[b] I am about to purchase a triplex. I talked to the bank and setup a termite inspection. I believe they will loan me the money if I can prove it a worthy investment.
Takes a bit more than that Travis. They will scrutinize your credit worthiness, your income, and your history.
As far as the property is concerned, have you completed a full financial analysis, included rents, operating expenses, debt service, capital expense reserves, and cash flow? A professional home inspection is also key especially for a newbie in addition to the termite inspection. Make sure property appraises, line up a quality property management company (unless you plan on managing yourself, in which case, you had better get well versed on that as well). You will need repair people, handyman, contract service providers, etc. You need at least one if not two exit strategies planned, a cash reserve for rainy days, and I am sure I am missing some things as well.
Post your financials here and we all can help you out. :lol:
It is a 6 bedroom 3 bath 3 kitchen apartment building. It is two stories high. They are asking 74,000.00 I go them down to 70,000.00 and he said it was appraised at about 83,000.00. I will get it appraised also.
I have 5 rental units already and have my team together already. I have a crew that does the work for me. I am ready to get the ball rolling on some more properties. I have a couple of investors. It is not much money but all together I probably have about $50,000.00 to put on a few different projects.
Any suggestions on how to acquire more properties at discounted rates?
Lots of variables in your assessments. My first question would be why are you buying a triplex at almost 90% of appraised value?
Second would be what is the income on the property?
There is only one electrical meter therefore I plan to do a all expenses included up to $150.00 for $550.00. Rental get rented faster here. I could have the house full in about 2 weeks.
It would bring in about $1650.00. After 200 for repairs, 600 for note, 100 for insurance, and 450 for utilities. That totals 1350.00 and should leave me with about 200.00-400.00 positive cash flow.
You are leaving out some of the expenses such as evictions and vacancies, but even without those, your numbers are too tight here. I want $100 per door in cash flow and you are quite short of that (assuming you would want the same).
All utilities paid can be a potential problem on a small building such as this. Proceed with caution.
Depends on the market I am investing in and the current market conditions as I must adapt with the market and use the strategies that work for it.
For instance, in Las Vegas, I buy REO properties from banks, get my leads from agents, other contacts, realtytrac, and title companies. I make low offers until I get one accepted. Key to this strategy is to make lots of offers.
I am also adding in short sales. Get leads from similar sources, make contact with sellers, have them fill out my docs, and begin negotiations with bank.
Look for motivated sellers needing a solution to whatever their problem is and offer that solution.
How to do you build relationships with title companies and agents? Sometimes I think of paying an agent to think of me when there comes a good deal. What do you recommend on building relationships with lead generating prospect?
Most agents are idiots in my opinion, or lazy and just expect money to fall into their lap without working.
There are the rare ones who work out nicely for us. Most of mine in the past came from referrals but I have recently added some new strategies.
As for title companies, you need to make an approach that ghas a mutually beneficial scenario. You are interested in leads and are asking for them at no charge. They are looking for business through closings so offer to run all of yours through them.
Never pay an agent until they produce results. Pay them via their commissions.
It is not legal for them to receive funds from you outside of closing.
I agree with the others that this is a bad deal. I NEVER buy apartment buildings if I have to pay utilities. That's a recipe for disaster.
As Will said, you left out a BUNCH of the real world expenses such as taxes, management (even if you do it yourself), vacancies, advertising, office supplies, legal fees, entity maintenance, evictions, damage done by tenants in excess of the security deposit, lawsuits, capital expenses (not technically an operating expense), etc, etc, etc.
How do you find great deals on rentals? The short answer is HARD WORK! Great deals are not often simply found on the MLS. I've gotten most of my best deals through personal contacts. My suggestion is to tell everyone that you know and meet that you buy property (at a discount). Many of your family and friends will know someone in the next year that MUST sell a house (a desperate seller). If you stress to your family and friends that you're looking for these properties, they'll think of you when they hear of someone who is distressed.
I would also join your local REIA and make friends with the SUCCESSFUL investors in your area. You would be amazed at the number of deals that are passed between the successful investors (often for free). In addition to the deals the successful investors pass between themselves, they often have leads on deals that they don't want to do for one reason or another.
I talked to the guy about buying the property. I told him I had 10,000 to put down and we would do owner financing for $700.00 per month. He said he wanted 1000 per month and I told him the number did not work at a 1000 per month. What do you think about owner financing?
Enjoy reading your posts but the statement you made that it is not legal for an agent to receive funds outside of closing is 100% wrong if your talking about fees for service.
In California a broker can be paid fees for services before, during, or after a deal, and as a matter of fact there doesn't even have to be a deal just a consultation..
There is no law on the books with the restriction you indicate in California,and I never heard of one in any state..
Not sure if we are on the same page and I am quite sure I am not 100% wrong.
What I am saying is that a licensed RE sales agent can not pay or receive commissions, fees, or whatever you want to call them directky to or from another agent or person and here is why:
The broker in which the licensee hangs his/her license needs to be paid and paying outside of closings without the knowledge of the broker circumvents his/her fees/commissions. Also, the system is set up this way to have a paper trail by the fed and state so keep track of income so that it can be taxed. If Mr. Buyer pays Mrs. Agent a fee via personal check direct to the agent, without a 1099, then their is no income trail to be taxed. Also, the broker would have been circumvented.
So, if you have any legal documentation to show I am incorrect, please provide it to me as I would love to be able to receive and pay fees outside of closing to licnesed agents and receive from licensed agents.
Billbacks are charging tenants for utilities you have to pay. It can be simple or complex. You might just say "unit A is 60% of the square footage, unit B is 40%, so A has to pay 60% of the gas bil and B has to pay 40%". Or, it could be as complex as a system that's attached to a hot water heating system that monitors which valve is open when, and then you use that to split the bill. RUBS - Residential Utility Billback System is the name for those systems.
it could be as complex as a system that's attached to a hot water heating system that monitors which valve is open when, and then you use that to split the bill. RUBS - Residential Utility Billback System is the name for those systems.
I've read almost every post on this forum for the last year and I've never heard of such a thing. Thanks for the information, Jon. I always knew that there had to be a better way to this. I thought about coming up with a solution myself several times.
I've not actually investigated these systems other than just to find out they exist. No idea how much they cost or what's involved in making them work. Or how you secure them from tampering. Lots of small 8-12 unit apartment buildings around here with a central boiler. Seem like something like this make turn marginal deals into better ones.
It is true in the apartment world. "RUBBS" is an alternative system to implement but in doing so, you may have to consider a rental rate adjustment so keep that in mind.
I just prefer to buy apartments with individual meters and HVACS to avoid this problem all together. There are many deals out there to look at so why hassle with a RUBBS system (just my opinion)
Also make sure you have a good inspector. A site like http://accurateinspections.com/newhomeinspectionchecklist.htm has a checklist that is free and actually very helpful.