All Forum Posts by: Jeff Brower

I like SFR's for a few reasons. It is easier to have the tenants do the snow, lawn, and cover all of the utilities. I have a duplex with a shared driveway and lawn. Hard to split the responsibilities. The SFR's are easy to buy and also easy to sell quickly. People tend to treat them more like their home and stay longer. I definitely want to do large multi down the road, but you have to start somewhere so I am going to try to build up a portfolio of SFR's until I can pull equity out to invest in larger deals. They are a good stepping stone for the common man/woman.

solid! way to keep your ears open!

@Michael Kelley Sorry I don't recall the thread, it was a long time ago. Check out my post on page 5 with my template and 10 tips for writing a letter to owners. It was $50 in materials and 4 hours of time to do it, well worth it.

I have had some inquiries on the format of letter that I used to make contact with owners of multifamily properties that I found on the auditors site. Below is a snapshot of my letter with a couple of items omitted. If you are not a real estate agent, this is not a problem! Just omit any mention of that point, but you can still mention that the seller would save $ vs listing on the market because you would be dealing direct and can essentially bypass agents (if they desire, or say you have no problem if they want to be represented for safety, they key is making them comfortable). I sent out a letter to 3/4 unit owners prior to this letter which was aimed just at duplexes. Since I didn't get any good leads from my first letter on 3/4 unit properties, I lowered my search down to 2 unit properties.

TIPS:

1. Mention you are not looking to buy and sell aka flip. Mention you want to hold it for a long time. Let them know where you found their contact information so they are not angry that their address may be out for who-knows-who to find. They will feel better knowing exactly how you were able to reach them.

2. Let them know that you filtered down a big list and still are interested in their property, this lets them know that you are seriously interested and aren't sending out thousands of letters looking to snag something at a low price.

3. Tell them you will pay a fair value, nobody wants someone who is going to lowball them.

4. Be personable, let them know what you do, that you are local, etc. You are local and not an 'out of state investor shark', this is to your advantage. Make this known.

5. At the end (if they are not interested) ask them to keep your business card or contact info in their junk drawer, you never know in 5-20 years from now if they will pull out your info and call.

6. Ask them (if they are not interested), if they know anybody else with a multifamily who is looking to sell. Generally folks who own 2-4 unit properties know others who do as well.

7. I said this before but will mention again, hand address these for a better open rate. You can print the letter and the return address sticky label, but hand print the to address. Also sign each letter in ink at the bottom near your salutation.

8. Give them multiple ways to contact you, and let them know they can do it at their convenience. Email, call, or text. I would rather text someone than call, this may make them more likely to contact you.

9. If you have your license, let them know that you will be using all official broker forms. This puts people at ease. If you are not an agent, work with a lawyer to draft documents if needed and let the seller know this. This step lets the potential seller know that you are not going to try to pull anything fast on them. It makes them more comfortable.

10. Let them know that you are trying to build a positive financial future for yourself and/or your family via rental property. Many of these folks were in the same shoes in the past, and people like to help others who are vulnerable enough to mention they are new and getting started. They will be more willing to talk if they see a past version of themselves within you. This is a step that is genuine and true but many people don't want to make themselves look like a newbie. Turn it around and use it to your advantage because this is the truth.

Hope this helps!

@George Herrera Many people fall into a trap thinking that total rent minus your monthly payment is your monthly cash flow. You must include some factors for other items that will cost you money in the real world. Furnaces break, roofs leak, tenants move out, etc. Adding in commonly used expense percentages helps to paint the real picture. If you search on these forums you will see more on averages that people use. The BP rental property calculator available on here also has inputs for these various expenses. Better to account for real future expenses that are bound to happen than to put on blinders and end up not being able to make payments. 

Some additional pictures showing the exterior and interior condition of the currently rented unit. 

@Bill Goodland No problem doing an FHA loan without an agent.

@Mila Tokmakova You are correct that PMI stays with the life of the FHA loan. But if you are refinancing out of the FHA loan into a conventional loan then you wont have to pay the PMI anymore. It is a replacement of the first loan. Pre-2012 the PMI would automatically drop off at 20% equity with an FHA loan, but like you said, they changed it to remain for the life of the FHA loan which is unfortunate.

@Bill Goodland I once tried buying a list, it was a disaster as my parameters were off. I believe it was listsource. I wasted $70 and did nothing with the results. This method on the auditors site was simple, free, and the data was exact. I scrubbed the list down by viewing all potential properties on google maps and streetview. The 60 that I mailed were places that I was willing to live. It probably started with 120 that I narrowed down. 

For those who do not have an online auditors site, you can also have a real estate agent run you a report of all multifamily sales over the past 25 years. You can use that as a start and research from there. 

@John G Sarley You sir are an inspiration. I would definitely like to scale up like you did. I work in Richmond Heights at the county airport, even closer to Euclid. Great to hear your story in a nutshell and have something to aspire too. Thank you!

@Gilbert Polendo You can only have one FHA loan at a time, so you cannot do a second unless you refinance out of the FHA loan on your first property. To do this, however, you will have had to accumulate over 20% equity that is normally required for conventional loans. If you find a great deal or a fixer upper to buy and move into with FHA for a year you may be able to refinance out of it after the first year and do it again. One caveat is that most homes need to be in a decently habitable condition in order to qualify for FHA, so extreme fixer uppers may not even qualify.