All Forum Posts by: William Bannister

Nice colors John Wiley on your rehab! looks fabulous! for a lower end deal that's how to change junker back into a home.

im wondering what bank is this? So I can steer anyone i know away from them LOL jk In the face of changing rules and stringent requirements trying to roll these properties can be more difficult especially if you have owned it less then 6 months. A lot of my rehab and resale has been a thing of not bringing the property to market until I have owned it 4 or 5 months so the seasoning requirement isnt a problem for lenders. The extra paperwork today is ok but giving up too much personal info can be a pain since (they) banks are in league with the IRS for most part.

I like Bryan's post if you want to give them another 30 days to shop a new lender but i might be inclined to explain to buyers there lenders are unreasonable and there appraisal is enough to underwrite the loan. Either underwrite or be gone and find a new lender. The lender is probably already said no to the buyer in there minds and are just stringing them out trying to blame u for losing the deal.
I mean what do they need your hud 1 for its none of there darn business what color your underwear are in this deal. The best thing to do with this banker is fire them but if you wanted to give buyer another chance so u can roll this deal just do an addendum to contract and extend it 30 or 45 days for a few extra bucks in earnest money to tie u up. the other thing you can direct the bank that sales are matter of public record and maybe they can figure it out on there own or have title company. If they think they are getting a copy of my hud 1 no problem but i would black out all the numbers on my side just to send a message!;)

I second Brandon's post buying a 2 or 3 family to start with is a great idea better returns then a sfh and it gets you started out as a landlord without having a long commute to your service calls.
When your starting out you needs things to be easier and being close to what you manage reduces costs.

More likely your going to find a dumpster full of cat piss smelling carpets then a hot rod in the garage. I have been at this 20+ years and bought over 100 homes and gotten one car and it was a rusty old Lincoln worth about 500 bucks. I had em haul it away for parts for 300 cash.
I once found a gun and 165 in cash in an old book and gotten lots of tools but never a 10k hotrod or anything as expensive as a hot rod.
The sensationalism is halarious. To knock on a garage door thinking you know there is a car back there. It could have been a garage full of trash and pissed out couches the previous owners didnt want to discard themselves.

The show doesnt seem real. To buy property that expensive practically site unseen and to be doing it with debt and such lack of experience in my thought adds up to one things bankruptcy.
Its almost comical and speaks disrespect of our profession as investors. When people think its that easy and they enter this business and realize there is some work involved in due diligence before you buy and by then its too late. Too me all I could think of when those auctions are on tv, is Vegas at the craps table. When professionals in this business buy we know what the arv is and what the rehab cost is.
Because the characters ion the tv show dont know what the costs are for repairs its impossible to know what the profit will be without getting inside. That is just plain stupidity buying rehabs without numbers. You might as well be at a roulette table.
When 90% of the real estate market is available to see the inside why would you even bother with such crap. It shows what lack of experience the players on the show have.
The only way to really take risk on these buildings is to assume you have a solid set of bones or go by outside condition and figure everything inside needs to be replaced. running numbers on anything but this would be pure un educated gambling.
While I have bought buildings like this without getting inside I was buying for 1200 dollars not 120k.

Welcome to BP. You are truly in a value market as I have a friends that came all the way from Hawaii to find cash flow in Dayton.
a starting investor can get a duplex there for 12k and make 900 in rent a month from it. with numbers like that as long as your able to manage them you will do well. + gathering 12k isnt so difficult as in some markets 50k is the down pmt. your in a great place;)

I think your right to think its not worth even 100k. If he paid 58k and failed to do anything to bring the apts out of the 70's its safe to assume that there is a 3k to 4k per door minimum in upgrades to bring it up to date back into this century. If I have to put 6 units x 3k for a total of 18k into a property in paint and carpet and other cosmetics and then have other repairs too I want that discount off the asking price if its a fair asking price. If its generating 11k net after asking its not even an 8 cap assuming these repairs and ect.
If its worth 105k based on other comps in area then that is a closer true value. How ever that assumes the other comps for 105k also need 18k in cosmetics and also need more repairs on top of that. There is also the work involved bringing that 6 unit up to date doing the rehab to get it into shape so you can rent out units with relative ease and compete in the market place.
It depends on how fast you want your money to move. It also depends on if you plan to carry debt on your property. I like to work for myself and not a banker so I dont carry debt on property I also have high demands for return on my money so I might go after property with a 20+ cap. With returns like that you must find property that needs rehab work.
If your going to get better then a 8 or 10 cap on your money you have to solve problems or do rehab work usually. This property at about 50k to 65k seems more interesting then 140k. At 65k if you have to put 20k into it then you would have 85k into it and you could make that 11k net turn the return into a about a 13% or 13 cap. I think its fair to get low teens if you have to do rehab work.
If this multi unit was in great shape and needed nothing then maybe it could be worth 100k. Since it requires work you must get paid for your time to roll up your sleeves we dont work free in this business.
I am a multi unit guy and I have always been about residual income and thats how I look at most of my deals.
I learned my critieria from an old school guy that had been buying property since the 1930's. He explained to me that fundamentals have been outta wack in this business since the early 90's when easy borrowing and easy money began to get out of hand. He explained to me just because other iodiots line up for financing and easy money doesnt mean we have to put our neck in the noose.
I learned from him that 36 months rent is the price of the property if your buying older multi unit that requires any work at all. So if this property is generating 11k net anual take that number x 3 years and you have a purchase price of 33k. That is probably what I would pay for it using my mentors numbers. That is why I dont buy to many of them anymore. Often times markets can get out of wack and over priced for several decades. Older multi units need a lot of attention too. Thats why I wont over pay. Too many people in this business look up after 20 years and realize they over paid after managing debt for a bank and ikts too late because you wasted precious time that could have been spent on a beach instead.
I bought a duplex for 13k and put 8k into it in heating system and remodel of attic to turn one of the apts to a 2 bedroom apt. The rents around 450 per month per unit for a total of 900. after property taxes In I get 800 a month. 9k a year in rents off a 21k building. thats an example of what reits do they pay 12k to 14k a unit for an income stream of 450 to 650 in rent per month.
I know your market place may seem more expensive dont be afraid to look at other markets if your doesnt add up. Money chases returns and you should be no different then others in your demanding returns on your money. You can offer this guy 60k for this building and probably do ok but my money would be heading for a better deal. When you 1st get into this business and get started its so important not to waste your time managing debt for 30 years that wont return you decent cashflow and returns for teh rest of your life. This post has gotten long but if you want more info on this matter I would be happy to provide it and show you where the deals are so your not stuck feeling left out. Right now the market has never been better for buyers. I just bought a 80k home 2 months ago that needs 11k in rehab for 1200 dollars that can generate 800 a month in rent.
I would like to know what market your in that might change my opinion a little bit but usually I just tell people the money must migrate to where returns are better or you will be sorry in the long run.

if u decide her income can qualify her on her own for the apt have her bring in old lease rip it up and write a new one. I would put in new lease state that old lease is void by new lease and tenants agrees to that fact. If her income no longer qualifies her I would not do it,I would keep him on lease till there lease time is up to have 2 on the hook if there is unpaid rent or damages. also you want something in writing to the fact of who the security deposit belongs to so the divorce lawyer doesn't come along and ask for your security deposit. A simple note from her divorce attorney claiming the security deposit is her property upon vacate of premise would be sufficient.
Just my thoughts any attorney in here could probably cover bases that I have not covered. I hate taking people off leases because I qualify em on income and 1/2 the income here has just disappeared.
I guess that's up to you if you think her income is sufficient then your fine.

I like the idea of a preliminary title search but I wonder if a call to the county court house if you spoke with the tax assessor on the matter to find out what the organizational aspect of the lots and houses where would clear up the matter. Generally if homes are built lots are split but not always. The tax assessor should be able to determine if lots have been split and if the homes go with it or not. The should also be able to give an accurate determination of size of lot. The listing agent should know the property but I never take there words as fact since they are getting a commission off the sale and may be motivated by money not to give you all of the details.
There is a place at your court house that also has maps of property like record of deeds, you can look at if you have the lot # and tax parcel id. I would be inclined to make the real estate agent in the deal get you that info so you can do your due diligence easier. This might save you the phone calls and looking up the numbers.