All Forum Posts by: Nick Q.

@Edward Lugo They're being held in McAllen right now.

Good point. I'm probably going to try option #2. Thanks for the idea.

How would I even start looking for commercial properties? I know absolutely nothing about this arena. I'll send you a PM with a few questions if you don't mind.

Not that I know of.

The closing of the Sub2 and the sale to the tenant buyer is practically simultaneous since there's a buyer lined up already.

Just a quick reply while I read through the other posts in detail, but these two are still building capital and don't want to tie up money in a deal that for that time period.

And one of the main reasons I'm considering this deal is because I work around 60 hours a week and unfortunately, at this juncture in my career, cannot set aside time to play a more active role in real estate (ie: wholesaling, looking for buyer/tenants, fix & flip).

I'd consider myself a newbie investor looking for somewhat of a more passive role while I learn the ropes. I just don't want to bite off more than I have time to chew.

Thanks! Enjoy your Thanksgiving. :)

Yes, the buyer. Both taxes and insurance for next year will be escrowed at the beginning of the year.

Will do.

The loan is current. I will check into the other factors ASAP.

I've checked comps of properties sold within 1 and 3 miles of that property. The county has the property appraised at $212,000 for tax purposes.

Yes, the buyer is buying it basically as-is.

Something I hadn't thought about yet. Thanks.

I've dealt with rentals in the past for my parents and they're no cup of tea. I would REALLY like to avoid having to deal with tenants and toilets if possible.

Taxes for 2011 which haven't been paid yet and miscellaneous documentation fees.

That is my concern also.

Definitely will get someone to review it.

Based on the replies thus far, I believe the $25,000 includes more than the usual and customary assignment fee and probably includes a "we put this deal together for you and spent some time with you so we're going to get compensated some for that" fee...the mentor fee I mentioned. ;)

I know a handful of folks that have worked with these individuals already and nothing but good information so far. These two guys are also on the board (one is the President) of the local Real Estate club with 30-40 members. I don't think they'll blatantly rip me off, but I personally feel that a $25,000 fee is a little on the high side.

@Jon Holdman: I didn't want the first post to be inundated with numbers, but you're right.

Here are the figures:

Acquire:
- Principal left on mortage: ~$85,000
- Cost to buy: $29,250 ($20,000 to owner of property + $1,500 in light rehab + $5500 + $2,250 closing). There will be a buyer/tenant ready to move in at closing of the sub2.
Assignment fee: $25,000

Sell:
- Owner-financing sales price: $175,000 w/ $20,000 down payment from tenant/buyer.
- Monthly cash flow: $526 (P&I of 155K @ 8.5% $1191 - underlying mortgage $665) x 60 months = $31,560.
- At the end of the 5 year period, the outstanding principal due to me from the buyer/tenant = $147,722.
Total: $31,560 + $147,722 = $179,282

Net:
$179,282 (from balloon payment + P&I payments over 5 years) + $20,000 down payment - $85,000 initial mortgage - $29,250 initial investment - $25,000 assignment fee = ~$60,032.

@Ed O: Thanks, I'll try to find some people and have them look into the numbers to see what they think. And I don't think they're "giving" it to me if their fee is $25,000!

@David Belote: The ~$60,000 in profit is not taking into account any possible appreciation in the property. I've compared comps in the area for rentals and sales and if I were to do around $9,000-12,000 in rehab in the property, I could rent it for $1,800 a month on the conservative side.

Fair warning...I'm a newbie here.

I've been meeting with two individuals in a partnership that have their own real estate investing company.

They're willing to mentor me and help me through deals as I find the time available to shadow them and watch them work.

They've taken time out of their schedule (10-15 hours thus far in the past month) to show me properties in various stages of rehabbing, staging, and have started to show me how to analyze deals.

I've come across a property where I can buy it Sub2 and do an owner financing deal on it. The property requires an initial investment of ~$30,000 with a owner finance price of $175,000. Estimated profits are $60,000 at the end of the 5-year balloon.

They've done all the work including finding the deal and will handle all of the paperwork for the Sub2. They've also found a tenant/buyer and will also handle all the paperwork through to the end.

They've given me the analysis of the deal breakdown and the assignment fee is $25,000 on top of the $30,000 for the deal. Is this fee too steep -- or is it fair?

I'm not trying to be greedy -- just seeing if I'm being taken for a ride.

Thanks.

Thanks for all of the comments.

Let me provide some more information to explain myself in response to everyone:

@Dan Schemerhorn: Given my situation of having a full time job, what would make the most sense to do? From what I've read so far, the "Buy and Hold" strategy would work well. If I can get my girlfriend involved, I wouldn't mind delving into a "Buy and Flip" mode to help finance more acquisitions of property to either hold or flip. Given my limited time, I don't want to develop/follow a strategy that demands more time than I have -- that would just be setting myself up for failure!

@J Day: I have prior experience with partnerships -- some ended well, some not so well. I do believe that if I get my girlfriend involved, I'll have a structure in place to protect both myself and her from any future issues. I'll be sure to share my plan with everyone though, for critiquing!

@Christopher Keivit: Thanks for the idea. I did try to come up with a business plan but the road block I ran into is that I wanted opinions on which real estate investment strategy would be the best use of my time and the resources I have available, hence the post. May be you could shed some light on the issue with regards to what the time commitment to each technique is. I'm not saying I'm trying to make a million bucks without dedicating any time, but rather trying to make the best use of the capital I have.

@Phillip Gainey: Yes, I'm looking forward to my next REI club meeting this week and hope to meet some folks willing to impart some knowledge. With those three things you mentioned: I dare say my level of knowledge at this point is close to 0 compared to many others here on Bigger Pockets; I'm lucky with regards to having some readily available financial resources as well as the potential to generate more capital; Unfortunately, having time, especially during the day, is the biggest factor for me -- with a job like mine, there's simply no time to do anything else from contacting folks to running errands. And we all know most people do their business during the day.

@Chris Clothier: Thanks for the encouragement. I definitely plan to seeking the advice, help, and suggestions of those more knowledgeable than myself. Definitely will be asking a few folks to lunch or coffee to pick their brains -- thanks for the idea.

@Kristina Gaskins: I've been starting to network already -- from friends who are realtors to those who have dabbled in residential and commercial real estate.

@Kyle Koller: Any suggestions for an experienced professional in Texas? I was hoping to put some feelers out there during the REI club meetings to see if anyone'd be interested in mentoring/teaching either myself or my girlfriend and help us start out.

Still open to suggestions and thanks to everyone who has responded so far!

Hi everyone,

I've spent the last two months or so reading these forums to gain some more knowledge of what I plan to get involved with. :D

A little bit of background so you'll understand my situation.

I have around $98,000 in student loans at a measly 2.875% interest rate so I'm paying those over the next 15 years.

I work full time, 8am-5pm Mondays through Thursdays with half day Fridays, which are 8am-1pm.

At the moment, I have around $200K in liquid funds to invest and my job allows me to save another $90K or so yearly if circumstances don't change. Unfortunately, my work schedule doesn't allow me to take or make any calls or run any necessary errands during the day.

I've signed up with a local REI club and have attended a few meetings. My next one will be this coming Thursday. I've been taking my girlfriend and her interest in real estate has grown tremendously.

At this point, I have a general idea of some of the different facets of real estate investment (bird dogging, wholesaling, rehab/flip, buy & hold) but still have much more to learn.

What's the best path to take to learn the ropes as well as get some cash flow to re-invest into other projects? I plan to get my girlfriend heavily involved also. We're hoping to find someone willing to teach/mentor her at the REI club.

Thanks.