All Forum Posts by: Dan Nowakowski

Wow. I had no idea this would evoke such a strong response. 

@Hattie Dizmond That makes perfect sense and I'd be a fool to argue with you. 

@Guy Gimenez If it's one thing I'm learning about real estate its that there are thousands of rules.  Let's face it, there is so much information online you could choke a horse with it. Part of my due diligence as a new investor is to try to figure out what's generally accepted as "the norm" within the industry and conduct myself accordingly.  You said that they "believe what they're told and fail to do their due diligence." Does that mean I'm not supposed to believe what you're telling me either and go verify it somewhere else? I thought that was the point of these forums? 

It can't be ignored that people within the industry encourage newbies to find a mentor. So, as a newbie, I give weight to the opinions of people that have more experience than I do (which is why we're having this conversation). So when someone that has that valuable experience recommends something to me, I make a note of it. In this case the advice I was given contradicts the general consensus. 

To be completely honest, I'm really glad I brought it up because I've learned from it. Thanks again for sharing your collective experience with me. 

Dan. 

@Hattie Dizmond Thank you for pointing that out for me. I didn't realize that was there. 

Also, I was told by a more experienced investor that they always use an NDA and that I should too.  It surprised me when she said that because I had never heard of one before; but heeding the advice of someone thats been in the business longer, I went looking for that form. Apparently it's not as common as I was led to believe. 

Please also know that even though I'm just starting out, I know better than to give out addresses for homes I have no equitable interest in. 

Thank you again for your comment. It hasn't fallen on def ears. 

Hey gang, 

I'm on the hunt for a good nondisclosure agreement. I have a few leads that I'm hoping to wholesale out and in the interest of keeping everybody honest, I'd like to have prospective buyers sign a form before I give them all the info on the properties. 

Does anyone have a good one that they swear by? 

A good wholesaler is basically in the business of marketing. You have to sort through tons and tons of leads before you find one that is worth holding or rehabbing, and many rehabbers don't want the hassle. They want to be in the rehab business, not the marketing business. All a wholesaler is doing is connecting A to B. 

Besides, nobody is making those people sell their houses to a wholesaler. The wholesaler is making an offer. If the homeowner doesn't like it they don't have to take it. Of course there are unethical people out there that take advantage, but thats the same in any industry. 

Thank you so much guys! I feel a bit more confidant about analyzing rentals now that I've gone over one. 

@Dennis Pressey Jr I'm looking forward to hearing about your system! 

@Kyle Boughton @Mike S.It's true. NJ's taxes are obscene. But as it turns out, I noticed on the tax assessors web site that they had originally assessed it at 225 but this year they lowered that number to 195. The lady at the tax office said the new rate should equate to a tax bill of 7200 a year (starting in July). That helps a little. 

@Patricia Newman thank you so much for taking the time to answer. I've taken a look at what rent is trending for in that area and he's right where he should be so no gain there. Also, I'm having a hard time feeling confident in the 1% rule because all of my other calculations are showing that the property would be worth a lot less. Here's what I got:

Lets say we purchased it at 120,000 and put 10% down. Financing 108,000 @ 5% over 20 years gives us a monthly mortgage payment of $713. 

So then:

INCOMING-  Rent  $2200

OUTGOING- 

Debt service- $713

Taxes- $600

Insurance- $291.17 (or $3500/yr. This place was built in 1920)

Vacancy- $176 (@8%)

Repairs- $200 (or $100 per unit)

TOTAL- $1980.17

Cash flow - $219.83

I think that's pretty good. If you ran the same numbers but paid 170,000 (his original asking price) we would have a monthly debt service of $1,010 which would put our cash flow in the red by $77.17.

Does that sound right to you? Do you think I'm missing anything? 

Oh sorry, I forgot to mention that the comps are all over the place. I don't feel super confident in them. The closest things we could find were townhomes that went anywhere from 134,900 to 170,000. 

Hey gang, 

We recently got a lead on a duplex from a guy who wants to move to another state to be closer to his kids.  I've never done an evaluation on a rental property and I'm deep in the throes of analysis paralysis. If I may I'd like to throw some details at you and I welcome any advice you might have. 

He never told me how much he wanted for it, he only asked that we make him an offer. The tax records tell me that he bought it in 2006 for $140,000. He also said that he took out a second loan on it and understands that he may have to put up some money to get out. He's not expecting retail pricing. 

He had it listed last year for $189,900 but then the listing was removed. This year he had it listed for $179,900 and then it was removed. 

It was built in 1920 and each side has 2 beds (plus one bonus room) and 1 bath. The appliances aren't super old but aren't new either. The entire place is all very well maintained. In fact, they had a fire about 5 years ago in the attic so they had to replace most of the roof and have everything inspected and brought up to code.  

One side has had the same tenant in there for the last 15 years and he's paying $1000 a month. The other side is about to have a new tenant in there (who is about to sign a year lease) for $1200 a month. 

Taxes are $8248.50. 

Each side is independently metered for all utilities. 

We have one completed flip on the market now (which is under contract and on the way out) and another flip in progress. We weren't planning on holding any properties right now so we'd like to wholesale this place out, if possible. 

What are your thoughts on this? 

It sure does. Thanks @Samson Kay

Any updates on this thread? @SamsonKay, how did you make out on this?