All Forum Posts by: Chad Otsuji

Quote from @Chris Seveney:

Quote from @Chad Otsuji:

Hello everybody!

I am looking at purchasing a property that was previously a 200+ acre lot that has been subdivided into 2 acre lots. 

This property is considered Agriculture or (AG). However the issue that I am running into is that it does not currently have a Tax Map Key. So, it does not qualify for traditional financing or USDA financing. The owner is estimating that the Tax Map Key will be available in 10-24 months. 

There is no home built on the property, and it is not zoned to have a property. It is zoned for farming purposes only. 

The owner also needs closing to be around 2 weeks, and traditional financing takes a bit longer. 

The only solution I can come up with is to get a hard money lender, since they're typically able to close a lot sooner.

Does anyone know of a Hard Money Lender that is willing to lend to raw agriculture land in Hawaii? 

I have anywhere from 20%-25% to use as a downpayment.

I have two rental properties that can be used as cross collateral, however they're in different parts of the country. Those hold about $250k worth of equity. One is at 50% LTV, the other is at around 67% LTV.

My exit strategy is to refinance into a Longterm USDA loan, after the Tax Map Key is issued in 10-24months.

I plan on farming crops on the land. I am estimating to generate $8k per month net profit, on the low end. 

If your company does these loans, or if you know of anyone who can do these loans please reach out!

Thanks,

Chad Otsuji

 If you need to close in two weeks a local mortgage company is probably out of the running. Just be aware this money will not be cheap for this deal, could be as much as 20% or greater. 

How much is the loan amount you are looking for? Do you have the appraisal done? Do you have title company selected and title cleared?

We expect high interest, but 20%+ seems very high. Would it still be this high with my 2 properties as collateral? 

Seller is asking 260k. We have about $50k. Loan amount of $210k 

Title company is selected. No appraisal or clear title yet. 

The owner said we can have an extension, if it’s within good reason. So 3-4week closing may be possible. We just need to make sure the lender can do the loan without the tax map key 

Hello everybody!

I am looking at purchasing a property that was previously a 200+ acre lot that has been subdivided into 2 acre lots. 

This property is considered Agriculture or (AG). However the issue that I am running into is that it does not currently have a Tax Map Key. So, it does not qualify for traditional financing or USDA financing. The owner is estimating that the Tax Map Key will be available in 10-24 months. 

There is no home built on the property, and it is not zoned to have a property. It is zoned for farming purposes only. 

The owner also needs closing to be around 2 weeks, and traditional financing takes a bit longer. 

The only solution I can come up with is to get a hard money lender, since they're typically able to close a lot sooner.

Does anyone know of a Hard Money Lender that is willing to lend to raw agriculture land in Hawaii? 

I have anywhere from 20%-25% to use as a downpayment.

I have two rental properties that can be used as cross collateral, however they're in different parts of the country. Those hold about $250k worth of equity. One is at 50% LTV, the other is at around 67% LTV.

My exit strategy is to refinance into a Longterm USDA loan, after the Tax Map Key is issued in 10-24months.

I plan on farming crops on the land. I am estimating to generate $8k per month net profit, on the low end. 

If your company does these loans, or if you know of anyone who can do these loans please reach out!

Thanks,

Chad Otsuji

Investment Info:

Single-family residence wholesale investment in Ottawa IL.

Purchase price: $105,000

First Wholesale Contract. This deal completely fell apart. I got the deal under contract for $105k, tried selling it at various price points, from $115k all the way down to $107k. ARV was $135k. Needed a max of $8k worth of work to bring it up to to market standards. Brand new Roof, HVAC, flooring, & half bath.

What made you interested in investing in this type of deal?

The house needed slight cosmetic work, and extremely motivated seller.

How did you find this deal and how did you negotiate it?

Facebook Ad and my AQ manager locked the deal up.

How did you finance this deal?

N/A

How did you add value to the deal?

N/A

What was the outcome?

Deal fell apart, because I locked it up too high.
I did not use the 70% rule, which was a huge mistake. If I used the 70% rule, it should have been ($140k) x (70%) - ($8k) = $90k
My MAO is $90k. So my initial offer should've been around $80-85k.
I tried to renegotiate with the owner, but the owner could only come down to $100k

Lessons learned? Challenges?

Use the 70% rule,
Get boots on the ground much faster, so that I can renegotiate the deal quicker
Get the owner to send as many photos as possible, even of the HVAC, Roof, etc
Communicate more often with seller
When finding cash buyers, contact from propstream, RE agents, other Wholesalers

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I tried working with other wholesalers in the area, and they were unresponsive, and some were just flat out rude.

@Ahriane Custodio I've never BRRRR'd myself but I believe I have a good understanding of it. As long as the rents support your Expenses, you can BRRRR it. So if its a $100k property, $20k worth of work, ARV is $180k, then when you cash out refi you'll get a new mortgage, pay off the old mortgage, get your $20k rehab money back plus around $10k of profit (Total $30k back). So that means @75% LTV, you have a mortgage for $135k. Your monthly payment including mortgage, taxes, insurance, property management, vacancy, CapEx, etc would be in the $1300 ballpark. So as long as you're positive cashflow, I'd say go for the BRRRR. Plus when you cash out refi, you don't pay taxes on the cash you get back because it's "borrowed".

As far as wholesale deals go, if say its $100k purchase price, rehab is $20k, and ARV is only $140k, then a flip wouldn't make sense. You could wholesale the deal for $110k and make $10k profit, with little work involved. Or you could flip the property and take on the risk, just to buy it for $100k, put $20k into it, 2-3 months of your time, and only sell it for $140k. And when you're selling the property, you'll most likely have to pay Realtor commissions and closing costs, unless your end buyer is covering all of those expenses. You also run the risk of going over budget. There are hidden costs when flipping properties. I just had to replace the Main Sewer Line in one of my rental properties because it broke in half, this cost me $8500. So if this happened during the flip scenario I just mentioned above, I would've been much better off taking the safe route and wholesaling the deal.

But also with that being said, Flippers know that there is risk. So it is also possible that you wouldn't be able to wholesale this deal at $110k. I just had a wholesale deal fall apart with similar numbers. I got a property under contract for $105k, needed max 8k worth of work. ARV was $140k. I tried wholesaling it for $107k for a very small profit, and NOBODY wanted to touch it. 

@Eliott Elias partner how? Find deals, bring them to buy and hold investors, and exchange it for equity in the deal?

@Kalim Kalla how much was your assignment fee on this deal? How much did your cash buyer end up rehabbing it for?

This sounds like a win for everyone all around! Too bad you didn't have the capital/resources to flip it yourself. You could've bought it for $35k, rehab for $60k, so all in would've been $95k + Closing costs & hard money so say around $105k. You then could have did a cash out refinance at 75% LTV. So that would put around $40k in your pocket after another set of closing costs. So you could have kept the property, made $40k, and benefit from the appreciation, cashflow, principle pay down, and tax write offs. AND you don't have to pay tax on that $40k!! You currently owe the Government tax on that $20k, so don't blow it all just yet. Either way, you came out in the green! Just keep this in your back pocket for future deals

Loved reading this post @Katlyn Krystinak! Do you happen to have any before and after pics? I'm very curious 

Investment Info:

Townhouse buy & hold investment in Van Buren Point.

Purchase price: $175,000
Cash invested: $17,000

3/2
PP $175k
5% down
$8k Closing Cost
Cashflow around $400 a month
Market Rate Tenant
Prop Management 8%

What made you interested in investing in this type of deal?

It has two kitchens. Nicely renovated

How did you find this deal and how did you negotiate it?

Found on Redfin and negotiated through a RE Agent. Accepted first offer

How did you finance this deal?

Conventional 5% loan

How did you add value to the deal?

Light cosmetic work. Didn't add too much value

What was the outcome?

Good tenant @ $1800 a month.

Lessons learned? Challenges?

DO NOT use the cheap Nest Smart Thermostat. Bring professional to inspect HVAC during due diligence period. Use HomeServe insurance. Double check with prop management before doing any work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes I worked with Joe Peters in Baltimore

Investment Info:

Townhouse buy & hold investment.

Purchase price: $172,000
Cash invested: $48,000

3/2
PP $172k
25% down
$8k closing cost
Cashflows around $400 a month
Section8 Tenant
Prop Management 8%

What made you interested in investing in this type of deal?

The steady section8 income. Recently renovated property. Learn as you go

How did you find this deal and how did you negotiate it?

Found on Redfin and negotiated through a RE Agent. Asking $185k but came down to $172k

How did you finance this deal?

25% conventional loan

How did you add value to the deal?

Light cosmetic work. Didn't add too much value

What was the outcome?

Good long-term tenant, steady income,

Lessons learned? Challenges?

Add more value. Get better insurance especially for Sewer in Baltimore, use HomeServe.com. Do main sewer line inspections when buying. Do annual or semi annual rodent control

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes I worked with Joe Peters in Baltimore