All Forum Posts by: Gilbert Dominguez

The mid west and eastern sub burbs seem to be holding well for both fix and flips and rental(cash flow properties). Bigger city centers maybe not so as those places are the most desirable by owner occupants not investors and you will find very high priced properties there where it will not make sense from an investment point of view for the most part. However if you have deep pockets then you may find good deals in ground ups, value adds, and large multi family residential properties like apartment buildings. If you are really looking at purchasing under market, off market, distressed properties and pre foreclosures you might look into buying discounted non performing notes. However you might want to prepare yourself for a big eviction and foreclosure effort with the properties you can purchase through heavily discounted non-performing notes. 

Also do not underestimate your seller simply because they appear to be doing family business only. They may be very sharp without you thinking it. 

I cannot tell you exactly how to go about it but one thing I have used in the past is to put the requirements as asked of me by my lender and insurance company. 

Example:

Joe first I want you to know that I am serious about buying your property. You asked me how much I can offer you for it. Well I will need to finance the property and also insure it and my finance or mortgage company asked me to get the following;

. rent rolls

. Maintenance records

. Number of units currently rented

. Number of vacancies

. rental history

 etc. etc. 

Joe ! would you mind too much helping me put all this together so I can make a determination with my bank, mortgage company , insurance company etc. about how much we can offer you for the property?

I will need to do a walk through with a contractor that I use for maintenance and needed repairs. Would you mind allowing me to do that?

Usually with family owners you might try to make it a more personal thing. Ask permission rather than make demands. 

I have looked for months and months and found nothing that would work on the North Side. The North Side is one or Chicago's better neighborhoods where property values will be some of the highest around. It would be nice to afford a 4 flex there but the thing is to find something that will cash flow, nearly impossible I would say. The north side would not be a place I would look at for now. Maybe the West, North West even near South. You should find something in those areas that will cash flow nicely. Looking in the North Side is like looking for a needle in a hay stack. However if you have the patience and willing to wait for that one deal then by all means. The North Side is for folks who really want and can afford to live there or will invest for asset protection but cash flow? No. 

If you really are looking for cash flow in the North Side there are some affordable apartment buildings not a 4 flex and they have all one bedrooms which you can convert into 2 bedroom units or 3 bedroom units as I have found many that are oversized and will allow a nice conversion. That's about if for what I have found on the North Side. Prices there compare to the San Francisco Bay Area with many in the million dollar range or over. Again its not a place for cash flow. 

I would do my best to evaluate the property same as any other commercial property of the same type. You might ask to see the rent roll, the maintenance records and ask to be allow to have a look at the systems, HVAC, electrical and plumbing. Ask about any recent or past major repairs. Once you can ascertain the rental income as how long each unit has had its present tenant. This may give you an idea as to how well you can count on the current rents coming in and totaling any figure you might use to valuate the property. 

Be prepared if the family owners are not aware of how this kind of property is valuated. 

Have a figure in the back of your head as to what you can afford, how you will determine your Maximum allowable Offer. Remember for you it will be an investment and you are not emotionally tied to the building. 

You can work your way around to asking to have the property appraised. 

If you are not really versed in determining system conditions then ask to be allowed to have a GC accompany you on a walk through. 

Do not offer to buy what you do not understand, that is first. If you can work your way to fully understanding what you might be buying then offer to buy it for the right reasons at what will be the right price for you. Do not romanticize about owning a 30 unit building because in the end its only business or should be. 

You lucked out !!!

Buying a house without ever seeing it in person can be risky business. I am glad things did not turn out that bad for you. Good thing your dad was near by to lend a hand this time. 

I always recommend to those that purchase or consider purchasing a house our of their area to go do things in person, see the property and due all your due diligence boots on the ground for the very reason that you need to know what you are buying before you get committed to it. Great the house did was not a very expensive property in the first place. It should cash flow for you nicely, I hope it does. 

I would say take it easy on yourself. You still did good in getting the property. Independent of the property was the untimely problem you had with the existing tenants and you are well to be rid of them. 

Its just something you needed to learn about buying properties with existing tenants but hopefully this will not repeat. Its all part of being a landlord and when you decide to be a landlord you are exposing yourself to having such experiences with tenants and the mess they leave behind not to mention they not paying their rent. 

Apply your lessons learned to your method of selecting your tenants so that hopefully you can avoid getting bad tenants in your units. You got through it so congratulations !! 

The first thing I would recommend is that you continue to save until you have $20K. Then you can look around for a 4 plex thinking you will use a 203K loan which will provide you money to purchase and fix up a place. I am thinking you will want to buy something under market cost so you can work on it and gain some sweat equity in the place. 

However before you do anything carefully consider how much you can afford to pay each month for a loan. Better if you can afford to pay a loan all on your own but you can also consider that if you buy a 4 plex you can use the rents to help you pay for you loan. 

You would analyze a property so that you are sure it will cash flow meaning if will leave you a net profit after all your expenses such as your monthly mortgage payment, insurance , PMI, and maintenance costs. If you will use a property manager then add that cost in your determination of net profit as well.

Do not be a afraid to actually calculate what all of your expenses will be and to determine your net profit or cash flow as we call it. 

I would not spend every penny you have saved up on your very first deal. Always try to keep or build up a cash reserve. Do not stretch yourself thin when it comes to finances. 

It was suggested you might partner up with someone and I think that is a good idea although partnership can be difficult in and of themselves still there is safety in numbers. 

I know its not the same as owning a piece of property but you might consider investing your money with far more experienced people maybe doing a fix and flip. Get as involved in that process as you can so you learn how these construction projects go and what all is involved including observing what can go wrong. 

Its sorry to see that allot of people get in over their head right from the start and then it becomes increasingly difficult to be a real estate invest and enjoy it. 

I always recommend to people that if they have 10 dollars they spend 3 working to earn the next 2 dollars because if you spend all you have and things do not work out well for you then you expose yourself to a hard experience. 

Yes wholesaling is one thing you can do but its not fee either and you have to work very very hard at it. Its allot harder to succeed at wholesaling than allot of people think and to be effective you do have to spend money for marketing materials and your marketing system in general . It takes time to break into the industry no matter what your strategy is. 

Some get lucky but do not count on luck just work hard at it and in time you will develop your business. I am simply saying all this to give you things to think about and consider. Its not my place to tell you do this or that or do not do this or that. I am just watching out for you in my own way for a distance. 

Before you ever rented any property you should have familiarized yourself with Landlord.Tenant laws there in your state and or area. Look them up and I am sure you will find out what is the right and legal process you should follow. 

If the building is on the market real estate agents are usually all too eager to tell you that a building is in good condition an tell you all the nice and wonderful things about the building . However when you see " AS IS" on a listing it will usually means there are issues with the building that need to be addressed such as repairs, system replacements such as needing a new HVAC unit, Electrical work, leaking water heaters, roof is leaking, etc, etc. 

I would first visit the building with a general contractor to get an idea of what you may need to spend in order to bring the building back up to a good living condition. It might mean a considerable amount of money and time required but whatever that requirement is you need to add that to your cost of the building along with the purchase price, closing costs, holding cost, insurance, taxes etc. Add all these things up will give you a more true idea about the real cost of getting into the building as compared to the cost of financing only.