BiggerPockets

Quitclaim deeds usually mean nothing to an investor. Please tell us how you have "access" to 55% of them in all OH. What figures do you base this upon?

This claim sounds like a real streatch to me. Can you back it up with some information?

I am meeting with a real estate agent today to confirm this information but from my own research It is pretty accurate. I have contacted other members from multi-group and browsed for futher information on their website.the quitclaim is just how I came to purchase them and was willing to sell to regain the funds from clearing the liens on the property bbut like yousaid quit claims mean nothing so i am looking for investors to help fund the rehab for a portion of the rent and resale

I don't think you see the big picture as i do. i know that i can't do it all by myself. I am hoping that i am inspiring others to do the same in other areas of ohio. but my thought and focus is cleveland lakewood, beachwood, cleveland hieghts and other "More Desired areas" those areas will run low on demand why build more in that area and over crowd it while perfectly structured homes in cleveland are being demolished because the have been abandonded for 10+ years.Pumetting the property values of the surounding home causing those owners to be upside down in there mortgage. It isnt
only the banks and unemployment that is causing the problem in my eyes people wih the money to help have shiny ball syndrome and want immediate gratification. but i think with the purchase prices being as they are i would think other investors would be clamoring for projects to increase the value of the homes in as little as five years. when the economy picks back up and unemployment is up then what all the homes to supply the new demand are gone and causees another problem now the people who could afford a home now haveto wait even longer to save to buld one. So in my grand scheme of things by fixing up thes properties in cleveland and spending minimal cost to purchase and minimum to rehab you are insuring an affordible market for those newly employed individual tired of wasitng their money on rent and want to finally feel some since of accomplishment by purchasing a "cheap" yet modern comfortable home that is just as nice as ahome that costs 10 times that amount but because of when it was rehab the savings can still be passed on to them at still a 100- 125% return.

You wanted and example of a proposed deal.

1. I purchase the property for 5000 pay off the liens on the property totalling 22000
Total investment 27000
2 repairs cost 62000
-new driveway
-new garage
-replace duct work
-repair a few pipe leaks
-and replace a 22 sqft section of the roof caused by minor water damage
-minor cosmetic updates

2. I pay the property management company
3. I pay my worker Bare minium payroll
4. the invesotr is pasically paying for materials and recieves 70% of the rent for 5 years and 30% of the resale value at the end of those 5 years any maintainance is handled by my company You basically sit back and receive a check I do all the work

does this sound realistic for the properties i have purchased. I am asking for serious imput onhow to make this more appealing to the average investor now. who is willing to actually take a risk and wait a while for the return

So, is that $89K total investment? $5K purchase, $22K in liens, and $62K in renovations?

I don't invest in Cleveland, but did investigate the possibilities a while back. $89K seems like a lot to have into a rental in Cleveland.

If I assume 3% appreciation per year, which I think is the best we'll do anywhere in the country, notwithstanding local situations that cause higher demand, and the value is really $89K at the start, this is worth $103K in five years. That nets $95K after sales costs. If I get 30% of the profit, that's $1,800. That's not interesting.

You say I would get 30% of the resale value, or about $31K. But that doesn't make sense because there's not that much equity.

What are you expecting for rents? If I'm going to plunk down my dollars to fund this deal, I want a healthy return. I'd get 14% for making hard money loans. Maybe I'd settle for 12% for this. That's $890 a month. Applying the 50% rule to rents, you'd need rents of about $1800/month. That gives you $900 for the expenses, $890 for me and $10 for you.

If you mean you're giving me 70% of the gross rents, then I'm sure this is going to fail. That only leaves you 30% to cover all expenses, which those are more likely to hit the 50% rule of thumb if you're talking 17 houses (other posts) for five years. So, you're going to be out of pocket for 20% of the gross rents to cover your expenses.

I must be misunderstanding.

correction the investors portion is 62000 which is 70% of project if rent is 800 a month then in reality 70% is 560 so you make 33600 over the five years in the resal if it is 103000 30% is 30900 =64500 in this example is only 2300 but that is not the actual but if rent iis1200 profit 19300

Katherine, These numbers are such a jumble its hard to follow. If you want to find an investor, you need to lay out your plan clearly and suscinctly. "If rent is 800" and "if rent is 1200" doesn't give me any confidence about what the rent really is. If you want to attract investors, you need to spell out very clearly the total costs for the project, the expected sales price, and the expected rents, along with what the investor has to pay in and what they get back.

I'm still not sure I follow your example. I invest $62K. The total is $89K, so you're putting in the remaining $27K. With $800 in rent, I get back $560 a month or $6,720 a year. I estimate your expenses at $400 a month, so you're adding in $160 a month or $1,920 a year.

When you sell, I expect to get back $92,900. That's the $30,900 plus the $62,000 I invested. If you're saying I only get back the $30,900 for a total payout of $64,500 for my investment of $62,000 there's no way I'd invest into that deal.

Then, you say the rents are really $1200, which gives me $50,400 over the course of the deal plus $30,900 at the end. Total return is $80,400 for $62,000 invested or a profit of $18,400. That's not a great return. That's an 8% IRR, and that's certainly not what I'm looking for in a real estate investment.

Much better deal for you. You put in $27K at the start, $2,880 a year in operating losses, then get back $72,100 at the end. That's a 14% IRR for you.

But I'm not sure any of these numbers are real. You need to outline what the real numbers are, what the investor has to put in and what they get back.

Katherine, you are not going get anyone even close to excited with these numbers. Thinking you can manage a rental with 30% of the rent revenue, is scary and not even close. Read through the 50% rule and a lot of the land lording posts on this forum.

Good luck.

they aren't real they are an example i said it was an example in the very begining so investors want more than a 8% return in 5 years? I will factor that in how did you comeup with that figure 8% i want to see the formula it doesn't sound right tome

21% is whAT i though t8 percent is not even close to what i had so my model could ptoduce profits an investor ewould want an yiu guys where trying todicourage me i would make my money fromother projects