All Forum Posts by: Greg Scott

Tim:

Your steps are fairly high-level.   You could probably create a 100-step process if you wanted to be detailed.  Staying at this high-level, I see one flaw in your thinking...

If you have a really good deal, you don't want to waste any time. you want to get the deal LOCKED UP. 1 & 2 should be simultaneous and immediate. If you cannot afford to buy it yourself and need someone else to bring cash or partner with, then you need to learn how to write your contracts. In most states you can have a clause that allows you to assign the contract to others. That allows you to lock up the deal immediately and later figure out the LLC or person(s) who will be the actual end buyers.

Good luck.

Mac:

I'm not clear if you are looking at two quads or one 8 unit apartment.  They are valued differently.  Quads use Comparative Market Analysis and apartments are based on Net Operating Income.   

To really evaluate the deal for either method, we also need purchase price and terms.

Owner financing can be really sweet.  If they financed 100% of the purchase price, for example, you would be crazy not to take the free $900/month.

Good luck

PS.  I think your name inspired me to use gem metaphors!  LOL  I didn't realize I had done that until I re-read my post.

Jewel:

Welcome to today's market. 

While it is possible to find motivated sellers, the typical property listed on the MLS is not going to look like a deal on the surface. You have to see the hidden gem and know enough about the market to understand where you can add value.

For example, you look at a property.  It is currently performing at a 10% cash on cash return.  But, you see the owner hasn't repaired the property and it looks terrible.  Meanwhile the property next door gets $100 more per month on rent and has a waiting list.  So, you fix the place up and maybe get $150 more per month, bumping your cash on cash to 20%.

The trick is to do your research so you are certain you can polish that diamond.

The answer really depends on your state and local laws and varies from place to place.

Rather than worry about two deposits, an easier way (if you can do it) is simply collect a larger security deposit and make sure your lease includes unpaid water bills as something that can be deducted.

The best solution is to have a great property and find great tenants who pay their bills.

Craig:

You should consider joining Lifestyles Unlimited.  They have an office right there in Las Colinas where you can attend live classes and networking events.  They have a great list of local vendors.  Using their vendors, I bought 9 SF rentals, all of them needing extensive rehab, while living in Michigan.  My wife and I fly down 3-4 times per year to attend events there.

In my opinion, it is the best bang for the buck in real estate education.

The simplest way to purchase that property would be with a new mortgage.   Why are you not pursuing that route?

Andrew:

Sorry to hear about what you are going through.   I don't know Castle, but I've had a friend experience a similar situation with other property management company.

I'm glad to hear you have contacted your tenants.  The key is to stop the bleeding.  Getting future rent sent to you instead of Castle is the first step.   Pay attention to the expense side too.   If they have any utilities or other pass-through costs that could be attached to you, cut them off immediately.    Make sure bills are being sent to you.  The important thing is to not let the damage get any worse.

Once the dust settles, you can see if there is any value to be extracted from the rubble.   In the case of my friend, he took the property management company to court and won.  Unfortunately, instead of cash he got a judgment order.   That might become cash sometime in the future, but he hasn't collected anything yet.

Good luck!

Adrien:

In the United States properties up to 4 units are valued the same way, Comparative Market Analysis or comps.  Only Apartments are valued on profitability.

While it is almost certain that you improved your yield by converting a single-family into a 4-plex, it is not clear if you have increased the value.  The value of your property will now be compared to other 4-plexes in the area.   If the 4-plexes have an average price that is lower than the nearby single family residences, your value will also be lower.

Two residences on one title would be a duplex,even if they are not connected.

Whether or not it is a good deal will also depend on condition vs. the other properties in the area and what it would take to make them comparable.  Also, total square footage is important.

The only thing that made me nervous about this setup is you may want to confirm that the unit in the back was legally constructed.   Talk with your building department.  For a few bucks, you can file a FOIA and make sure that both units were built to code and fully permitted.