All Forum Posts by: Greg Scott

That sounds like a decent deal. Would you still buy it if the NOI was $130K or 120K? The 142 figure sounds just a bit high to me, but could be accurate.

Financing on commercial properties can actually be easier than single family.  But, lenders do like to see a track record.   A good lender can help.  There are probably lots of local banks and credit unions you could talk with.   

Or, given your specific situation, you may want to look to a broker who can offer you more options.   I've used Old Capital Lending.  Their Dallas office does lending nationally and can get good rates.  (I'm actually meeting with them tomorrow regarding our next acquisition.)

@Patrick H.

Let's back up a bit.   I want to confirm that you realize that this means you are likely to be kicked out of the house in about 4 months.  You know that, right?

The other interesting thing here is that he owner clearly has not been paying their mortgage.   In effect, this means they have invalidated your lease because they cannot guarantee you can use the property for 20 more months.  So, the very first thing I would do is stop sending in rent payments.  (Drives me crazy when unethical landlords stop paying mortgage but keep collecting rent.)   Instead, you should open a new bank account and send your rent payments to that account.  Then inform your property manager of what you did and why.  (You may want to talk to a local lawyer to ensure you are complying with local laws on this)

This will have three effects, 1) it screws your unethical property owner  2) It protects your monies which you might get to keep after the foreclosure and 3) gives you leverage with the bank that is foreclosing.  They might be interested in obtaining these funds and if they are in this legal limbo area, you have some negotiating power.  Give the funds to your unethical property owner and they are gone forever.

I wanted to see what the oldest unanswered post was on BP.    The oldest was a closed account, so I chose this one.

I am quite amused by this post, made 9 years ago.  I loved this comment: "If you are naturally risk-averse, Egypt is probably not for you"  If you recall, in 2011, two years after this post, there was a revolution in Egypt.   Shortly thereafter ISIS started rampaging across the region.  Now oil prices have fallen and Middle East economies are in recession.  Wikipedia indicates that Sharm el-Sheikh hotels are using fake bomb detectors to give guests a sense of protection.

Does anyone know how an investment in this community fared over the last 9 years?

@Paul Cabrera

"Getting started" can mean a lot of things, so the answer has to be "Yes!"

 - Education can be time intensive, and the more the better.   Start by reading, listening to podcasts, joining groups.  All of that is helpful to get the ball rolling

 - Clean up your credit.  That is a two prong approach, of course.  It starts by controlling your expenses today and living within your means (i.e. dont create new credit problems).  Then, start cleaning up credit history.   Cleaning credit is not an common sense approach.  Engage a reputable credit repair company.

 - Network with people in the business so you can start to develop your team and define your strategy.

Ideally you want to put the pieces in place so that the moment it is apparent you are ready, you can move fast.

Ugly situation.  Good luck.  

Be careful.   The State of California's laws are written to favor this parasite and not you.

First, I would stay in lock step with your insurance company.  With your umbrella policy, they are more in the crosshairs than you.

Next, I would get my own representation, someone with experience in these matters.   A huge nightmare for you is if the insurance company tries to find some "bad boy clause" to invalidate your liability umbrella.   Better know what to say / not say.  Keep your insurance company as your shield.

Finally, document everything and retain those documents some place safe.

Let us know how it goes.

I will just share a few thoughts for you.

 1) All real estate is local, so just be careful.   The various categories won't behave the same in every place in the country

 2) Retail is very dangerous right now.  Have you noticed how many stores are going out of business due to online shopping?

3) Industrial can be very lucrative if you have a niche and are in the right area.  On the other hand, regulations have have become increasingly biased against industrial companies

4) Office comes in many shapes and sizes, but is getting influenced by technology and demographic factors.   Baby boomers are retiring and more tech-types work from anywhere.

My personal preference is residential real estate, so from your list I prefer Multi Family

@Tarunveer W. Instead of a bank, reach out to a Mortgage Broker. A bank has one set of rules, but a broker has more than one tool in their tool belt. You can usually google them or look to your local REIA for recommendations.

Are you wanting to get to 20% because you feel the deal will be better or you are short of cash?   (I had a sense of panic from your note.)   If having to put another 5% down puts you in the cash danger zone, you may want to rethink this.  How will you handle emergency repairs such as the furnace dying in January?   That is not an optional repair.   Make sure you have enough cash to survive several bumps in the road.  Otherwise, a string of bad luck will destroy you. 

Armando:

One of the best real estate education and mentoring firms has a large office in your back yard.  Lifestyles Unlimited has offices in Houston, Austin, and Las Colinas in the DFW area.   

My wife and I fly into DFW regularly to attend classes there.   We were there over the Labor Day weekend and are coming down again on the 22nd for their bus tour.   While many events are for members only, I believe the bus trip is open to the public, and they have at least one free event per month.

Regarding your capital, you have more than enough to go directly into multi family which would allow you to build passive income faster.   I'd start with your cash and explore the retirement funds plan later.  There are plusses and minuses to both using a C corp and investing within a retirement fund.   

@Ali Knox

There are several ways to look at this

Cash Flow  

It is not clear what your down payment is.   Let's assume it is $40K.   With a $110/mo cash flow that is around a 3.5% cash on cash return.  I would shoot for double digits.

If I'm reading this correctly, you aren't paying anything for property management.   Typically, that would be 8-10% of revenue.   Assuming your family won't work for free forever, or they quit the business, is this still a deal?   At 8% that takes $112 per month off your cash flow for a negative $2 in cash flow.

Captured Equity

If the house is really worth $190K and you can buy it for $165K with a $40K down payment, then you have a 62% equity gain from the start.

Given the above scenarios, this doesn't look like a cash flow play.   If you think the area will appreciate a lot, you may want to buy & hold anyway.  Personally, I like strong cash flow while I wait for appreciation, since that is more speculative.  Alternatively, you could sell the property for some quick cash and then use that as down payment on another property.

Good luck

I use Richter & Associates and have for years.  They are solid.

Also a good source to find property mangers is NARPM