All Forum Posts by: Adam Gollatz

@Ismael Jimenez How recent was the 291k appraisal?
 

Whats the income/expenses? Like I said, you can talk to the appraiser or try to appeal it with the bank and their underwriters. Im sure texas has a licensing board for property appraisers if he was grossly negligent that you could go to. Id make sure to weigh the pros and con of waging war on the only appraiser in the area though.

I only know what youve mentioned, but if its a small town with 1 appraiser, those numbers dont sound too unreasonable. Im assuming you built this right before the crash at the peak of the market when a lot of the new construction was happening. If so, Ive noticed that a lot of the smaller markets have only in the last few years recovered to those peak levels. So you built at 250 at the peak and ~10 yrs later its up to 291 which is 41k increase or roughly 17%. Your also looking at nearly 75k/ unit which sounds like a fair price. 

Cost of new construction/replacement cost is usually higher than market value/appraised value in most areas. If it was cheaper people would build new homes rather than buy homes.

There are a few strategies for dealing with this. Reach out to the bank/appraiser and provide them documentation of why you think it should be more. Unfortunately "the cost to build this is 100/sf" is not valid. Try showing them your P&L statements to see if they will use an income method to appraise it higher. Or look for other 4 plexes in the area that would support a higher appraisal. You could also look for a new lender. Local credit unions and banks will some times be more flexible. Look for one that does in house loans and appraisals.

Seems like a pretty simple answer, am I missing something in the question?

Benefit to the landlord - tenant has an insurance policy that claims can get filed against, so they dont get filed against your homeowner/landlord policy. Policies vary, but there are also benefits to the tenant as well (covers their belongings, protects against theft, covers their assets in the event they have enough to get sued, etc) if you market to a higher clientele of tenant, it should be an easy sell to get them to pay 100 bucks a year for it.

3 years of tax returns for a 5 unit? That seems like overkill to me. As for the lease agreements, I would just take the info that the seller provides. Im sure someone will disagree, but it shouldnt make or break the deal if you've done your research. As long as the seller hasnt signed a 5 year lease for 1$/mo in which case your OTP would have some verbiage to give you some recourse.

If this deal is only producing 200 to cover vacancy, repairs, and PM, Id run away. Even though you dont have to use PM's and repairs and vacancy arent bills you pay every month, they are very real expenses when they come up. You have to factor them in or you're just buying a liability.

Idk where to start wth this one...

Is 50k the entire purchase amount? If so, I wouldn't treat the heloc as cash for calculation purposes. Its really just a 100% ltv loan in which cash there is no cash involved and your CoC would be infinite for all deals, which doesnt help compare. Instead I would look at cap rate.

Just curious, is the 250/mo payment youre calculating on your heloc interest only or paying back the principal and interest? 

You should be able to get the appraisal done quickly, 1-2 days, so check with your HML and see. Then you would write an offer with a 2 week inspection contingency, no right to cure and if the appraisal comes back low you can walk away.

My advice on this deal is walk away. HML works great when traditional financing wont do because of property condition, because you can always throw money at the problem to fix it. Fixing a broken condo association is a different story.

Something doesnt sound right to me. If your ROI is 80%, your cash on cash should be much higher due to leverage, unless you have some sort of insanely high interest rate.

Mind sharing your numbers? Feel free to message me.

1 unit at 600/mo? KISS. 

Open a separate checking account, get a debit card for it, put a chunk of money in for reserves and do all transactions from there. As for payments, if you have a bigger bank they usually do some sort of check capture on a smart phone for deposits, so you can take rent payments as check/money order, link your phone number to zelle and they can deposit it straight into there. If you end up with a less tech saavy tenant, do you really want to be training them on how to set up to pay you every month?

As for record keeping, save receipts and put them into a spreadsheet/google sheets. The sheets app on your phone keeps it convenient. Talk to your accountant about how he wants it all broken out. but you can put a note on there cap ex, repair, lawn care, advertising, utilities, etc. 

You need to estimate rehab costs, at least roughly, before you even make an offer. Before your inspection contingency runs out you should have a very good idea of what the rehab costs are going to be and if you're not doing the work yourself, you should have a contractor bid.

There are a variety of ways to accomplish this and it depends on your comfort level. have your agent work with the listing agent/sellers to set up a time to walk through so you can get a better of idea of sq ft, floor, paint, number of doors/windows, etc