All Forum Posts by: James Rodgers

Well everyone, I got beat out by a cash buyer. Super bummed. I have learned a lot, though, and can see that commercial is not, in fact, that far away. I will be more open-minded toward straight up buying a commercial MFR from now on.

Any tips as to how I can move quicker, and maybe entice a seller to pick my offer over a cash buyer? Thanks, everyone, for your input. 

James

@Clint E. I do not know for sure. I will clarify that, thank you.

@William Jackson That is SO good to hear! Obviously it will cash flow well, but that's exactly what I want to hear about the neighborhood. Come visit sometime! :) 

I heard on a BP podcast an investor who gave tenants 3 options: 

a) let your unit be upgraded and pay the new rental price 

b) Keep your unit the way it is and pay the new rental price

c) leave

Thinking about applying this approach extremely respectfully after a year or so. 

@Bryan L. so what will be different about my financing other than the down payment being larger? I came up with that debt service number with your typical amortization equation on 30 years and 5% interest.

@Sam Shueh yes, Birmingham Southern College. I believe none of the tenants are actually college students, but I figured that would be a great plus, college student tenant market.

@Dan Genzel I wanted to get there, I just didn't think on my first deal! I have actually been reading that the city will be investing on this side of town in coming years, Birmingham Southern has some big changes planned itself. That is one thing that gives me caution, however, it is probably one of the areas of Birmingham I am least familiar with. 

Hi everyone, 

I am really excited about this property. It popped up on my Trulia feed, I called for information, and the owner, who is also the listing agent, called me back this afternoon. It seems like a great deal. I have been looking for a 2-4 unit MFR to owner-occupy, but I think I will just do a conventional loan on this one and not live in it. I have been learning about residential investing and wasn't planning on going commercial yet, so I'm asking for input as to what I might be missing, with it being "commercial," with it being my first deal... What should I be on the lookout for that could explain why this is such a good deal??

The property is 7 1/1 units close to Birmingham Southern College in Birmingham, AL. I am not too familiar with this particular neighborhood, but I would say it is a C- area. From my conversation with the owner today, each unit is occupied at $350/mo. The tenants have been there "some for 15 years," and "won't be looking to leave." They furnish all appliances and pay all utilities themselves. There is central heating, and cooling (not sure about cooling). It is a long, one-story building with off-street parking. I don't know about washer/dryer hookups, but I don't think there are any. 

It is listed at $100,000 and the price is firm. The owner said she is selling to finance a larger, 100-unit deal, and isn't open to carrying the note. 

Here's my analysis: 

INCOME:

7 units x $350 = $2450/mo

EXPENSES:

Mortage = $403/mo ($75k at 5% for 30 years)

Taxes = $90/mo

Insurance = $75/mo ???

Repairs & Maint. = $245/mo (8% of total rent)

CapX = $250/mo ??? (kinda educated guess)

PM = $245/mo (paying this to myself)

Vacancy = $123/mo (5% total rent)

Total Expenses = $1431/mo

Monthly Cash Flow = $1019

One last question I have, if it does look like a good deal to you: how do I go about raising rents/updating the property/modifying the contract terms if need be? She said they pay cash every month. I want to maximize this property's potential, and also manage it extremely efficiently, so I would think that I'll probably want to update the system they are used to, and maybe at some point improve the building to whatever extent. 

Thanks so much in advance, everyone! I love BP and and so thankful to have found it. 

James

@Andrew Postell  I'm looking to do exactly what Lucas did with his first property. I only have about $1,000 cash and am stretched to be able to save a large amount quickly. Would the 203k or the Homestyle Mortgage be more advantageous to me?

@Lucas Hammer well done on your house hack! I don't want to hijack your post, if you want I can move elsewhere.

James

@PattiRobertson How do I get the name to hyperlink?

@Patti Robertson Do you have experience with those two loans? I have been considering the Homestyle Renovation Mortgage, but I am actually planning on owner-occupying a MFR. If that is the case, would you say that 203K would be more beneficial? Pros and cons of each compared to each other?

@Paul Wakim to me your concerns about timing seem legitimate, although I am a newbie myself. Do you have any ideal if the owner has the property free and clear and would be interested in seller financing?

James

I appreciated that you directly profited from staging... Where did you sell the furniture? 

Awesome post.