Our Adventure with Real Estate

Paul Sonntag

The Beginning – A Single Family Home

• Located in Vermont, approximately 30 minutes from our house

• Purchased 2004

• Rented 3 years

• Tenants trashed place when they left

• Decided to fix and sell, Spring 2007

• Wanted the “Wow” factor when someone walked in

• Sold 2 days before it went on the market

• We managed the property ourselves and renovated it ourselves (hiring assistance where it made sense)

• Will always be thankful we did it ourselves

• Understand tenant issues

• Understand renovations

• Talk the same language with our current property management firm

The Adventure Continues…

• Stayed out of real estate market during crash

• Started looking again late 2009 • nothing interesting in Vermont

• cap rates far too low

• Out of state investing• Locate area

• Variety of employers

• Unemployment rate

• Number of available properties

• Vacancy rate

• Reasonable cap rate

• Fair laws, not excessively tenant friendly laws

• Find a property management firm we could work with

First Apartment Building

• 18 units

• 8 occupied when we purchased the building

• Not all were paying rent

• Needed cosmetic renovations only

• Purchased August 2010

• 100% occupied by June 2011

• B area

• C -> C- tenant class when we purchased

• Now B -> B- tenant class

Second Apartment Complex• Took several years of consistent searching

• Wanted a deal not just a property• Conventional purchase or foreclosure• Known value-add going in• Within 2-3 years want value increase such that conventional refinancing pays

back down payment

• Many properties under contract failed our inspection

• Property #2• 28 units• foreclosure• 14 occupied at time of purchase• Unoccupied units were uninhabitable

• Purchased with “Mass Wealth” money• Bank financing for construction loan• Purchased April 2013• 100% occupied December 2013• Refinance completed April 2015

Summary and Your Next Steps:

• We have 2 profitable properties

• Both fulfill our goal of

• Providing a decent place for people to live

• Making money for us

• Actively working on the 3rd

• Advice to you

• Know your goal – why are you investing in real estate ?

• Know your assets

• Get started – it’s a numbers game

• Don’t be in such a rush to get any deal that you take a bad deal

• Remember you are providing a service to your tenants

• Keep learning – seminars, reading, talking with knowledgeable people

• Think different