All Forum Posts by: Jose Enage

Ross Bernard I find this website quite useful in researching good neighborhoods --- city-data.com. There is always a discussion of which specific areas are good or bad neighborhoods.

Welcome John! Keep getting involved,knowledge and experience will follow.

Welcome Chris! Just dive in and immerse yourself in the wealth of info, resources and talents BP offers.

Hi Sam,

Welcome to the BP community. I used to live in L.A. back in the 80's. (San Fernando Valley - Northridge area) I'm now in B.C.
My game plan is to wholesale (flip contracts) to build capital and go into buy and holds thru multi-family homes. It may not be a bad idea to wholesale multi-family homes in the 2-10 unit range as this niche is not yet widely covered by others.

Brian Gibbons Let's say for arguments/analysis sake, I wholesaled this lease option to a tenant-buyer who had poor credit rating, desperate for a house and desperate to rebuild his credit. The term was let's say 2 years (no rent credits, just break-even) at $900/mo rent but with option to buy. Can the tenant-buyer upon exercise of his option ask the bank for a loan remodification since he is the principal homeowne now? (The seller could not do this as this was his second home and so was denied by the bank)Is there a chance this will happen?

I assume the loan re-modification will probably bring down the value of the house to where the comps were-- $40-50K and at the same time bring his payments much lower. Is this at all possible? Curt Smith

Brian Gibbons I was trying to wrap my mind to the idea of understanding why an underwater property would be a deal in lease options. You ably illustrated it in your rule of thumb of 10% plus note carry to make it work. I will keep that in mind from hereon, same with "my price-his terms" or "his price- my terms" etc.
Added to that, the deal can be theoretically made on the front end but how do you market it on the back end?

Curt Smith Indeed life is short. your statement reminds me of the

PARETO PRINCIPLE: You want to spend 80% of your time on the 20% of deals that will give you 80% of the profits/cash flow. I subjectively knew this deal was a "NEXT" situation, but I had to sharpen my understanding of this so that next time I could sort through the kilos of dust to find the gram of gold Faster.

Brian Gibbons, just a clarification--- the $900 is the total expenses monthly. It includes mortgage, PITI, insurance, HOA & taxes. This is the total expenses. I would think that the monthly rent to the tenant tenant-buyer would be $1150 to $1250. This is for a sandwich lease. The lease is for 5 years.

I guess the other question is, how marketable is this property to a buyer-tenant if it is $80K underwater?

I need inputs of our "lease option specialists" in BP for a deal I am putting forward.
My understanding is you can do this even if the property is underwater. Please advice if it is viable.

There is a balance of $120k on the mortgage. It is a 2/2.5 bath townhouse. Monthly payments are at $900 (mortgage, PITI, insurance, HOA, tax). Rental comps are $675-985. It was vacated last month and rental was at $900. Property recent sale comps are at $50K (last 6 months). Seller is very motivated as he was denied a remodification of the loan by his bank as it is his second home. He is an out of state owner. Short sale is not an option for him as his primary motive is to protect his credit - which he needs for other purposes. He is very open to the idea of lease option.

Is this viable for a sandwich lease or is it better to wholesale this L/O? Any ideas on how to set this up if at all viable?

You can go to Craigslist and look for FSBO (For Sale by Owner) of duplex, triples and quadplex and make offers. This is free. Or you can do a direct mail to multifamily owners. Look to purchase lists ie. Listsource and start a campaign. You have to start "planting" or marketing 4-5 mailouts before you can begin to "harvest" and get real motivated sellers. (sort of like Proverbs 28:19)

Agree with @ned Carey , the price per door is quite pricey. You might want to get some comps as well as rent estimates. If it cash flows, then you are ok. Look up the 50% rule.

http://www.biggerpockets.com/renewsblog/2013/06/14/50-percent-rule/