All Forum Posts by: Bab Adetiba

If I can get $1,000 rentals on a lot and 1400 sq ft new build for $100,000 all in, why shouldn’t I rent the home? In Dallas a high appreciating market, I want to build a 1400 sq ft 3/2/1 on my already developed lot, medium grade finishing carpet and tile mix, 80/20 brick and panel. The price of the lot and build will be $100,000 roughly all in. Why don’t people do this strategy more? Someone convince me this is a bad idea. I don’t hear much about this topic. I intend to rent for two years then rip that carpet our, change the counter tops etc and sale In addition, I imagine I’m allowed to use a bridge type loan where I term out the original construction loan to , say 20 Years. Am I allowed to also refinance from that arv of $180,000 in my case? I’d love more insight and opinions on this. Any help is appreciated!

Levi T. Valued at $6,000, listed for $9,000, owes $5300, closing at $7500

I’m in Dallas and the lot is in south Dallas , very hot sub market.

Under what event can the city settle taxes?

For example, a lot was listed , I made the offer, contract executed, and right now I have it under contract for $7000 and the owner owes $5000 in taxes.. Currently the title company is doing the tax certificate process and he owes $5300 to be exact, Is it possible or likely to instead lower my offer to $2000 and settle the taxes with the city?

I know people do this with delinquent land owners. But not sure if this falls under that situation

If you have experience with something like this, please help. 

@Ricardo R. no gas. I have vacancy at 5% and at $350 a door, cap ex totals to 6% of gross income. Current income.

@Robert Schumacher Texas. My calculations have it at 46% opex now. No particular reason. We haven't dealt with a commercial lender, though i don't foresee any reason we wouldn't qual. Credit score excellent, property is over 1.25 DSC... Nervousness perhaps. I will be speaking to some local lenders during the week.

Thanks for the tips guys, really appreciated

@Ricardo R. I am sending LOI tomorrow and will indeed confirm actual bank deposits, rent rolls and when I see it myself this weekend, I will take account for those cap ex items. My agent owns a few apartments so I'll receive proper guidance - I believe.

Listed expenses are as follows:

maintenance - labor

pest

hvac repairs

landscaping

plumbing repairs

electric

water/sewer/trash - grouped together just like that

prop mgmt at 10% of gross

actual insurance

actual taxes

_______

@Donald S. I claim a shoddy operation because the p&L appears copy and pasted and the owner is out of town. Indeed I always assume opex is 50% regardless of the owner's proforma. It will be self-managed so 8% for prop mgmt, and we have a contractor nearby (whom we have a history with) always on call. 

@Andrew Johnson what I provided was actual collected income. After LOI, I will confirm "Actual" during due diligence. 1982 build, Now at $350 a door for cap ex, my opex is at 46%. 2/2 rents for $520 and 2/1 for $440, below market rent for sure. And we definitely prepared to rehab half of the units, budget $3,000 a door. I will get my physical eye on it this weekend.

16 (2/2) and 8 (1/1) units. I'm very familiar with the area

From P and L

Gross income: $145,000

Gross expense: $53,000

NOI: $92,000

Asking $1,000,000

Weird expenses are $0 for landscaping and $90 monthly for electric. That doesn't make much sense.  When I underwrite it, cap is 9.2%. The average cap in the area is 6-8%.

How do you account for cap ex? By having a separate cash cap ex reserve or accounting for 10% from your gross income?

I want to offer $850,000, 10% down and 7% interest seller financing. Is this standard rate? Also the Owner is out of state, and shoddy paperwork suggests poor management. Some value add opportunity on the place. I have a few single families but this is my first apartment deal. I will be sending over the LOI soon.

Welcome to BP. I will be in texarkana this weekend. inbox me if you want to mee up. 

@Jeffrey Holst tremendous thanks for the episode. Will take a listen this weekend. 

@Jonathan Orr I have a yellow letter similarly fashioned to the one in Brandon Turner's book Buy and Hold Rentals I include with my offers. Basically lists what I plan to do, "hey I am a local investor", and my picture. Yes, we have a targeted list. For the land, I intend to say I am building affordable to medium priced homes. After this week, my partner and I will decide on the language and will share it with you.  Just like you, after two months of consistency, we will be able to determine if strategy works. Lastly, the direct mail is one leg of the monster - the second leg is door to door. 

Thanks for the tips.

I’m considering sending out direct mail yellow letters to a list of addresses . This time, The list is comprised of land owners. All less than 10,000 ft.² zones single family. I mostly hear of direct mail for properties but I want to target these specific individuals who own land. I do not wholesale; the purpose would be to spec build . Any experience with targeting land owners? Is this what people already do and I’m late to the game? Are the motivations the same for land vs property owner? Lastly, I was advised by a builder to not inform owners I will be building a house. Apparently they don’t like that - not sure. Any tips with language ? Thanks.