All Forum Posts by: Amine E.

@Mark Waldrip

Hello Mark,

I actually did look at these condos and made an offer on them. My offer was lower than 30K per unit. I really liked the area. however, this deal did not make any sense to me at 30 K per. The HOA fee is a cash flow killer. I also did not like the fact that the HOA fee was recently lowered from $300 ish to $250. I felt that the owner and HOA president might have done that to get the units sold. There were special assessments done in the past, I would check on those as well. Feel free to reach out to me for more info. I want to be fair to the seller and not disclose more info here.

Thanks

@Zach Fairfield Best of luck on your endeavors. I was in your place three years ago. Today, I have 12 rentals and two flips under my belt. Go live your bream and crush it!

@Jake Thomas This is a good deal. I do not buy based on the 50% rule. If I did, I would have 0 properties right now.  I would refi this house (150K ) at 80%, pay yourself back for the cost of acquisition/ Rehab of 94K and put  26K in reserves. You would still have 20% equity in the deal. If something happens and you need cash, you would have 26K in reserves and in 15 years the house would be yours free and clear.

I like this deal because of the equity capture.   Great win.

@Hersh M. at 20% (38K) down this deal will net $1400 per month or $200 per door

Quick update. Here is what I learned:

• HOA does not have restrictions on number of rentals. Out of the 24 units in three buildings, only 3 are owner occupied. The rest are all investors with 1 or two units each. seller has the majority at 7 units
• Each condo needs additional insurance. Current owner pays $275 per year with state farm
• Taxes are $375 per year per unit
• 3 units are section 8, 3 are private pay and 1 is vacant. Average tenancy is over 3 years per unit.
• Seller used to have 9 units and recently sold two units to the tenants. one for 32K and one for 35K. he wants to sell the rest all together due to health reasons.
• No deferred maintenance to past due HOA dues. HOA has healthy reserves per seller
• One special assessment since 2008
• HOA takes care of water, Heat (gas) and water boilers (one per two units), outside maintenance
• Property management cost $500 per month and handles all paperwork, payments to vendors and collection of dues.

Thanks

@Andreas W. Great stuff. Added your suggestions to my list of questions.

@Scott England This area can support a 5-8% Vacancy rates. Will add to my analysis. Thank you for the input.

@Ben Rasche You make a good point about having current owner raise rents. I might consider that if this deal progresses in a good direction. as far as why the current owner has not raised it already, I m really not sure. But I can tell you that I have 2 SFRs that are rented about $75 below Market rent and I have not raised rent yet because I like the current tenants and I don't want to give them any reason to look elsewhere,. 

@Jeff Copeland. Thanks for the feedback Jeff. If I m able to increase rental rates to $825, My m monthly return would be over 2% which is great for B+ class. My long plan goal if I acquire this deal is to expand my ownership in this community by buying additional units from other owners. Per seller, the HOA has pretty healthy cash reserves at this time and it looks like the buildings have been well taken care of.

 I m preparing a list of additional questions to ask and document to require before I submit my offer. Thanks for the feedback.

@Andreas W. Thank you for the feedback. I see your point about insurance and that's something I will have to investigate further. The fact that the HOA pays for insurance can be a great incentive to attract tenants; thus, lowering vacancy.

When it comes to rents, I know for a fact that those condos could bring in $825. I m not sure why the current owner has them rented lower, but the area and condition of the units can support $825 with tenants paying for electric only.

Hello fellow BP'ers

I m looking at 7 condos in a 24 unit condos community spread over three buildings. The condos are in good share and in great area. I would consider them B+. The current owner have them all leased long term with very low vacancy over the last 10 yrs. He has been the President of the HOA and its been pretty much him and the management company for the last 10 yrs since no one else is interested in the HOA ( He said). Rents are $675-$750 per unit and Market rent can support up to $825 per unit in this area. HOA fees are $250 per unit and pays for insurance, outside buildings maintenance (including roof), Gas and Water. My offer is closer to 190K at this time. Is there a reason I should be Nervous, AM I missing something here?

Thank you

Welcome to BP @Shawn Treat. Flips are a great way to generate quick capital. but

ultimately, IMHO; Buy and Hold is the slow and steady way to financial freedom.