All Forum Posts by: Neil Schoepp

@Nick Holty

I don't know much anything about this type of loan. I came across a property in upstate NY that had this attached to it but there were way to many moving parts for me at the time. Any how it's a federal loan program for rural areas and very low income individuals which could be seniors that do not have much in the way of savings. Take a look and see if it will work in your instance. I'm sure there are a lot of hoops to jump through but rates should be favorable and owner occupancy is not required.

515 loan booklet 

515 asset management booklet

515 project servicing booklet

@Henri Meli

In the initial stages of underwriting this deal I would let the numbers do the talking. As many others have said we only deal with actuals, never pro forma. Based upon the actual NOI of 55k I would write the offer at 687500.

They are attempting to sell this property at an 8 cap and based on pro forma (if everything goes perfect, yep that always happens huh) 

I Would explain how I used their NOI and the cap rate they are trying to sell at (8%). By the way, what is the cap rate for Wake county?

Let's look at the numbers a little closer to shed some perspective.

We "know" that when you purchase this property you will have a NOI of 55k. We have an asking price of 1.5M. That equates to a 3.5 cap. Can you afford to buy at a 3.5 cap?

When buying property we are really buying the income stream. The monies coming back to us. So to base your numbers on anything but what the property is actually producing is not a good investment strategy. Would you pay 30k for a 10year old Honda. No, of course not. It just doesn't make sense. Same thing here. 

At pro forma numbers your paying the seller for 50k of revenue that YOU must create. So your doing the work and he's getting paid.

Throw the offer out there worst case he declines at least your underwriting was based on sound principles.

I'll give this a bump. The way I look at it is if @David Moore is attaching his name then it may be worth a shot and a win win win all the way around. It's gotta be worth at least contacting David and hearing the details. Anyone know anyone in Tulsa?

@Qusay F.

Your broker is not trying to get you to borrow at a higher rate. The thought out there is exactly about gaming the system. You say you are going to move into the duplex but never do. Now it's an investment property not owner occupied. 

Ask how he feels if you have a signed lease for the SFR Before you close on the duplex.

To your success.

@Jesus Garcia

I'll throw my 2 cents out there.

You accomplished the most important thing for a logo. Although it is multi colored It will also print clearly in one color. 

I think the color works and the overall design looks good. I like how you grounded BAYTOWN by underlining it. 

If It were me I would remove the gray background and let that color be what you are printing on. 

I would also thin out the lines of the house. They feel to heavy to me. 

Overall I think you did a good job. 

Make sure you buy that rehab. that is the action that will change your future.

To your success

Neil

 @Jack Taylor

Given the option of those two I would choose to pull out the equity. The equity comes out tax free and the interest is deductible. The 401k will have penalties for early withdrawal (assuming your under 591/2 yrs. old) and will be taxed.

There is another option that may work. You may want to read up on self directed iras (SDIRA) In short it is a 401k that you can direct where the funds are invested. You need to really read up on it though as there are special rules and you need to set it up through acompany that is comfortable with them. 

this is more of an advanced strategy so just make sure you work with a well know company and you do your research, plenty of info right here on BP.

You may want to start here With a list of SDIRA companies.

To your success 

Neil

hey @Katherine Bernas

 I look at it like this.

If she does marry and he gets new orders then she is covered and moves away. 

You still have one tenant left that does not have the ability to pay the full rent.  She either gets the ability, which is essentially more pay from another job, or she finds an acceptable roommate. That roommate MUST be approved by you AND MUST pass all of your tenant screening criteria. If she can't then she's out, for if she's not it will turn BAD quickly. She cannot expect nor should you pay 1/2 the rent for her.

If she is unable to find a new roommate I would not charge her for the breech of the lease. I would just let her go. Makes no sense to me to harbour ill will for something out of her control. 

If they have been good solid tenants then work with them. If not then here's your chance to do it over.

well I'm going to be the one. Fair housing.

You may agree with it or not. You may feel it's your property and you can do as you wish.

At least know what the law is.

A good place to start for an overview is Ultimate guide to tenant screening this will give you an overview of discrimination among plenty of other ideas and a link to the fair housing website.

You say don't give them a reason. I actually address this below (Mike Butler) but understand you can make 100% purely innocent "mistakes" 

So let's play this out for a second......

You receive a phone call asking about a property you have for rent. During your conversation you ask if the caller has any children.  You then for whatever reason either legit or because it's my property and I can do what I want, decline their request to rent. They then sue for discrimination. 

You have a prospective tenant who walks with a severe limp and clearly has trouble with stairs. You have three properties available one is a second floor walk up, one is a SFH with five steps leading to the front door and the last is a ranch with no stairs. Which do you show/offer him. Yep you guessed it all three.

I just want those reading this to understand that there are very real fair housing laws in the USA. Those laws are enforced and you should work with in them. 

One last point. Mike butler makes a great suggestion in his book landlording on autopilot. Never deny an applicant. Speak to the applicant tell them a problem arose with their application, explain the problem and what they need to do to fix it. Then put their application on hold until they resolve the problem. What percentage of applicants actually get back to you? In the meantime move onto the next application. 

I'm not a proponent of being scared. Just please understand that the laws are out there you may get hit with it or not but I like sleeping at night. Do you?

@Joe Paoletta

I come from the SFH world myself and was looking to move into smal multifamily 12 to 25 units. I had the same question. During my research I came across this article written by Michael Blank. How to raise money to get started.......

In a nutshell find a deal that would be similar to what your looking to acquire and write up a Sample Deal Package. You then use this to present to potential investors saying I am looking for deals that would be similar to this, when I find one that meets the criteria set forth (property type, returns, market area etc.) can I count you in?

People say if you find a good enough deal the money will follow. I look at it like this: the money will flow much quicker if I already have those relationships set up. The deal package opens the door to start that relationship. 

Hope this helps

Neil

@Tyler Arnold

Congrats on taking the first step to controlling your life. It may seem obvious but why not talk with one of those investors you are finding properties for. Pick their brain. 

You may also want to read up on some terminology.

Cash on cash

ROI

Gross income

NOI

Frank Gallinelli wrote a good book explaining  What every real estate investor needs to know about cash flow.....

You may also enjoy the BP Podcast there is some really good info from real world investors there.