All Forum Posts by: Cortney Jones

If I were analyzing it, I would want to know if the NOI included money set aside for future repairs and maintenance? Also, wouldn't be comfortable with calculations at a 3% vacancy. I'm always conservative and plan for a 8-10%. Does that NOI include management fees?

Once I looked at all the numbers and got them to what my buying parameters are, then I would know what I would be willing to pay. Basically, I reverse engineer it from what my criteria and estimated costs are plus the known NOE that are there now.  Also, I would pay a premium for owner financing options. 

 @Warren Straley, I would use the rental property calculators on BP to reverse engineer the numbers and also do some research on local cap rates and pricing.  A lot of it depends on who you are representing - the seller or yourself?  If you're a realtor with fiduciary responsibility then you'll be coming up with numbers based on comps and what others are selling for in area to get the most for your client.  If you're buying and looking to offer a fair price then use the calculator to analyze numbers and find what you're happy with from a buying criteria point of view.  

I personally look for a minimum of $200/mo cash flow per door, plus a 15% cash on cash return as a minimum. I also include the previously mentioned numbers as a cushion (10% for capital improvements, 10% for management fee and 8-10% for vacancy)

@Nicholas Q., although the selling agent is insisting you not use a buyer's agent because they don't want to pay fees, that doesn't mean it's in your best interest.  

Hire an Realtor with an ABR designation to represent you in the transaction. It sounds like it's one of your first ones. The ABR is (Accredited Buyers Representative). They've put in additional time and received training on representing buyers. If you can find an ABR that specializes in investment property, all the better.

You can always increase the purchase price slightly to accommodate the increased expense.  It's a good way of protecting yourself.  

If the house is in the WA area, direct message me and I'll give you a referral to a great Realtor who also is an investor. She would be a great resource. 

@Evan Poole, sorry you were supposed to be tagged in the answer above too since yours was a similar question.  Wanted to tag you to make sure you saw the answer.  Hope it helps. 

@Trevor McManus  great first steps and congrats on taking action.  It seems like a simple thing to some, but you would be surprised how many people I talk to who after a year or more are still learning, reading, and getting ready.  So kudos to you!

On average, in AZ market which is super hot, we spend about $2500 in direct mail marketing to get the phone to ring enough to get 1 deal.  Average profit per deal for wholesales is about  $12,500.  So a great return on money for wholesaling.  Typically, for a newer investor, you'll find that you'll have to talk to 20 sellers and make 20 offers to get a deal.  It's simply a numbers game.   In other markets we invest in . . . TN, OH ( we spend about $1500 in direct mail marketing for a deal).  

As for a script, yes and no.  It's a people business first and foremost so I want to get to know the people.  I talk to them to find out what their problem is.  For wholesale properties there needs to be motivation.  A problem that I can solve.  Usually there is a problem such as behind on mortgage, loss of job, too many repairs, burned out landlord, job transfer and they need to move quick.  The goal is to find out what that is and to help solve that problem for them.  

I ask them enough about the house to get the details I need to make an offer, but mostly I want to know about them.  What's their reason for selling? Why are they calling me? I empathize with them if needed, I'm genuinely interested in them and their situation.  The more I know about it, the more solutions I can offer.  I will ask them, "Trevor, it sounds like you're in a tough situation. If I can get you  all cash and close quickly, what's the bottom line you would be wiling to take for the house?"  If it's close to full market value then I know we don't have a deal. 

I will be out of town next week, but if you want to hit me up the end of July, I would be happy to hop on a conference call and role play with you for about 15 minutes to demonstrate an initial call with you.  You can be the seller and I'll just ask you the questions I usually ask.  Send me a message at end of month. :-)

Best,

Cortney  

be specific in what you're trying to accomplish? Are you asking from a hypothetical perspective to see if an idea is viable or is this a real deal? 

If it's a real deal, then you should talk to the lender and find out what restrictions you would have first. 

@Joey Arellano Don't let weather or anything else keep you from achieving your dreams!  There is always going to be stuff that is "against you" but you have to figure out how to get around it, through it, over it or under it.  

Wholesaling Rocks!  It's the easiest way to make money in this business, particularly starting out.  If you don't have money for marketing then you'll need time to go find deals.  It's gonna cost you one or the other (time or money), but it's worth it.  We wholesale 1-2 deals a month now and average about $10k a deal.  At one point, when I was younger and wanted to work more, we were wholesaling 4-6 deals a month.  

It's a great viable plan and a good way to generate chunks of cash.  Don't make excuses and think of the things that can get in your way or be against you.  Just do it!  Push and push and keep pushing until you have success.  

If you send me a DM I'll send you a resource that will help give you the step by step to getting started.  Remind me what I promised you in the message. 

It's worth it!!!

@Michael Bell   I'm not familiar with the path to purchase series you mention, but I can give you some guidance on getting started with nothing.  

There are numerous ways to buy property with no money down.  Really.  :-) 

I've bought hundreds of investment homes and never put 20% down on any of them. For starters check out biggerpockets.com/nomoney  a book by @Brandon Turner

If you want to stay conservative and traditional (and there is nothing wrong with that) and do the 20% down and bank loan traditional purchase then start with doing some homework on the area you want to invest in.  Look up some properties in the area to get a feel for what they are selling for.  That will give you an idea of the amount you're looking at.  

I would start by finding an amount you can comfortably begin to save each month for one, but simultaneously looking for someone you can partner with on a few of your first deals.  Reinvest all your profits into savings to buy more properties.  

If your first property is $150k then going the traditional route, you would need to save $30k in order to have a 20% down payment. You could go FHA with a 3% down payment, but you would have to live in the house for at least a year. If you can work with a partner, maybe you do the legwork to find the deal and you do any of the required work, etc. and they put up the money and you split the profits, you could get there faster.

Also, consider wholesaling a few deals to get your first down payment.  

My personal preference is buying no money down.  You will still need some money.  You'll often have marketing expenses to find the deal(s), also most houses will need some work before you can rent or sell them and often if you're buying no money down then you'll have some past due payments that need to be made up.  

If I were you I would start by learning about the various ways to buy and sell and the pros and cons of each. Then, decide on which business model you want to use that fits your goals and plans. Then, read everything you can about that - 3-4 books quickly. Don't let it drag out and use education as a crutch to not take action. Then, start looking for potential partners. Use the BP community, your local Craigslist, call We Buy guys in your area, go to local REIA meetings, etc.

Hope that helps you take some first steps. 

Best of luck!

@Alejandro Flores, good plan, but you do need to think about what @Paul G. stated. If you're using the new home buyer program, it's an FHA product, unless your broker has something new? With FHA you have to live in it for a year.

You can absolutely do owner financing on a property that you don't own free & clear, but not one that you've signed a sworn affidavit to live in for a year. :-)  

If your lender is using something other than an FHA product, then you should be good. Definitely have everything drawn up by an attorney. Also, your attorney will want to put wording into agreement that your loan to new buyer is wrapping around existing loan for disclosure purposes. I would also recommend a clause that states the buyer agrees to surrender property willingly to you after 2 months of late payments. Doesn't always work, but sometimes gives them the out they need.

@Elijah Jay Dangerfield,  as a TN property landlord, I can tell you that @Rob D. is dead on point.  Include all the costs of clean up, repair, etc. as the damages and get a judgement.  Then, file that judgement with every county nearby and with the credit bureaus.  Take the Writ of Garnishment to their last known bank and to their employer.  Then, send it to a collection agency and let them go after it.  Judgements in TN sit on their record for 10 years.  It's rare, but sometimes you'll be surprised and years later you'll get a call from banker/mortgage broker saying "hey my clients are trying to buy a house and you have a judgement on them from 6 years ago that has to be cleaned up before they can get bank financing, where do I send the check?"  

We have several former tenants who have garnishment payments coming out of their checks and to us for 24+ months now.  Your friend just has to be willing to do the work or hire someone to do it. 

@Jess Slack - Congratulations! Glad the deal is going to work out.