All Forum Posts by: Charles Carillo

@Paul Davidson

The PM manages the property and handles all tasks associated with that. They handle and coordinate maintenance requests, lease the apartments, collect rent, etc.

PMs have different pricing structures, usually with a fee that is a percent of rent and then a new lease fee. If you are using their handymen as well, that will also be another fee. If they are managing renovations or construction projects, that will be another fee.

@Orlando Alberto

All real estate investment strategies involve risk and require capital. What happens after you find a deal? Who is funding the purchase, renovations, holding costs, etc.? Cost overruns are very typical with first-time flips, and I would strongly suggest any real estate investors, especially new ones, have access to additional funds if they find themselves going over their budget. 

@James Wise

What happens if the Realtor focuses strictly on rentals? Who would know that market better than anyone?

@Tije Wilkins

Have you actually spoken to any local lenders about the property? 

I would suggest speaking to local banks and credit unions. Whenever I have an issue with financing, I normally contact local institutions. They are much more reasonable and are more intertwined in a community than some lender states away. The credit committee is usually made up of local people who are familiar with the market they are in. Lastly, they like building relationships. Once you find a lender that finances properties similar to yours, start building a relationship.

@Julianne Salamone

We have partners who are foreign investors. DM me and I will send you contacts for; attorneys, lenders, and accountants they have previously used. It is important that you hire professionals who have experience working with foreign investors.

@David S.

When reviewing deductibles and premiums, I look for the deductible where the premium reduction is negligible when you go to the next deductible above it. For example, you might see large drops in car insurance when you go from $250 to $1,000, and then the effect on the premium isn't as significant as you go higher. Why take on the additional risk for just a few dollars of savings every year? 

I see the same thing with homes. I had one 3-family property worth about $275k, and the premium dropped several hundreds of dollars a year when I got the deductible to $2,500. However, when I had the choice to go to $5,000, the savings were very minimal, and it would have taken 10+ years to recoup if there was ever a $5,000+ loss. At $25,000, you are saving a lot, but is there a better, lower deductible that makes more sense? It goes without saying that you should have $25,000 also in liquid investments, but I think that is a given.

@Scott Alvarez

There are 3 main parts to a seller financing deal: down payment, interest rate, and price (4th would be the term). When speaking to the owner (building rapport), your main goal is to figure out which of these main 3 is most important to them. Once you learn this, you can tailor the offer to meet their needs. For example, if they really want $500k for a property, offer a purchase price of $500k but a lower down payment and interest rate (and a longer-term). They are getting what they really want, and you are crafting the deal to where it will still make sense for you.

One potential issue is if what is most important to them is most important to you as well. For example, if they want a large down payment, and you only have enough for a 5% down payment, that is an issue. Or if they want a high interest rate, and your numbers will not work at that interest rate, or if they really want a crazy high price where it will be difficult to cash flow and refinance in the future. This is where you need to really start working the numbers, but hopefully, you can craft a deal around what they want.

@Scott Alvarez

Yes, it is normal for a buyer to refinance a seller-financed property after a set number of years. The timeframe depends on the deal struck between both parties and the seller's goals. 

A seller might want a longer term to further spread their capital gains, while a buyer wants enough time to renovate, stabilize, and refinance the property. I always go for a longer term with sellers. It gives you/the buyer more time to complete the project and obtain traditional financing.  

@Seth Vendelboe

I also suggest speaking to local banks and credit unions. Whenever I finance small commercial properties, I contact local institutions. They are much more reasonable and are more intertwined in a community than some lender states away. The credit committee is usually made up of local people who are familiar with the market they are in. Lastly, they like building relationships with local investors. Once you find a lender that finances properties similar to yours, start building a relationship.

@Account Closed

I would contact them to see if they are interested in selling and ask what price they would want for their unit. This way, you have an idea of where they are at. When you speak to them, see what their plan is, and what is most important to them. Maybe they will sell, but they want to live there for another 6 months or pick their ideal sale date. Price is sometimes not the most important factor for home sellers.

In regards to your valuation, I would verify your expenses since I would imagine most potential buyers will question why the expenses are so low (even though you mentioned you have rented the units over market rent).