All Forum Posts by: Heath Ryans

Hey Robert. I host a meetup in Kingsport and we have a multifamily meetup in Johnson City. Both of them are actually this week.

Mine (Tri-Cities Real Estate Investors Group) is at Rush Street Neighborhood Grill in Kingsport Monday at 7

The multifamily meetup (East Tennessee Multifamily) is at Sabores in Johnson City Tuesday at 6:30

Both groups are on MeetUp and Facebook

First, I give you the good ole "consult an attorney" disclaimer, because I'm not one.

Second, here's a few examples

Try to keep Earnest Money Deposit (EMD) as low as possible. I believe it has to be atleast $1. It should include some form of language that specifies that the amount of the EMD is all that you're on the hook for if the deal falls though so you don't owe the seller anything beyond the EMD no matter what happens.

Make sure the contract has an inspection contingency that allows you to get your full EMD back, preferably at any given point in the transaction.

It doesn't make sense to have a financing contingency in it if it's presented as an all cash offer but if that's not the case, absolutely include that.

I specify the fact that my contract is assignable. Probably not necessary but I do anyways. 

I have something in mine that says the seller fully understands everything in the contract and is signing on their own free will or some jazz like that. Pretty much saying they aren't being forced into signing a contract that they don't understand. I promise its in better legalize than my description of it.

That should get you started.

Audrey,

After your clarifications, I'm at 10.4% CoC with 365/m in cashflow.

325,000 purchase price

($32,500)10% down

Water 175/m (thats assuming you dont get to split trash in the future+small allowance for water bill on vacant unit)

Electric 25/m just for carrying electric on a vacant unit

repairs 10%

CapEx 5%

Insurance 175/m

taxes 135/m

Manager 10%

Your company very well may be different, but property managers don't manage for 3%. not on an 8 unit. Not on an 80 unit. typical property management for a deal this size is 10%.

I would say move on then. I don't see enough in the deal.

Private money lenders are people you know that you have built a relationship. You should demonstrate your market knowledge to them. Prove that you know what your doing. Sounds like you already have one deal under your belt as a proof of concept, so that's good.

I've used 2 private lenders so far and it's great. I love that method.

double wides can be tricky because of the debt portion. They can only be financed if the home is on a solid and permanent foundation. Also, they tend to be very hit or miss on resale. Sometimes they move quick, sometimes they'll sit for 6 months. 

If you meant similar properties are only selling for 20-40k total, then no. That's a very bad deal. If you meant that they are selling 20-40k more, than its still not a good deal. 

What is the land worth?

Not 100% sure what your asking. Cap Rates are market dependent. The market, the neighborhood, the street, condition, even the age of property you are looking at will determine cap rate.

If its an off market deal, just ask them. If it's on market, ask the listing agent if they're open to it.

lay out term, interest rate, whether or not a balloon payment exists, when first payment is due, when monthly payments are due, grace period for payment, specify if late fees exist, how note is secured (ie first position loan).

Those are deals that wholesalers have under contract. In a nut shell, they have a property under contract for X amount. If you want to purchase that property, they will assign the purchase contract to you for a fee. You will close the deal normally and pay them at closing.

Always always always recheck their numbers and estimations. I would confidently say that atleast 85% of wholesalers have zero concept of repair costs and market values. Some are great. Most are not.

Also, don't be afraid to negotiate with them.

Finally, make sure they actually have a contract on the deal they are trying to wholesale. Not trying to use your offer as a basis for their negotiations.

Based off what little info you provided and then adding my own estimations, I'm already down to a 9.95% CoC and $350/m in cashflow. And that's assuming other expenses don't exist.

What is the amortization term on the loan?

Balloon Payment?

How much renovation needs to be done to each unit?

Upside in rents?

Any landscaping expenses? (Yard to be mowed?)

Are all utilities separate and direct billed? 

Does the other complex owner want to share Trash expenses with you? Do future owners?

What is the tenant base of the other complex? Will it drive away prime tenants from yours?

What is your allowance for repairs? Is it an older building?

How much are you setting aside for future CapEx?

What is your vacancy reserves?

Are you self managing or hiring a property manager?