Deal to evaluate

4 Replies

Hi there, please weigh in on this deal. I need some reality checks on my assumptions. I would like to evaluate the deal from a buy and hold perspective.

Attached 3/2/1 vacant townhouse built in 1980. Near my house, huge yard, backs up to power lines.

REO foreclosed in March for 178,000
Zillow says it's worth 191,000
$110,000 cash offer
$20,000 repairs and updates
$130,000 /hard money loan
$4,000 closing costs/me
$150,000 conventional refi
$145,000 repay hard money loan (how many days is the norm and what kind of return to lenders expect?)
$5,000 cash from refi to recoup closing costs

Rent the property for $1250 or $1300. It may not cash flow but I have maintenance, property management (which I will do for 2 years), vacancy, and utilities all figured in to my expenses. Might even cost me a little each year until rents increase and I can sell it.

If you can get into a property using OPM, what is the cash flow rule? This is Oregon and cash flow is not easy to get to

Thanks.

Hi Ginny,

The NW Real Estate Investors Association (NWREIA) is holding one of their monthly meetings tonight at the Baja Fresh on Sholls Ferry Rd (12286 SW Scholls Ferry Road, Tigard, OR) starting at 6:30 p.m.

Tonight's meeting is the Deals and Analysis meeting, which is held every last Thursday of the month. It's a great forum to bring in potential deals for group discussion. we usually get about 30 investors attending this meeting and I almost always attend, I'll be there tonight.

You can get more info and RSVP on their events web page.

Hope to see you there.

Randy Johnston

Randy Johnston, Real Estate Agent in OR (#201207851)

@Ginny Watson - So you are assuming the ARV will be $200k with a conventional loan of $150k?

For a B&H strategy the numbers don't work for me personally. I believe Jay Hinrichs is in your area and might be able to lend some insight - I just can't tag him :(

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

Hi Ginny,

The only way to know the value is to look at sold comps, and I suspect there are sold comps of the townhouses, besides the REO, in the area. As you indicated, the power lines are a negative on yours. It's good that you have an exit strategy. You've thought this through, now to talk numbers.

Zillow is completely inaccurate. "Don't quote Zillow." (That should be a slogan.)

Please attend the Deal Analysis meeting tonight in Beaverton, as suggested by Randy Johnston. Anita and Courtney who head the meeting are very valuable leaders and there are always a couple of private money in the meeting as well. You will be so glad you attended.

You can buy food and go into the big meeting room. You can Stand-up and tell about your deal. If you don't have a contract on it, then don't give the address, etc. If you don have a contract, then you can give more information. I suggest you tell the leader that you are a guest, and that you want to present an acquisition deal to learn from.

Grace Widdicombe

Northwest REIA, Board of Directors - Portland

Northwest REIA, Moderator - Eugene