All Forum Posts by: Aaron Thivierge

Here is the BP calculations for this buy and hold

http://www.biggerpockets.com/buy_and_hold_results/...

Here is the repayment mortgage to the seller for the $26,000 (20% carried by seller)
I misspoke earlier as I carried that $26,000 loan from the seller for 30 years instead of 5 years of previous calculation.  Using 5 year repayment to seller, your monthly payment would be $512 for the $26,000, PLUS the primary P/I to a bank which is $822/ month.  With this correction, you are cashing flowing  negative $165/ month (loosing $41.25/ door). 

http://www.zillow.com/mortgage-calculator/

Lots of thoughts on this (and I don't mean to offend, just offer my insight): 

Where is the "other" 80% coming from?  You have no skin in the game.  You are borrowing money from the seller to show the bank you have a down payment, and you are borrowing money from the bank to pay the seller.  This is not conventional nor creative. 
 
Your property taxes and insurance allocation looks underestimated.  I would use your local tax estimator or tax records to review the actual tax figure/ year AND call your insurance company for an actual quote on insurance for the year. 

I plugged all your given numbers (though they should be verified) into the BP buy and hold calculator, and that 4plex property will cash flow $94.57/ month divided by 4: so each unit should yield you $23.64/ month in cash flow. 
I assumed you'd be paying back the seller carried 20% ($26,000) at 5% for 5 years with a payment of $253/ month.   
Have you looked into a FHA loan on primary occupancy dwelling (duplex, triplex, quadplex). But, don't forget about your reserves, repairs initially to get rent ready the other units.

My interpretation is this deal is a poor choice unless there are other variables not mentioned.  

@James W.

 @Brandon Turner

  I am happy to share a real life example of a calculator with the PDF function. This 1st example is a home that came up for sale about 10 days ago, I immediately ran the numbers, went over to check out the property and offered on it ($3,000 over asking price) as the numbers were in line with my acquisition criteria (another investor offered more than me, so I didn't get this property).   Example 1:

http://www.biggerpockets.com/buy_and_hold_results/...

Example 2:

This next calculator PDF shows a triplex that I ran this morning that came up for sale yesterday.   As you can see, I didn't have to drive over there to check it out: this one is a loosing property from the start for my holding criteria. 

http://www.biggerpockets.com/buy_and_hold_results/...

I couldn't believe the photos and the price and all the positive reviews. Way to think outside the box on this STR vs. SFH. I hope this model is reproduce-able for you. Did you design the furnishings and accessories? They are so hip and fabulous! I can see how you'd draw a diverse crowd from the young family to college girls reunion to the over 55 community. Very tastefully done. Now you've got my wheels turning. Congratulations, and thanks for shaing with the BP community!

I would buy the property and not renew his lease. Or review his lease contract and search for a lie. Evict him based on fraudulent information provided at contract origination.  But your right- get him out as soon as possible: he is a serious liability to your business performance 

install a refrigerator. I would match the caliber of your competition.  If the competition has SS, and SS flows with the décor, put in stainless steel.  To me, that's like buying a car that is almost perfect, but has no radio...spend the $80 on a radio and make the package complete.  Spend the $900-$1200 on a refrigerator and make the package complete. 

I joined BP about 7 months ago, and I became a Pro member yesterday. wow. The buy and hold calculator alone is worth the yearly membership.  I have anlyzed 6 deals with the calculator function in the last half a day. I was able to clearly compare which property was most advantageous to acquire over other properties : apples to apples.  
I LOVE the PDF function at the end. I have emailed this to 4-5 friends, mentors, family members getting input on the properties. I even printed a copy of my best BP buy and hold report and brought it to our family dinner tonight. 
My father in law was so impressed with the organized presentation. He is a very successful business owner, and he was intrigued : He asked me to define the 50% rule, 2% rule. He loved the yearly projections page. 
I didn't really know which forum to post this accolade. This tool has been asset to my business and has enhanced my deal analysis! Again, this BP organization exceeds my expectations.  Feel free to move to another arena if there's a better forum for this topic. 

great stories. thanks for sharing.   Nicely done.  

I don't see this as a good deal at all. Here is why: ARV $135,000 (you hope and expect). Using the 70% rule, an investor would not pay more than $94,500 AFTER all repairs are done. If the home has been vacant for 12 years, lets assume at LEAST $15,000 in repairs (VERY conservative). $79,500 is the top dollar you could pay. That is NOT including repairs greater than $15K, and not including any wholesaling finding fees as you mentioned "selling the note and keeping the spread", holding costs, etc....
I just don't see any profit here but TONS of potential for a loss.   I would do a VERY detailed ARV inquiry on this home and a VERY detailed repair cost spreadsheet before going further.  

@Kevin D.so, 9 months later.. is there a status update: repaired, listed, sold? Congratulations on your 1st acquisition: nice actionable step!