All Forum Posts by: Brent Paul

Don't rule out portfolio lenders as well.  You will have to call around to banks in your area and see if anyone will do that.  It's not an easy process and it may require you to call 30-50 banks.  However once you find that good lender and build a relationship with them it will really open up some doors to you.

I would also suggest listening to podcast 55 which goes over what the underwriter looks for when approving your loans.

Very informative from the perspective of an underwriter.

http://www.biggerpockets.com/renewsblog/2014/01/30/bp-podcast-055-jimmy-moncreif/

Also listen to podcast 64 which goes through blanket loans and portfolio lending.

http://www.biggerpockets.com/renewsblog/2014/04/03/064-full-time-50-units-josh-sterling/

Checkout your local community banks.  There were quite a few podcasts about this method.  Make a list of every community bank and one by one explain to them what you are trying to do and see if they will loan to you.  You may get a lot of no's but don't give up.  It just takes finding that one of 2 banks that will lend to you.

When you do happen to have a bank that will lend to you be sure to have a portfolio ready.

Podcast 55 answers all your questions.  Have a listen from the point of view of a bank underwriter that approves loans.

http://www.biggerpockets.com/renewsblog/2014/01/30/bp-podcast-055-jimmy-moncreif/  

There is a house near me listed for 55k.  I have not gone to look at it yet, but the listing says it needs extensive repairs and updating.  The only thing I know about it is the same owner has owned it for many years and the plants are all over grown in the yard.  I will be driving by real soon to check out the front and back of the house for myself.  The house to the left is valued at around 180k and the house to the right at 130k.  The average value of houses in the neighborhood is around 140k.  The location is pretty good with a private school only a few blocks away and is on a quiet residential street.  

Rent in the area is around 1100-1200 for a 3 bedroom like this house. 1000 sf house

This house was built in 1880.  I would have to check into whether it's considered historical or not.  I know a few houses have some exceptions where the outside can't be altered to keep the houses character.

The 3 biggest hurdles I see with this house is water leaks, plumbing needing updating and electrical needing updating.  

Some quotes I have received for rewiring a whole house is 4k-8k and for plumbing starts at 4k.  Considering the age it's likely everything is galvanized which is a real pain.

Back in the 50's- 70's this area used to flood every year so there is concern of possible rotten wood or leaks in the crawl space and asbestos.

Reno budget would probably be around 40k to gut the kitchen, bathroom, redo the flooring, electrical, plumbing, etc.

It's really tough to find anything that cash flows in my area.  Nor has anything even come close to the 2% rule.  

Most everything in my area is a fixer upper that can easily build value by updating, however with rental rates I would be taking a loss each and every month unless I flipped it.

The market is red hot right now which is driving up the prices on homes.  Not to mention there are at least 4 other investors that I know of flipping houses in the area.  I have seen there work and it's quality workmanship with materials too.

Is anyone else noticing that it's more of flippers paradise than a buy and hold market in your area?

Thank you for the response.  The house is currently listed at 220k.  If everything is renovated inside then price is about right.  If not it will cost quite a bit to update everything from the 60's decor to present day.

The units electricity would either need to separted so they each pay their own electricity or the rent should go up.  The rents are quite a bit below the going rate in the area, especially since the renter pays no utilities.

I do have some concerns about plumbing and wiring since the house was built in 1897.  A good friend of mine had a house of the same age and it was a nightmare rewiring the house and fixing old pipes.

This would be a long term buy and hold for me. 

I don't have quite enough funds for 20% down which is why I was thinking contract for deed would work best for me.

In my area there is a triplex for sale.  Unfortunately I haven't seen the outside yet.  However the siding and roof are new.  This particular property is in a decent area and is fully rented.  It has been off and on the market for the last 2 years.  I believe it's a little over priced.

Multifamily rentals rarely come to market in this area.

The seller is willing to do contract for deed.

He loses a lot of profit by paying for all utilities.  The rent is also lower than other comparable rentals in the area.

What is everyone's thoughts on this?

I am just not sure if the numbers work for me.

Multi-Unit Information
• # of Units (Total): 3
• Annual Insurance Expense: $900
• Annual Repair Expense: $600
• Annual Trash Expense: $309
• Annual Maintenance Expense: $1,200
• Annual Electric Expense: $3,113
• Annual Fuel Expense: $1,188
• Total Annual Expenses: $5,841
• Gross Annual Expense: $6,410
• Gross Annual Income: $25,140
• Owner Expenses: Taxes, Insurance, Water/Sewer, Electricity, Fuel, Maintenance/Repair, Trash, Snow, Lawn
• Tenant Expenses: Cable TV
• Shared Amenities: Porch

Unit 1 Information
• # of Baths (Full): 1
• # of Rooms (Total): 6
• Bathroom Description: Main Floor Baths (Full)
• Dining Room: Informal
• # of Similar Units: 1
• Monthly Rent: $950
• Total Expenses: $162
• Unit Number: 1
• Unit Sq. Ft. (Finished): 1,080
• Main Floor Laundry
• Appliances: Range, Microwave, Dishwasher, Refrigerator, Washer, Dryer, Water Softener (Owned)
• Amenities: Porch, Washer/Dryer Hookup
• Cooling: Central
• Annual Rent: $11,400

Unit 2 Information
• # of Baths (Full): 1
• # of Rooms (Total): 5
• Dining Room: In Kitchen
• # of Similar Units: 1
• Monthly Rent: $695
• Unit Number: 2
• Main Floor Laundry
• Appliances: Range, Microwave, Refrigerator, Washer, Dryer, Water Softener (Owned)
• Amenities: Kitchen Window, Washer/Dryer Hookup
• Cooling: Window
• Annual Rent: $8,340

Unit 3 Information
• # of Baths (3/4): 1
• # of Baths (Total): 1
• # of Rooms (Total): 3
• Dining Room: In Kitchen
• # of Similar Units: 1
• Monthly Rent: $450
• Unit Number: 3
• 2nd Floor Laundry
• Appliances: Range, Microwave, Refrigerator, Water Softener (Owned)
• Amenities: Kitchen Window
• Cooling: Window
• Annual Rent: $5,400

Any insight would be appreciated.

I have checked public notices and over 50 percent of the listings were financed by

mortgage electronic registration systems.  Weren't they being sued for something?

Maybe it's a coincidence but I find it so strange so many foreclosure houses were financed by them.

I will be financing with a bank loan.  I would love to pay cash but I don't have the capital right now.   I have an investor lined up to partner with but he's tied up in a house flip right now.

I am stil a little confused about the llc but it's starting to make more sense now.

I can see why it makes sense to separate each llc for each type of property. 

I am looking at buying a 4plex in the next few months and have been debating what to do.

I have read that some people form an LLC and some people don't at all.

A friend of mine suggested I need to form one for tax purposes and it takes the liability away from my person assets. Also something about a reduced tax rate. My gut tells me he is wrong, but I am no expert.

What are the advantages of forming them? I don't plan to own 50 properties but maybe 10 or so.