BiggerPockets

The $45k Positive Cash-flow duplex--My Favorite Investment

Raphae Capital,LLC
Faisal A. Sami
Private Real Estate Investor
847-385-8841 Direct Cellphone

SUMMARY:
My name is Faisal Sami and I am a private real estate investor. I am growing my own real estate portfolio with $35k to $45k houses and duplexes in the Cleveland,Ohio area. I do not have any secret sauce,secret formula or unusual knowledge in real estate. What I do is just some knowledge and common sense meeting persistence.

From time to time I sell a property to other investors who get to know me,like what I do and want to grow their own real estate portfolio. I do all the work on these properties including finding the deal, getting clean title, as well as rehabbing and renting the property out. Every transaction is handled by a licensed Realtor, licensed attorney and Title company. The investor gets clean title to the property and can do whatever he/she wants with the property.(Usually rent it out long term.)

I make a small profit on each sale from anyone who buys from me. I am not running a charity but rather a business subject to scrutiny from the open market and licensed professionals. I don’t sell books,tapes or seminars. I don’t charge fees for coaching or “program” fees. I don’t charge any upfront fees whatsoever. Consult with your legal and accounting professionals before investing in any kind of real estate as there are risks involved as with any other investing program.

If you don’t have cash or credit but want to learn about the real estate business, I have a referral program. You can make a $1000(one-thousand dollars) referral fee for each referral who CLOSES a deal on a property with me. You can be involved as little or as much as you want in the deal. You will still get the $1k.

I do not wholesale junk houses or sell “projects” where you have to do the rehab and find the tenants. This involves too much work on your part and I feel is where I bring value to the equation and why I feel justified in making a small profit on each deal. Again,each deal is open to analysis,due diligence and scrutiny by licensed professionals. Watch the videos at the end!

My Program in more detail
My passion and hobby is real estate investing. Not the kind where I personally get involved with tenants and toilets but rather,portfolio type investing where I let the professionals do their job and I focus on results.

I started in the smallest of ways investing in single family homes in the $30k to $45k range and I still believe that is where the greatest values are to be had. I try and stay away from war zones at all costs. I only buy in neighborhoods where I feel comfortable driving in and spending some time in. This takes time and research. These properties take time and research to acquire but are not that difficult to manage,especially since I have professional property management onsite. There is no convoluted voodoo finance,short sale formulas, or complicated paperwork here.

The best way to buy, in my opinion, is usually with all cash and hold for the long term. A portfolio of 20 to 50 homes in the $35k to $45k price range,whether financed or bought with all cash can make for a very nice “passive” income. The numbers are easy to understand and the risk is relatively low per house. Add to that, the properties are in high demand as rentals, lease options, and land contracts as well as outright purchases for end buyers. I usually buy the house with equity in the deal so if my total cost is $40k the recent comps might show values of $55k to $65 with that range of equity in the deal.

Another way to look at it is usually in about 3 to 4 years from the date of purchase, these properties should be free and clear, assuming you buy with all cash and manage expenses. A bit longer if you use financing. The point is, you buy the asset and other people, i.e. tenants pay it off for you in a relatively short time span.

I only work with licensed professionals. This starts off with licensed Realtors, Attorneys,Appraisers,Loan Officers,Title Companies, and Property Management. I have found that licensed professionals are educated in their field,focused on their work and understand their fiduciary responsibilities. I never let my Realtors take advantage of sellers or try to acquire their property “subject to” their underlying financing on their kitchen table while they have the U-Haul in the driveway as some real estate seminars would have you doing. I just do not believe in that type of investing.

Most properties I buy are from banks,purchased from other investors who need to liquidate or are listed right on the MLS. I always use a Realtor and make sure the other party is represented by a licensed Realtor and a licensed Attorney. I pass on most properties and invest in properties where the seller and I can come to an agreement on price. The seller’s reasons for selling are varied and range the whole spectrum of the human experience. I can’t tell people how to live their lives, but I can be there to buy their house when they need to sell on the open market.

I invest in properties in the Cleveland,Ohio area that average a 15 to 20% return on my investment. I am able to do this because I “buy right.” I pass on most properties that are brought to my attention and only make offers that make sense. This I have learned is a key skill in real estate investing and many a person has lost money and been turned off by real estate because they did not “buy right.” Most of my properties are single family homes and duplexes that are in high demand.
 
I initially invest around $35,000-$45,000 per property. That includes the property purchase,and the rehab cost. My team coordinates the price negotiations, the transaction, and the entire rehab process to ensure the property will be completed on budget and on time, as well as oversee the property management once the tenants have moved in.

Most of my properties have quality tenants within 2 weeks of rehab completion. I get approximately $250 to $400 per month in net cash flow on most properties. (assuming $500 to $1000 in gross rent, minus expenses and debt; higher cash-flow if bought all cash). If there is a debt in the form of a conventional loan,seller financed note or a private money mortgage then that has to be taken into account as well.

I do some straight rentals and hold for them for the long term. Another twist on the straight rental is the lease option or the “land contract” in Ohio. This is where a tenant wants to get into the home as a homeowner but does not have the upfront cash or credit to get a traditional loan. It’s a great way to get a tenant with a homeowner mindset into your property and lock them into a purchase price that ensures a profit for you once they are able to finance.

In this scenario, we get an upfront deposit of around $2500 and structure our monthly payments so we ensure a positive cash-flow. We are not worried as much about vacancies in this scenario as each new vacancy brings in a new $2500 upfront non-refundable deposit to be applied to the purchase price when they are ready to finance. If I have $40k into the deal, my sale price locked into the contract is around $52k. This deal allows a credit challenged family to get into a house and then when their credit and finances improve, they can get their own financing and become true homeowners. Its a win-win-win.
 
I also do “flips.” For an average of $45,000-$50,000 initial investment, I will find a property to buy, fix-up and sell for a profit. These deals are hard to come by but when I find them I jump on them. I use local hard money and pay around 15% and some points or sometimes use my own cash if I am between some of my buy and hold properties. But because I “buy right”, I know my chances of success in the deal are high. I like to get my money back in 6 months to 9 months in these “flip” deals. But “flips” are NOT my bread and butter. They are gravy. My bread and butter deal is still the longer term buy and hold single family home or duplex in the $40k to $45k range.
 
Faisal A. Sami 847-385-8841 cell. Call me for a free 15 minute business consultation.

Below are some video's and additional information about my team and the property management company I work with. Our onsite property management partner of choice in Cleveland,Ohio is Rooftop Profit Max. They are experts in property acquisition,transaction coordination,and property management.
 

I just just closed on a duplex in West Cleveland for $27,500 with a total of $7000 in fix-up cost bringing the total cost to $34,500. This property is already rented for $950 per month($475 each side), giving me $350/month in positive cash-flow accounting for debt service,taxes,operating expenses and insurance.

I am also doing a “flip” deal right now which I am purchasing for $30,000.00, putting in $20,000.00 in fix up costs,and getting it back out on the market for a quick sale price of $75,000.00 for a potential quick sale profit of $25,000.00.

COACHING PROGRAM
There are no fees. You do NOT need to give me any money for coaching. I have been asked by investors from time to time how I am working my system and accumulating properties. I have been a student of many real estate coaching programs and seminars and after spending thousands of dollars on books,meetings and CDs/DVDs I have learned a lot. But I never made any money until I actually started getting into the game and buying real estate. At some point you will need to do the same.

So rather than charge upfront for books,tapes and “coaching” I would rather work with people who actually want to DO real estate investing and not just read about it or sit on the sidelines.

From time to time I have more good deals than what my capital will allow me to personally buy. What I do for these is put them on the open market to sell. I like selling to other investors because if they are happy with my property and it is making money for them, they will buy more properties from me and refer their friends and associates.

I try and buy way below market and sell below market leaving money on the table for investors who want to buy their own property and grow their own portfolio. Most of my properties are already fixed up and rented with tenants moved in and making payments. In other words these properties are cash-flowing. :) But some investors want to buy my wholesale properties and do their own rehab. That is fine too.

When the investor buys from me, I obviously make a small profit on each property I sell. I am not running a charity. It’s the age old adage: buy low and sell high. The key here is that I buy way below market and sell below market. Each deal is subject to Realtor, Attorney, Appraiser and Bank (if you are using financing) scrutiny. I encourage you to use your own professionals to analyze the deal. There is no obligation to buy.

Every property I have for sale is handled by a licensed Realtor and licensed Attorney. If you buy from me you will have to have your own licensed Realtor and licensed Attorney represent you in the deal. Otherwise I will not sell to you. No exceptions to this rule. This is done for your protection.

I can provide recent “comps” from my licensed Realtor for the past 6 months that show what houses have been selling for in the area and my house will usually be priced at the lowest “comp.” My licensed realtor will also do a Comparative Market Analysis(which you can have verified with your own Realtor) for each property which will show what has been going on in terms of house sales in the local area, and what houses are currently listed for.

Each house I sell to an investor is closed like any other standard real estate transaction through a regular title company overseen by licensed Realtors and licensed Attorneys. If you buy from me you will get title to the property like any other real estate transaction depending on whether you buy all cash or what type of financing you use. Standard State Real Estate contracts are used. No unique or special contracts. You can use any financing you want including bank,credit union or any other financing source. They will scrutinize the deal and do their own due diligence as well.

After the sale, we have a great in-house property manager(the same guy I use) or you can use any other property management company or individual you like. It’s your house, your business, your real estate empire to build. You can do anything you like with your property after closing including keeping for long term cash-flow, refinancing, or outright selling if you want to. You are in total control.

If you choose to use the property manager I use, he takes all phone calls, rents out the unit during vacancies, deals with all minor repairs, and direct deposits rents into your bank account. There is no need for you to collect checks and go to the bank. I verify my deposits through online banking. He charges the first month rent and then 5% of gross rents as commission. He sends me a statement each month on my own properties that itemizes everything that happens with the property, which I then hand over to my accountant. You can use your own property management system,company or person you want. I do not make any fees or commissions if you use my property manager. He is running his own business and you would have an independent business relationship with him. The value he brings to the table is that he already knows my formula and what I like to do with my properties. He can share that knowledge with you. But again that is your call and you can use anyone you like for your property management.

For investors who buy from me, I am available at reasonable times to share what I am doing and what is working for me. I do not make any money on property management or any other ongoing fees. My profit is only made in the sale of the property. In other words, if buyers see value in my property, it will sell otherwise it will continue to sit on the market. Again, there is no obligation to buy and the property is on the open market for scrutinization and comparison to other properties in the local area.

I can also arrange a tour for you of the properties we currently own and or we have for sale in Cleveland,OH area and you can see for yourself what our investment properties look like. I can make available my licensed realtor, licensed rehabber/contractor who fixes up my homes as well as my property manager to meet in person or speak with you on the phone if you have an interest in purchasing one of my properties.

You can talk to all of these people on my team. What we are doing is not rocket science and there are no secret formulas. This can be replicated anywhere in the USA where the market factors are present. You can also do all of the things we are doing, all by yourself. There is no secret “system” here. The key point is that we are actually DOING the work instead of just talking about it. And that is a HUGE difference.

I am selective with whom I work with. I prefer accredited investors. You must be sufficiently capitalized and understand real estate risks to be able to invest in real estate, in my opinion. Vacancies,damages to property,fire damage,termites and other costs of doing business can and do occur in real estate investing. You must be prepared to meet these expenses. If I feel you do not possess the understanding,are not sufficiently capitalized, or do not understand real estate risks, I may choose NOT to do business with you. Please do not take this personally. I just want to make sure I work with people who understand real estate risks and are prepared to deal with them.

I only sell positive cash-flowing properties which are bought right, rehabbed and have paying tenants in the house. The positive cash-flow is documented and is available for scrutiny before any sale. I do not wholesale or sell “projects” where you have to do the rehab and find the tenants. This involves too much work on your part and I feel is where I bring value to the equation. Again, this is open to analysis,due diligence and scrutiny by licensed professionals.

Referral Program

What if I don’t have cash or credit to invest? First off,there are no fees to be in my small referral network. You do NOT need to give me any money to be in my referral program. If you have business connections or are good at brokering deals, I can pay you $1000(one-thousand dollars) per introduction to a cash buyer or a financed buyer for every property they actually CLOSE on for however long they purchase property from me. There is no other involvement on your part after you have made the introduction unless you want to be involved. So whether your referral source buys 1,5, or 10 properties from me, you will get $1000 per closed and sold transaction without you having to do any other work.

A short telephone interview is required as well as a government issued photo ID. I just want to make sure you are a credible person. You will also have to fill out a one page standard IRS W-9 form so we can report income correctly to the IRS. Any prudent business owner would have you do this to be in compliance with tax law.

The video's below will give you an idea of the types of investment homes I am buying. These videos are made by my partners Tim and Brett.

West Cleveland Duplex Video  http://www.youtube.com/watch?v=Lx1YGvDkvQ4
Cost $35,000-$45,000 rehabbed, Rents for $550-$700 per unit, Net cash flow $700+ per month, Worth $80K
 
West Cleveland Home Video  http://www.youtube.com/watch?v=oSxFxBs5CIc
Cost $25,000-$35,000 rehabbed, Rents for $750-$850, Nets $500+ per month, Worth $65k
 
Euclid Ohio  Home Video http://www.youtube.com/watch?v=tGsVq12A1V8&feature=related
Cost $35,000-$40,000 rehabbed, Rents for $875-$925, Nets $400+ per month, Worth $90K-$95K
 
Shaker Heights Ohio Video http://www.youtube.com/watch?v=yNmUVeePAT0&feature=related
 Cost $40,000-$45,000 rehabbed, Rents for $900-$1000, Nets $400+ per month, Worth $95K-$110K
 
Cleveland Heights Ohio Video http://www.youtube.com/watch?v=kZOkm3CYmL4
Cost $35,000-$45,000 rehabbed, Rents for $900-$950, Nets $400+ per month, Worth $90-$95K
 
Bedford Heights Flip Video http://www.youtube.com/watch?v=ocNDuWB2HPU
Cost $45,000-$55,000 rehabbed, Sell for $85.000-$90,000, Net $15,000-$20,000 per month.
 
Cleveland Area Home Video http://www.youtube.com/watch?v=n4MBEL7jeFwCost around $20,000 rehabbed, Rents for $650, Nets $350-$400 per month, Worth $45,000
 
Other info:
Why is Cleveland a great choice for investing?
 
Situated on the shores of the Great Lake Erie, The City of Cleveland is a modern city with an atmosphere that blends the charm and lure of a Midwestern city with the hustle and bustle of an East Coast metropolis. 
 
Cleveland has a population of just under 500,000 and is made up of a number of quaint suburbs that surround the metro area. The Medical Industry has really put Cleveland on the map for employment. University Hospital and the Cleveland Clinic are ever expanding creating thousands of new jobs every year. Cleveland is also home to 6 institutions of higher learning. This creates a perfect situation for cash flow investments with 40% of the population renting.
 
Price point and cash flow have to be THE best reason to invest in the Cleveland area. These are nice homes in beautiful neighborhoods offering an incredible opportunity for investors.

Decision
I love real estate. Call me for a free 15 minute business consultation at 847-385-8841 and I can share with you what I am doing and see if there is any value I can add to your business.

Wishing you well in your real estate adventures!

Faisal A. Sami 847-385-8841
Private Real Estate Investor

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