All Forum Posts by: James Barnes

Back story: Since joining. my plan is to rent my current single family residence out and hopefully make 200$ in cash-flow a month. To do this I would obviously need to purchase another house at a below retail deal, live in it, fix it up, and then do the same to the next residence(rent it). My mind has been focused on finding the right deal within about 30 min of driving distance from my house. I've made a relationship with a realtor and a lender as well in the meantime, already pre approved..yadda yadda yadda.

Here's my dilemma. My mother in law has a property that she is "tired of taking care of", She currently rents the home out and is just fed up with being a landlord. This home is about 2800sq ft, has a two car attached garage and is on a beautiful 6 acres of land. The house is easily worth on the lower end, upper 300's and on the upper end, around 420k. She currently rents the home for 1600(very low IMO) a month with the tenant pretty much taking care of everything besides major appliances(tenant puts up 50% if something breaks).

She is going to offer us the house at close to 50% value with 80k financing from the bank(she still owes 80k on it) and the rest, seller financing(her financing us) at a 1% interest rate.

Her tenants just signed a lease for an additional 2 years.

My question(s): Would you guys advise me to wait the two years to invest in this home?(remember, I am going to be living in this home)

Should I invest in another property in the meantime and get this one as it comes up in 2 years?

I'm afraid that I wont be able to make the deal happen in two years if my money is tied up in another deal somehow or someway.

My wife and I could use the two years to save up for a massive reserve fund(for both properties) for ease of mind in those two years.

I also don't want to wait 2 long years and feel like I'm putting my "goals" on the back burner...

Thoughts?

Thanks

James

Ok, thank you Michael. I am meeting with a lender Saturday at 0900hrs to get pre approved for the next property. I will make sure to get the rates, points, etc.

I appreciate your advice

James

I am looking at purchasing a new home within the next year. This will be my second mortgage. My first is an FHA so this one will more than likely be a conventional with, lets say 20% down. Rates right now are any where from 4%-5% for conventional. I've been trying to run some houses through the calculator but am unsure if I am doing it right.

Would someone with a little time be willing to run a random SFH listing in my area and explain to me what you did and how you came up with the numbers.

I am finding a rough estimate for the property taxes on the actual listing. For the purchase price I am putting in the asking price( is this right that I do that or do I need to do other math to come up with a better number for the report?).

If the house technically needs no work then what do I put in for the ARV? If it looks like it needs work, I just have to estimate based on pictures right? or are you guys using another estimate procedure.

For closing cost I am putting in 5k just covering my behind. I think it's like 2%-5% on the purchasing price correct?

Estimated repair cost is an estimate( I get that). Do you guys just go off of pictures and see what you want updated, then plug in the numbers for the new renovations you want?

I'm unsure what to put in for Origination points. 1-3?(pretty sure this is what it means by points)

What other charges should I calculate from the lender that are pretty standard with any deal?

Should I have a Cap Rate for SFH's?

For Gross Rent I am comparing it with like property's in the area

I'm assuming there will be no other monthly income

I will have my tenants pay for everything. Utilities, HOA etc.

What's a safe vacancy rate to use for SFH's? 2%?

Should I account for income increases. I'm assuming I should just put zero there to be safe.

I'm accounting 2% for repairs and maintenance.

Not putting anything in for capital expenditures or property management.

I'm putting 1% for expenses increase.

Like I said, this will be my second home but I plan on turning this into a rental as well. I want to buy knowing that I'm getting a good deal(rental wise for the future).

Thanks for any and all help. My zip that I'm looking in is 20619, California MD.

Sorry if there is a sticky on this subject but I learn better from real world examples that pertain to my situation.

Thanks again,

James

Two SFH that you turned into rentals? What was the process you used for this? How much is your monthly cash-flow per house? And you lucked into a multi-family dwelling(please pass onto me your lucky rabbit foot lol)

Have you read The ABC's of Real Estate Investing? Seems to me that this would be right up your alley with your goals of owning a duplex or multi-family rental(this book is solely focused on this)

In the book the author Ken says that sometimes you have to take initiative and go find the deals. He says to look for "owner-managed" properties because these have the greatest potential. A lot of the time the properties that are worth owning never make it to the MLS. You have to send letters, go talk to the owners, call them and put your neck out there.

I'm speaking from knowledge I've gained from the book so take my advice with a grain of salt.

Also there was just a post on here where a girl did a letter campaign and got a stunning amount of responses. She says she was overwhelmed so try searching the main forum page for that post. it may help you a bit.

Hope some of this helps a little. I saw your post was getting no love so I decided to put my 2 cents in.

Good luck

James

Hugh

I agree whole-heartedly. Just sharing my experience with my "home inspector that has 20yrs experience".

And a "new wholesaler"? From what I have read, you have to have pretty good connections to start as a wholesaler? Take notes?

Thanks for the clarification Owen.

To sit down at a table and listen to a few of you talk in person would be rather interesting and my brain could possibly explode from all of the knowledge that it would be trying to comprehend. Listening to some of you on here has humbled me and made me realize I still have A LOT to learn. Hopefully I can do business with some of you in the future after I get my feet wet for a couple of 5 or 10 years...

OUCH! What are you meaning when you say $100/door cash flow? $100 per month on each cash flow?

Thanks for the advice

James

PLEASE find a good contractor or a construction company that does it "all". When purchasing my first home, my "home inspector" couldn't tell a door knob from a light switch. I'm obviously exaggerating a bit but he was not knowledgeable at all. Do your research and make sure the person has experience and not just a qualification.

Looks amazing. Let us know the results when it sells!