All Forum Posts by: Christina R.

ok that didnt go through... im typing this on my phone in thr middle of southwest Texas with poor connection. .. bottom line is to be a successful wholeseller.. in my opinion.. you MUST know how to determine rehab costs and ARV and learning both takes a lot of work.

what are the terms of the lease?  If you are inheriting her I'm assuming you must honor the lease.  However, when those terms are up  if you do not want to keep her give her proper notice.  If she doesn't comply, you can start the process to evict even if hoarding is a protected disability class, I would think. 

Have you closed on this property yet?  Does your contract state that you inherit her or can you take the property on the condition that it is vacant?  I'm looking at this from your exit strategy position; if you had to bail on this house and you have a hoarder tenant, I'm not sure you'd have an easy time disposing of the property.  You mentioned upstairs, so are you occupying the unit downstairs or is that going to be rented out as well?  

I understand the desire to get that first rental; I've been at it for over a year and I sometimes feel like I'm spinning my wheels but I'm have to say, I'm not sure this situation is one you want to get into.  Hoarding presents enormous problems with safety and with pests (bedbugs, rats, vermin, etc).  These are major liabilities for you as the landlord. You are right that any real estate investment has risks but you can mitigate much of that by deciding what you will and won't voluntarily take on.  Sorry to be a buzzkill but hoarding is a psychological issue that has huge ramifications.

@Grant Kemp 

 - yes, I do have an update.  Sorry been a week of swim meets for my one daughter and it's just been crazy here.  @Tyrus Shivers was nice enought to run comps for me since there have not been any dups and tris that have moved around here lately, and I figured out that for units less than 5 a comp approach- rather than an income one - was needed for any lender financing if it ended up going that route.  

Short story short - Tyrus' pricing and mine were along the same lines where you're looking at about HALF of what the seller wants.  He has these properties valued at high 200s, 300s with the highest being 375 that he WANTS on my street where I live.  Like you said, he wants 20% down.  He has taken the property back on my street once before from whomever he sold it to in 2008.  He said he wanted 6%, interest only (he said something here about doing this so it would help with "paying taxes" ?), balloon in 5 years  .  .  but he was "flexible" on down payment, % rate and whether any of it went to principal.  

Based on the rents which are NOT market - you'd have to get all properties at around $425K total and that's if they were in pristine condition.  The triplex the owner pays for everything but electric whereas on the other properties the tenants pay for everything - so the tri has about 60% in ongoing expenses rather than 50%, I would say.

This guy is not what I would say  a "motivated" seller.  He has property all over this area, he is toying with the idea of "spinning off" these 4 where I live because it's about 30 minutes away from where the bulk of his properties are - and those are apartment complexes, 15 units and up, etc., and his "real" money makers.   I'm not adverse to just telling him what investors I know would pay for these and say if it ever comes to the point you just want out, call me first.  Tyrus found one duplex that was like $400,000 that was getting $40,000 a year in rent.  

So I've heard that terms are where it's at with seller financing b ut I just don't see a way with these price points in his head that you could offer within 20% of what he wants and have some sort of deal.

Advice?

Have you considered asking Mark and/or Denise to JV this with you? they may consider it as they (1) know that area inside out, (2) have tons of their own rentals there, (3) are extremely familiar with the judicial process in B'more City so in the event they would have to foreclose on the house they know with eyes-wide-open what they are getting into, (4) they have their contracting teams in place and know exactly what they want to do with a property.  Expect hard money terms from these two, that would be my gut sense on if they were inclined to get involved.

Someone mentioned to me that if an HML won't lend in an area, most likely private money lenders won't either. This is a total <$30K area (there is an entire thread on BP if you haven't seen it about sub$30 K properties and the pros and cons of them). However, I believe you bought the house at a "right" price (I haven't seen the condition) and based on discussions I've heard with Mark and Denise, barring some unforeseen huge complication with the house, it could be within their "all in" range on what they did with properties there.

I have not done either so this is based solely on a year's worth of scouring this website, going to local Meetups and REIAs and networking with investors who rehab and investors who buy-and-hold. HML is risky to begin with for the reasons Richard and others have mentioned above. My perception is that it is somewhat less risky for a rehab because your intent is to resell at the end of the work, thereby paying off the HML lender. 

For rentals, you have that seasoning issue and HML is really not meant for a long term loan. Definitely comes down to numbers - are you buying low enough that a downswing in your local market won't depress values to the point that you can't refinance out of the HML? Is your area like Baltimore City up here where the foreclosure process is long and hard and HMLs got so burnt in the boom aftermath that it is virtually impossible to get an HML to rehab for rental up here?

As @Ned Carey has told me, the devil is in the details with HML terms (well, just like any loan when you really think about it). If you go that route I would recommend no term less than 12 months (what if your spruce up takes longer, and costs more, than expected?) to borrow the money, what the fees if you have to extend that term, etc.

If this is your first deal, it will take longer and harder to find an HML. You need experience to develop that HML lender relationship and they usually won't lend unless you have experience so it's a catch-22. Ask me how I know.

@Girard Curry 

 a real estate lawyer will be presenting at the Baltimore Washington Meetup tomorrow night at 6:30 PM (Weds, July 9th)

check it the details of the location/time here

I'm sure this topic is bound to come up.

@Patrick G. 

 - well, are you gonna get the list?? lol  I can't decide!

I have a contact that called me this past March off my letter campaign that has 2 duplexes, a triplex and a SFH in my area that gross about 90-95K in rent a year. One property is actually on my street. At the initial call, he sent me a sheet with the addresses and rent info on it and wrote that he'd be interested in owner financing it. Well, at the time he wouldn't give me any idea of what he wanted for them and it basically didn't go anywhere. This past week I've been doing follow up calls, so I called before the 4th of July holiday.

He called me today and will be in the area tomorrow, wants to meet and discuss his situation. All are free and clear with the exception of one which has an ARV of 180-200K and there is 60K owed on it.

So here's the thing - I haven't the faintest idea how to approach this discussion (which i am really doing for practice with talking with sellers because I'm still out of my comfort zone with that - I didn't ask anything about price or anything else today on the phone because I need the practice of this if nothing else comes of it).  I probably would want to wholesale these off BUT could be interested in keeping them myself (or with a partner to split any cash flow).  

I've read here and heard elsewhere that with seller financing, the TERMS are where it's at and not necessarily price so I don't want to "price myself out" of this with the traditional wholesale formula if truly there is money to be made with a different, yet financially workable approach for all involved.

What questions should I ask and what should I be listening for?  

Thanks in advance for any suggestions!

Did you try Gary at Cavalier? 

 As you are learning it is extremely hard to get purchase AND rehab funding in a lot of B'more City.