International Investor Finds Success in the US: Santosh’s Success Story
This international investor cash flow deal will really get you excited about investing! We’re speaking with one of our successful Premium Elite members of MyHouseDeals, Santhosh Kundoor. Santhosh’s story is a testament to an international investor cash flow deal. He had several investment properties in his home country of India. Today, he will share his exciting journey as he has gone through the process of looking for his first international investor cash flow deal in the US. He’ll take us through his initial attempts looking through Facebook, Craigslist, and other sources, but not finding the perfect fit. Right when he saw the deal on MyHouseDeals, he knew it was the perfect cash flow deal to convince his wife! Finally, with her on board, he was able to jump in, make an offer, and get the house. It turned out to be an amazing multifamily investment opportunity—an excellent cash flow deal.
Santhosh faced many surprises, including delays, cost overruns, supply chain issues, and labor problems. Our intrepid international investor found that the best way to overcome this kind of adversity is to be prepared for the unexpected. Santosh was able to persist through all of the obstacles he faced by keeping his goals in mind. He was motivated by his child and his desire to fund his son’s college education through this international investor cash flow deal. The biggest lesson Santhosh learned, however, was the benefit of using the right tools as early as possible. He spent eight years trying to find the perfect cashflow deal and finally found the right one within 3–4 months on MyHouseDeals!
His is a riveting story of attempting a renovation on an international investor cash flow deal just after the pandemic with all of the elements of price uncertainties and supply chain issues. He persevered, however, as the story today will demonstrate. Let’s get started!
Topics include:
- Cash flow deals
- Rental investment strategy
- Going from international to US investing
- The benefit of investing in paid tools
Here’s a quick breakdown of Santash Kundoor’s deal:
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You can listen to the audio here:
You can watch the video here:
Tell us a little bit about yourself. Where are you joining me from and what is your background in investing?
I’m in Sugar Land, TX, a suburb of Houston. I have some background in investing, with an apartment and four pieces of land in India. I wanted to do the same thing here in 2011 and 2012.
I was looking into it, but my wife had strong objections. She wanted to buy the family home first and then the investment property. I was traveling back and forth to Austin at the time, and I found a one-bedroom condo that I could have purchased for $65K. I could stay in it during the week and rent it out on the weekends. I really thought about this, but I backed out.
Then we bought our home. We had quite a lot of expenses related to the home. At this point, I was looking around, but never really buying anything.
I heard about BiggerPockets from a friend of mine and I looked into it for a year or so. I still didn’t have the funds or the courage to act on it, but a friend of mine was looking for some investment properties and I suggested BiggerPockets. He jumped on it. He and his partner are up to about 20 homes now. That’s really what got me started. Early last year, because the pandemic gave me a little free time, I started looking into it again, but the market was pretty crazy.
I looked through everything, Facebook listings, Craigslist listings, and other wholesalers. These were a waste of time for me.
I had become a free member of MyHouseDeals. I was not a paid member, so I would see a deal, but by the time I would look for more information, it would have timed out for the day or someone else had already gotten the deal.
I looked through other wholesaler websites. Those were mostly priced at ARV, so not useful.
MyHouseDeals was the only place where I could find something realistic where I felt I could make a little bit of profit. I was looking for a single-family property. I looked for three or four months. I was frustrated by that time because the market was hot. It was a very tight market. I decided to look for multifamily properties, not just single-family homes. I found one that was listed for $159K, and reduced to $135K.
I talked to the wholesaler and looked at the property. Most of the properties that I had gone to see, at this point, had already closed or were under contract by the time I got to them. Luckily, this one was still available. I wanted to make an offer of $130K, but my wife objected and said, “No, we’re not offering more than $100K.” I was heartbroken but was eventually able to convince her, and we got the house for $130K.
I was sure that that would be the right price. The property had two houses right next to each other. One had been vacant for almost 10 years. The other one had been upgraded over time and had a big garage with an office. To me, everything looked good and we went for it. I am in the process of setting up my LLC and getting it ready.
I have had some of the contractors come by and give me a quote. Everyone has a different perspective. The seller has one perspective thinking with $5,000K you can just fix it up cosmetically and then go from there.
One of the surprises with this property was that it needs all new electrical. The wiring and the breakers were old and unsafe.
I’ll also be replacing all of the plumbing in the house. New valves, pipes, everything. I’ll enlarge and completely remodel one of the bathrooms. These kinds of decisions are personal choices. The cost could go anywhere.
From the bare minimum all the way to what you want the property to be. That’s so exciting. Is this the first deal that you’re buying as an investment?
I have bought investments in India. This is my first in the US.
When you started looking for it on MyHouseDeals, did you already know what you were going to do with the property? Did you know if you were gonna flip it or did you know you wanted something that you could rent for cash flow? Or were you just looking at everything that was available in the area and then deciding what your exit strategy was going to be depending on the deal? What was your approach to that?
Flipping was out of the question. Our exit strategy is to hold it for a short time and see how the cash flows. I had decided this going in. I wanted this rental for our family so that it would help to support us a bit. If that doesn’t work, we can always refinance if we need money for expenses. Primarily, I see it as an investment for my son’s college education.
That’s a great idea! It sounds like this is something you are looking to do on the side. I imagine you have a full-time job and you’re treating this as supplemental income.
Yes, this is part-time for me.
What do you do in your regular time?
We usually watch TV. I watch TV all the time. I like to ride motorcycles and watch motorcycle videos. I’ve been religiously watching MyHouseDeals for almost a year now. Searching BiggerPockets and other websites for property deals also watching YouTube videos on flipping. Spending my time in a constructive way.
Sure, do you have a full-time job?
Yes, I do have a full-time job in IT consulting.
Very good. I’m sure that keeps you busy. That’s also a hot industry right now. So your plan was to supplement your income, save for college with your real estate, and then you found this deal. You knew you were going to hold it for a while, rent it out, eventually sell it, and cash out on it. Tell us about the house itself. How many bedrooms and bathrooms? Paint us a picture of what the property is like.
Going in, we were looking for a house with three or four bedrooms and two baths at minimum. That was the criteria. We found many that were close, but they had problems, like foundation damage or other major issues. Many were just priced too high. Once we shifted our focus and started looking into multi-family properties, this one popped up. This includes two lots, with two houses. We were really just interested in one of them. It’s 1,600 square feet, three bedrooms with two baths, although one of the baths was pretty small.
It has a garage conversation that was used as a media room. We’re in the process of converting that into a game room.
Three bedrooms. So that matched the criteria from your wishlist?
Yes, and it’s got a big garage, which we wanted. It’s a three-car garage plus an office. It’s unfinished but functional.
How long was it after you became a Premium member of MyHouseDeals before you spotted this deal?
Probably three or four months. I spotted many, but because of the market, they were going fast.
They are fast. This came from a wholesaler, you mentioned. You said they wanted $135K, and your wife cleared you for $100K. How did that conversation go? Did you actually put in an offer for $100K?
I was the one who was doing the searching. My approach was to consider the address, the square footage, and the value of the others in the neighborhood (from Zillow, etc.). Then I would check the FEMA website for flood zone or other pertinent information. I was doing lots of research.
This one really caught my eye because it was listed for $160K, but the price had just been reduced to $135K. That looked like a good deal to me. I started talking to my wife about it, reminding her how quickly these houses were selling.
We faced a similar situation before. There was a property that she liked, very near the city, but we didn’t have time to go look at it during the week. Without even seeing the property, we put in an offer for the asking price, around $110K. The seller didn’t want to sell it to anyone who hadn’t seen it in person because it had some foundation damage. We lost that deal, so this time I was very determined. I talked to her for two or three days, telling her that this property has two houses. Even if you just consider one house, it’s almost 1600 sq. ft. That’s worth about $95–$100K. So together we would be getting two houses. I kept on it and eventually, she said okay.
She probably began to see that this might really mean something. Basically, it’s a duplex. It’s actually two lots, but they were under the same listing. Gotcha. Meaning they were owned by the same person. So he was selling both the lots together. Very good. You got it for $130K, you said?
Yes, $130K with the wholesaler commission, closing costs, and everything.
When did you close on it?
I closed in January.
Tell me about the scope of work. You said you’ve been meeting with contractors. Where are you in that process and how much are you going to invest in repairs before the house is ready to rent?
At first, the wholesaler said it would take around $5K, but we wanted to do other things and were not sure about that number. We wanted to make that garage addition into a part of the living room. It had a bar and other things we wanted to remove. It started with that and we had guys coming in. That’s when we learned about the breaker issue, and that most of the breakers are 50 or 60 years old.
You’ve got to replace those. The estimate on that was probably about $10K plus, wasn’t it?
There were different quotes, but one of the guys said it would be $13K—$14K for A+ everything. We started with that, but we didn’t really have the funds for it and it would blow the budget by about 30%. We decided that we should identify just what things we were going to work on. She wanted to do cosmetic things. I said no, I’m not sure we have the budget for it. We discussed this. We have gone through three or four contractors, and are still just on the first house. We’ll finish it first and then move on to the other.
While we were discussing and waiting for things to come together, I decided to get started. I started doing some of the demo work, in areas we knew we wanted to change. Now most of the demo work is done. I have an appointment with an attorney this week and after that I’ll start getting the guys in.
Everything is getting more expensive and many things are unavailable. I went to Home Depot twice to pick something up, only to find it was out of stock. So when you ask how much I’m going to spend for repairs, I’m just not sure yet. I want to do some of the work myself, to save money, but I’m not sure if I can since it’s almost an hour away.
Realistically, I’m thinking it will cost approximately $20K—$25K to fix it up. That will make it about $155K total for purchase and repairs.
I’m sure you’re very motivated to get someone in and start collecting rent on it. What is your timeline for that? Have you determined how much you’ll be renting it for?
Yes, I have reached out to a realtor and she suggested $1,400K to $1,500K for the bigger house. The other one is about 900 square feet. Once the smaller one is fixed up we will probably get $900–$1K.
So you’re expecting your total between the two units to be about $2,400 monthly. Is that correct?
Yes, and I was also told that if I spend about $30K–$40K to convert the three-car garage and office into living space, then I can rent that for another $1K.
To a separate tenant. You could potentially have three different tenants between those two lots. That’s fantastic. So time is of the essence. Time is money. The sooner you get someone in there, the sooner you start collecting. When will that happen? This is the big question.
I understand that time is of the essence because I’m losing about $1K–$1,500 in potential rent per month, but it’s important to me to fix it up the right way so that I won’t have any immediate problems when I finally do rent it.
How did you fund the deal? Did you work with a bank? Did you take out a mortgage? Did you work with hard money? Did you self-fund it? What was that process for you?
We were saving money. My wife had some savings and I had some savings, and then we refinanced the house and so it was like one-third, one-third, and one-third. We couldn’t get the money for the repairs. We maxed out our savings.
You don’t have a mortgage on it? You bought it free and clear?
Yes. We bought it free and clear. We wanted to get a mortgage once it’s fixed up so that we can get the appreciated value.
That makes total sense. I want you to focus on fixing that up as quickly as you can so you can start cash flowing that thing as soon as possible. It’s a hot rental market now as well, and you want to capitalize on that. I know there are some challenges with construction materials and with labor, but if you can get through that, then you’re well-positioned to rent that thing quickly. I’m really glad you’re already working with a realtor. Tell us what’s next. Are you looking for your next deal? Are you going to wait until this one rents before you’re looking to buy another one, or is this it for now? Give us a little bit of insight into what your plans are.
My original plan was to get this ready in three or four months. I thought by May I would have rented it out and would have pulled out the money and then started with the next one, or at least remodeled the smaller one next door.
That was the plan. Now it looks like it’s gonna take a little bit longer, but I’m actually looking at the next one. It’s very much like this one. I’m pretty sure what needs to be done. It’s just a matter of arranging the money. That’s very exciting. I always say the first deal is the hardest, and then it gets easier from there and it gets a little bit easier with every deal that you do.
I’m excited for you. You got the hardest part out of the way. Let’s make sure you ramp up this one and move on to the next.
I wanted to update you on this. I decided that I needed to split the lots, plot 9 and plot 10, to get the financing done. I went to the county and split them. The appraisal came to $140K and $70K. Together the appraisal district values them at $210K.
That’s awesome. Theoretically, if you were to turn around and put those properties back on the market, you could already see a substantial return on your investment.
Yes!
That’s fantastic. How has your experience been with MyHouseDeals so far?
My experience with MyHouseDeals was mostly with the free version of it. At first, it was primarily a blog post that I could search in. The recent updates are awesome. You can go look at the map which pinpoints where the properties are. Something that the site could add, would be the actual Zillow value. (We took his suggestion!)
If it could connect to the API and then show the numbers, that would be great. Another helpful thing about MyHouseDeals is that you respond to comments. Other sites may not respond or you get an automated response. I also like that you have some training about how to buy a property and other useful information on the website.
That’s good to hear. Who have you watched or listened to that helped you to learn the skills that got you where you are today with your first deal?
When you are getting the deal, it’s all about the numbers. The price and the ARV. Those things can be calculated or easily gotten from the website, but most of the deals that we do involve fixing the homes. We need to estimate the rehabs. “The Book on Estimating Rehab Costs” by Jay Scott from BiggerPockets helped a lot with figuring it out in the beginning. Then the cost increased by about 30% because of the pandemic. You have to take those little surprises into account.
Summary
Santhosh Kundoor’s journey was epic. He had a clear goal. His international investor cash flow deal will now fund his son’s education. He faced many obstacles and experienced uncertainties and discouragement until he found MyHouseDeals and the perfect property. Even after convincing his wife and securing this excellent international investor cash flow deal, the project was not all smooth sailing. Many things had changed in our post-Covid world. Our investor was tested on many levels. He faced rising costs, material availability, and labor shortages. Through it all, Santhosh was both patient and persistent. He had a vision. These were the keys to his success.
Santhosh, our savvy international investor, would tell you to wait for the right property, your perfect cash flow deal, act bravely and quickly when you find it, and keep your goal in the front of your mind. When difficulties or surprises pop up, be prepared to pivot and keep going. Most importantly (after trying other things for eight long years) he would tell you to jump in and start your journey with MyHouseDeals!
We’d like to thank Santhosh for speaking with us, and wish him the best of luck in the future with his international investor cash flow deal!
