All Forum Posts by: Sunil Kumar

Thanks - will await the message!

Ross - basically you are saying I have to find someone like you in order to get REOs at 50% of list price?

Dallas, TX and nearby areas is where I am looking

Ross - that is exactly what I am doing here. Is that what you understood after reading my initial query?

Do you find banks selling REOs at 50% of what they list it at? Seems that folks on this forum are indicating otherwise?

Joe - excellent breakdown and detail as always. You are right, the objective is long term wealth through equity pay down. Appreciation is icing on the cake. $30 or so monthly is fine in the short term keeping long term in mind.

From your experience, what should I keep in mind when executing these kinds of deals (long term investing) to avoid both short and long term surprises?

Jon - I have always wondered how investors are able to get such good deals on REOs when banks are not likely to budge (ie. your comment on not even generating a counter). What is an investor to do???

Ross - that is exactly the thought process here

Ben - based on the 50% rule, the numbers appear to work (i.e. insurance 85 + taxes 500 + HoA $25) = $610. Rent is $1,500 - thus 50% is $750. Your thoughts???

Jimmy - 6 months. Has had 2 offers, one backed out (don't know reason) and the other one's financing failed.

friends, need your help!

saw a bank owned single fam home recently. 3bd 2bath 1500+ sq ft. in a highly desirable and developed area in Dallas. one of the best school districts. home is old, 1991 built, but everything was in solid shape, no foundation issues or otherwise. will get it inspected as well.

numbers as follows:

list price. 160k
taxes: 6k (500 a month)
insurance: 85 bucks/mo
HOA: $300 a year

rent: $1,500 based on comps

even at full price i should be breaking even (no cash flow) but equity buy down through monthly tenant payment of mortgage. i have offered 120k and hoping to get a counter from the bank.

what else to look out for? what am i missing?

go or no go? what are your thoughts? tips on negotiating with the bank on this one?

i have never bought from a bank - and can use any and all help i can get from you.

thanks

if i understood you correct, you buy properties in the 36k range and generate 850 a month. You are also saying that your fairly involved with property / tenant management given your tenant base?

i assume you do this full time?

do you know anyone doing what i intend to? (buy and hold in newer areas / middle to upper middle class tenants, low maintenance management) ?

Jon - my sentiments exactly and thank you for your input. i am ok with $100/mo cash flow tops, and counting on tenant's equity buy down over time. i like your suggestion and the reason i was shying away from that is because of potentially more tenant turnover, difficulty collecting rent, evictions etc. i am hoping to manage it myself, and therefore the logic is by investing in a nicer area, i will get better quality and complying tenants, and less headache to carry and manage the property. this has worked for me well when investing in Michigan, but what are your thoughts about this??? would love to connect with you - i see you are local. awaiting your valuable feedback

Friends,

Anyone with local expertise in the Dallas area will be better able to assist. I am looking at properties in Frisco and McKinney.

I am evaluating 2 REO properties, single family homes in newer areas of town. Advantage is that they are relatively cheaper and newer (less maintenance). Disadvantage is that I don't know if there is enough rental demand? Who would rent far from desirable areas to be in (downtown, airport, etc)? Most people typically buy in this area that I am looking at.

Numbers are as follows:

Property Type:
2005 yr built
4 BD
2.5BTH
2096 sq ft.
3,700 annual taxes
$61/sq ft.

Anticipated rent based on recent comps: $1,360
Tax/mo: 308
Insurance: $125 (guess)
Management fee (10%) = 136
Repair reserve (5%) = 68
Vacancy reserve (5%) = 68
Total cost before mortgage = $706 (just around the 50% rule)

Anything else (costs) I am not anticipating in this equation? Trying to avoid surprises and ensure I capture all of it.

Given the area and potential rental demand, what do you recommend? Buy / no buy? Are there better alternatives (i.e. Plano, Allen ?) Plano has older built homes, and I am trying to keep it to year 2000 and newer to minimize maintenance issues.

Appreciate your assistance in advance

Thanks!

Will,

I should have clarified. Yes the primary intention was not built in equity but each had a built in sum, ranging from 20k to 40k. I also paid no down for one and 5% for the other 2, making the investment minimal and the ROI decent from the annual cash flow + tax benefits. The buy down to date has only added to the equity.

Is that more reasonable given the clarification?

I do realize these are not the best deals, and am looking to get into some better ones in the future with more experience.

Anything I can learn from these experiences and your feedback is appreciated. Looking forward to your comments.

I am seeing that single home ownership for rental is the best route to go, and will start pursuing those from hereon. concur? disagree?

Keith and Will,

This is great advice. I have three condos currently, all of which are positive cash flow. I invested for the long term (equity buy down) and not appreciation or built in equity. That said, you are right. Several experienced investors have advised to move away, and I will. I am evaluating some single fam homes and will be back for an update.

Thanks again everyone