All Forum Posts by: Brandon Hardiman

So lots of good advice here. What is most important to you right now? Maybe just getting started and getting cash-flow coming in the door with a little cash up front to pay off some consumer debt or invest in another property? In your situation, I personally would likely do minimum work on the 2nd property to get it liveable, such as fix the roof. So then say you are in it for $8k. I would then sell that property on owner finance at about 85-90% of ARV with 10% down and a 8-12% interest rate.

So if you sell it for $180k with 10% down you will profit around $10k up front which you can then use to invest. In the meantime, you will be collecting a $1200-$1400/month payment on a house you have zero debt on and zero responsibility for maintenance or managing. Pure cash-flow. What will that do for your family? Then as long as you have underwritten the borrower correctly, you can partial out that seller finance note (at about a 15% discount) to a note investor in the future to liquidate if you absolutely had to.

Just my thoughts. But I like to be creative.

Well it's not a simple answer really. It depends on your goals, properties, etc... Short term rentals (less than 30 days) are theoretically not allowed in Huntsville, but it's not enforced unless you have complaints. You just have to be prepared for a new city official to come in and change that. Now it is getting more competitive so you can't just throw whatever on the market and expect to do great. You need a nice(ish) property, good design, photos, etc... Also if you are just wanting a property manager, I imagine you are open to paying around $10-$15k to furnish each one depending on size? There are some recommendations for people who can manage/cohost for you. If you want feel free to reach out and we can discuss more.

So I am under contract on a property and I am past my due diligence phase. However, I have discovered on my own by chance that half of the house was an addition put on by the previous owners and no permits were ever pulled for it. This is in Alabama. Since I did not discover this during my due diligence period, am I legally obligated to still forfeit my EMD if I back out? Or can I back out on the ground that this was information not disclosed to me by the seller? There are no agents involved and I used my own purchase contract. I am a wholesaler and was going to just take it down myself if didn't find a buyer at the right price. But now I really don't want to take on the risk of an unpermitted addition and not getting appraisal value, insurance issues, etc...

@Casey Cole There is a quadplex for sale by owner in 35816 that could potentially be a good buy. I would at least talk to the owner and run some numbers on it. It's been listed for a month so there is likely some wiggle room in that price. It's close to UAH so you won't have an issue finding tenants. Maybe even make some extra income mentoring the engineering students that are likely to be staying in there.

@Kyle H.

You aren't going to find much small multi-family at all in Huntsville unfortunately. We have a severe shortage of that here. Birmingham would be a better bet for that but even then it's just not typically found in either city. But I think you at least have a better chance of finding a duplex in Birmingham

I personally don’t have the experience to say one way or another. But I just finished reading Brian Murray’s Crushing it in Apartments and Commercial Real Estate and he specifically says you never pay for the potential income a property may generate because that is where your big money is made after you acquire. You treat it like a business and only purchase it based on the current income it is currently generating it. If they want to sell it based off potential, then the seller needs to raise rents to market and wait foe the year or more it takes to stabilize before they sell it.

Congrats Gorden!

@Patrick Britton

This is gold information and love to be hearing it from an actual appraisers point of view. In all the books I have read on real estate, it seems to be the one thing that is not delved down into much is accurately determining ARV and getting into the frame of mind of the appraiser. And yes with a cash-out refinance, I figured the appraiser was even more in-line with the banks best interests but I wasn't sure if that was definitely the case. I have a good relationship with my current lender so I would think they would be open to me disputing a comp. But knowing this info, I will have that conversation with them up front.

Also thanks for the link detailing out quality and condition. I have seen these on appraisal reports but wasn't exactly sure how they correlated.

@Jeff Henderson @Sonia N.

Thanks for the input. I think I will follow the advice of sticking conservatively and just continue to be picky.

The hard part is with the market so hot and competitive, it makes it even more difficult to find a good deal if you are being too conservative. I've noticed the comps I get from wholesalers that send me properties definitely are the highest ones in the zip code, which obviously makes sense why they would choose those. Issue is the wide variation of comps. Especially in transforming neighborhoods. 

And also in these neighborhoods that are heavy with investor buying and with so many properties going off market due to it being hot, there is little info to be found about the comps as in what the actual condition or inside of the properties look like. So it's hard to do a true apples to apples comparison. I mean how do appraisers get accurate info on comps when they can't see the inside?

@Cheyenne Nafe and @Will Fraser thank you for your input. To clarify, this is an appraisal for a refinance cash-out. So it is not for the purchase of sale of a property. I know typically in those instances, an appraiser can magically find comps to appraise around the value the property is being sold for as long as it is reasonable. But in the case of a cash-out refinance, there isn't a target sales price an appraiser is given so it is completely blind in that case. And since it will be the banks appraiser are they usually extremely conservative and use the lower comps?