All Forum Posts by: Dustin Smith

Hey all,

Thanks in advance for the insight. I'm looking at a retirement community that I want to turn into a 5 plex. The list price on the property is $220k, but I know he may be willing to accept as low as $165k as he can't afford the payments and wants it gone. I'm interested in offering a nondisclosure bid of $165k or $2k above any other offer up to $182k. I've got a hard money lender willing to pay for the purhase price, but not any of the renovation. The problem is the renovation is going to cost as much as the purchase price, and I don't have that available. 

I know there is someone else looking to do basically a lease to own with $5k down, $2k per month plus all taxes and insurance for 24 months, then $200k at the end of 24 months. 

My question is, do I make the offer and seal up the deal, then find the cash for the renovation? Or wait and likely lose it?  Im anticipating this other offer to come in by mid-week. I know I'm likely going to get a lot of play it safe answers, but I want to get some other opinions. 

Is it possible?  Yes.  Through a bank, not likely.  I'm having a hard time figuring out what the problem is, however, if your friend can and is willing to get you every dollar to build the duplex?

Even if I'm showing small personal things to someone on craigslist, I've always got my Ruger LCP hidden inside my waistband.  I never expect something to go wrong, especially in Eastern NoDak, but I don't want to be caught unprepared.  And what they don't know don't hurt 'em.

Ditto to ^ @Aaron Montague  You'll be a lot happier planning for a 6-8 month renovation and making a good margin than planning a a 4 month renovation and barely breaking even. It's easy to jump into a sub-par deal, taking the time to make sure it's a great deal is a different game. With the HML's, call them. Make sure you stay on their radar and let them know how serious you are.

Also, not sure if you could potentially talk to the fire department about the building structure?  I don't have any experience with fire damaged property, but they may be able to give you some insight into the structural integrity of the building, or possibly approve a visit.

Good luck!

Welcome to BP!  You've certainly come to the right place!  The forums are a perfect place to ask questions like this, and you'll usually receive lots of useful feedback.  As you interact with people on the site, send them a colleague request.  Check out the youtube channel for all sorts of awesome information.  The experience available around here is unbelievable.  I actually include "BiggerPockets" in any search I do on google pertaining to real estate, because I trust the people on here more than anywhere else, and I know my questions have likely been asked before. 

Good luck!

Quick point about the questions regarding your prospective rental property you made a couple days ago, I would be a little more liberal on your expenses. Unless you've actually figured out every detail of the typical monthly expenses on the property, including repairs and major capital expenses, be conservative in your estimates. You'll be a lot happier letting a potential deal walk than investing in a deal that ends up being less than desirable. Not sure how new you are to this, but here's a good reference tool for roughly analyzing a property courtesy of Mr. @Brandon Turner 

https://www.youtube.com/watch?v=KQmChuIW_sY

Also, I'm not sure about your specific area, but I'd factor in at least 10% gross rent for property management even if you're looking to self manage. #1. It basically provides you with a paycheck for your time, meaning that your cash flow is straight profit and #2. If you get wildly successful, you'll likely want to ditch the responsibilities of property management, and including the PM expense in your initial analysis will allow you to pawn off those responsibilities when the time comes.

Best of luck!

Hello D.S. in Minnesota from D.S. formerly in Minnesota! Welcome to BP! I think you'll find this place more than beneficial as you start your REI career.

@Andy Mirza much appreciated!  And as far as comps go, if I can stay under $200k in rehab, this is by far my best opportunity right now.

@Greg Palmer the heat and electric is the only part that may be an issue.  Water here I would expect to pay probably $50 per month for all six units.  I'll certainly check with the power company to see what it would take on their end to split the utilities up.  

@Richard Allen I do appreciate the ideas though! Up until @Andy Mirza mentioned it I hadn't even though about it.  I didn't find out about the code issues until yesterday. Frankly the guy that owns it doesn't deserve it in the first place.  He didn't do any homework on what he was trying to do and it's clear by visiting the place that he was not up to the challenge of managing the place.