Real Estate Investor · Los Angeles, CA · Member since 2010 · 24 posts · 0 votes
I have my first deal at Columbus, OH need to move on and it's a great investment property with instant equity and monthly cash flow but it seems no one want to buy in. I have called a investor/realtor in OH and he told me that the property I am wholesaling is the way below selling price of 50% or more. That really shock me. Can someone help to advice the current market in OH and is it real? It is kind of frustrated to me..... :cry:
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Tiffany T.:
Hi All,
Thank you for the great response. I need to discuss with my mentor to see what's the problem with this deal. Again, thanks.
If your mentor is the one who turn you into this deal or approved it knowing all the details, I would strongly question his /her judgement (Or worse, his/ her motives)...
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
I'm not sure if I understood you correctly. Did the REA told you that your asking price is way bellow the value of the property or the other way around. (Asking price is as twice as much as the actual value...)?
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
It seems like you are in a tough spot here. Why won't you ask the realtor to pull some comps for you. You can also, compare asking price from close by similar properties and see how off you really are.
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
16y
Using the 50% rule, you're looking at a cash flow of -56.92.
Using the .02% rule, you "shouldn't" pay more than $30,900 for a property making $618 a month.
Both ways I look at it, it doesn't look like a good deal. You also need to look at what other properties are selling for. If someone can buy the same type of property next door as a foreclosure for 20k, and rent it out for the same, then you are asking too much.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
I suspect by "cash flow" you mean "rent - PITI", which significantly overstates the real cash flow. What are the expected rents for the two units.
From what our OH members have said, and from my little looking in various OH cities, $55K seems like a pretty high price. Realtor.com shows 923 houses priced at $60K or less and 323 priced at $30K or less. There are 559 houses in the $75K to $100K range, so your numbers may well be correct.
I see you're from CA. Are you're sure you're looking at this property with the OH market in mind and not CA?
Real Estate Investor · Los Angeles, CA · Member since 2010 · 24 posts · 0 votes
16y
Jon,
I learned a lesson as a newbie so I try to get this out. Not sure if I can cancel contract with seller or not. This may give me a problem, isn't it?
Real Estate Investor · Cincinnati, OH · Member since 2008 · 172 posts · 37 votes
16y
Cancel contract with seller? Are you trying to buy this? I thought your title implied you wanted to sell this.
The more deals you look at in a neighborhood, the more familiar you will get with understanding what is a "good deal." You need to crunch more numbers on houses in your investing area.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
What does you contract with the seller say? Ideally, you have only a small amount of earnest money into the deal and your contract says "liquidated damages". That would mean the worst case scenario is that you lose your earnest money.
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
16y
Originally posted by Tiffany T.:
Marc,
Thank you for the advice. I did have my mentor to analysis the deal for me initially but it seems not workable.
The numbers i posted only work if you meant the 618 is the monthly income, meaning each side is rented for 309. If Jon is correct, and you already subtracted the mortgage, then the numbers would be a little different.
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Tiffany T.:
Jon,
I learned a lesson as a newbie so I try to get this out. Not sure if I can cancel contract with seller or not. This may give me a problem, isn't it?
Woh, woh, woh.... Hold everything! Are you in the process of buying this property? So you do not own that property yet, Do you?... Get out and don't look back!! You will lose any earnest money you paid, but other than that, I don't see any problem. You are in California, so the seller would not bother suing you for a breach. It would be too expensive...
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Tiffany T.:
Hi All,
Thank you for the great response. I need to discuss with my mentor to see what's the problem with this deal. Again, thanks.
If your mentor is the one who turn you into this deal or approved it knowing all the details, I would strongly question his /her judgement (Or worse, his/ her motives)...
Investor · Mableton, GA · Member since 2009 · 1k+ posts · 465 votes
16y
Originally posted by Tiffany T.:
I have already paid the mentor so I have to go back to ask him help me solve the problem. Thanks guys.
While you're asking for help, ask for a refund too... :roll:
In any case, come back here after you talk to the mentor and consult with us here, since non of us have a stake in any of your deals, you more likely to get an unbiased advice.
Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
16y
Originally posted by Tiffany T.:
I have my first deal at Columbus, OH need to move on and it's a great investment property with instant equity and monthly cash flow but it seems no one want to buy in. I have called a investor/realtor in OH and he told me that the property I am wholesaling is the way below selling price of 50% or more. That really shock me. Can someone help to advice the current market in OH and is it real? It is kind of frustrated to me..... :cry:
What part of Cbus is it in? I worked that market for a bit. I was given a "wholesale" deal from a "wholesaler". When I ran comps at a mile, the deal was worth what he said it was. When I tightened that to a half a mile the 90K ARV went to 75. At 1/8 of a mile the ARV was 55K the deal was being offered at 55K. You have to watch Cbus as the area can change in 5 blocks from good to bad and 5 blocks later it is good again. Who is your mentor? That market is crashing hard. I left there in late 2007 becuase I realized what was coming from my market study. I went bacl to Florida because it was further into the correction.
Flipper/Rehabber · cincinnati, OH · Member since 2009 · 211 posts · 59 votes
16y
Tiffany,
Hate to say this but I agree with Eddie on his opinion of your mentor. I work the Cincy market which is pretty similar to Columbus. To give you an idea I have a fully renovated duplex here in a non war zone area. It is a 4br and 1 br unit that brings $1500 per month. I could not sell it for 50K so I just rented it. I actually have a couple of Columbus properties I need to move. PM me..help me move these and make a little cash..trust me they will be priced right..in return I will be happy to look at your deals for get this..FREE..to help you get you feet off the ground.
Property Manager · Atlanta, GA · Member since 2010 · 39 posts · 15 votes
16y
Tiffany,
Not to bash your mentor, but he/she can be great at crunching numbers, but if they don't know the market (within a few blocks) of your property they are doing you a disservice.
Also, what mentor gets paid before the deal is done.
Tiffany....your are an investor now! Question everything....Twice!
Cancelling Contract:
Did you have an inspection clause in the contract? If so, has it expired? If not, use your inspection as a way of backing out.
Do the same thing with any financing contingencies, etc. Go through the contract with a fine toothed comb......80-90% of contracts are voidable.
Real Estate Investor · Los Angeles, CA · Member since 2010 · 24 posts · 0 votes
16y
Marcus,
Thanks much for the great advice and encouragement. I will try my best to get out.
Dear all,
I know you are curious about my mentor but I still wait for his response but yet. Hopefully he will give me good answer before next Monday. otherwise I will definitely ask for refund. Thanks lot.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
The simple fact you don't have an answer from him already is a very bad sign. If you have a deal on the line, a mentor should be able to help you very quickly. If you have to wait until Monday to get an answer, I think that conversation would start with "what value is it I'm getting from you?"
I (and I think the others here) assume by "mentor" you mean someone you're paying a significant amount of money to or who's taking a big cut of your deal.
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
16y
Tiffany's profile says she is a student of Preston Ely.
I agree that your mentor might not have your best interests at heart. There are people everywhere that will take advantage of your wanting to get into the business. I know several people who have been completely ripped off by "mentors" in Nouveau Riche.
From what I've seen, the people here will give their honest opinion, and try their best to keep you from making a big mistake. My advice? Walk away from this deal, and find one on your own that will actually make you money!