of this from memory and forgot to mention that I also added new porch railing and a handful of new smoke alarms to bring the house up to code as well.  

Best,

 - Chuck

Total list of updates:

• Three new light fixtures (including adding a one to the bath, which desperately needed another)
• Minor electrical work
• All new plumbing including a hot water heater
• HVAC serviced
• 3 BRs and bath painted
• Basement floor scraped, cleaned and painted
• Shower tile "stripped" (of paint!) and tub refinished
• Hardwood screened and two coats of poly
• Two new security/storm doors
• Two sections of broken/collapsed sidewalk in the front replaced
• New alarm system
• Minor haul off
• Thorough cleaning (regular crew)
• Carpet cleaning
• New door handles and deadbolts

Total cost was $7K and change, maybe $7,200 total.  

I bought this as a buy and hold a month ago. It's located at 371 N. 41st Street, a great (quiet) little part of Shawnee in the far Northwest corner of Jefferson County. It was a HUD foreclosure so I had to wait out the owner-occupants first look period. Last day of that a contract was submitted (and broke my heart) but a few days later it came back on the market and I submitted a full price offer on their ask price ($35K) at that time.

I tend to fix up my buy and hold beyond what a lot of investors will do in these low income areas.  I'm very selective about the houses and the streets though and I'm very comfortable with what we've done here.  All told, I'll be $7K in when the last bits are done (tomorrow or Monday), so total purchase and rehab will have it at $42K. 

I listed it a couple of weeks ago (section 8 OK) and have a great couple signing a lease Tuesday for $850 monthly.  

It had hardwood in the main living area and they were in great shape.  I had them screened and two fresh coats of fresh poly laid down which will hopefully help keep them in good shape.  

The kitchen as in very good shape.  Since this photo was taken I've had a new hood vent installed and the back-splash behind the stove has been repainted.  Other than that, it just needed a good cleaning.  

Half the basement is this kinda/sorta finished room.  About half the floor was covered in ancient tile.  We scraped all of that up and put concrete paint down.  Now it's a bonus room for someone.  There's also a furnace room down here and a utility room with W/D hookups, a wash sink and a big stack of built-in shelves.  

This is the smallest bedroom and one of two on the first floor.  It needed some fresh paint and the carpets (dirty in this pic) were cleaned today and came out nicely.  

The upstairs bedroom.  This has also had the carpet cleaned since this picture was taken and the walls have been repainted.

We put in new towel bars and cleaned up the bathroom.  The tile and tub however have been previously painted (WTF!?!) so that's getting stripped today and the tub will end up being refinished and the tile simply cleaned of this paint and left in their natural state (avocado). 

House had a high efficiency furnace when it was purchased but the AC looks pretty dated.  We'll find out in the spring if it's OK.  I've had an alarm system put in, two new security/storm doors (old ones were missing), some new blinds, a couple of new light fixtures and I had most all of the plumbing gutted and replaced including a new hot water heater.   Plumbing was a big bite at $1,200 but that's a lot cheaper than retail for all new pex, new spigots and shutoffs and new water heater.  

If anyone has any questions I'd be glad to answer them.   I'd love to see some more Louisville posts in this forum too (hint, hint!).  

Best,
 - Chuck

it just occurred to me too but if I'm on the fence about someone, or haven't found them at home for an inspection, I'll quiz the neighbors about their habits.  Very informative stuff sometimes!   

Checking their car is good but not foolproof.   I've done in-home inspections for many years and they leave very little doubt as to what you will get when they move into your house.  I did two this past week with a lady and a gent that are moving in together (getting married).   I don't announce, I do surprise visits... Wait for their car to be around and then knock, etc.  I always tell them that I'm looking for ashtrays and big dogs (I don't rent to smokers and I only allow small dogs and no cats).   I am looking for this, and more.  Sometimes their yard/porch tells me everything I need to know and I just leave without going any further.   :/

Best,

 - Chuck

I believe the rule is that if you require proof of 3x income-to-rent then you would require your section 8 tenant to have 3x THEIR portion of rent in monthly income.