All Forum Posts by: Jamie Gruber

Brent Coombs the equity gain is definitely the concern here. As you noted for the amount of work the net gain is very minimal. Thanks for taking the time to respond on this.

Thanks for the reply. To be clear, the mortgages themselves would total $2000 with rents of $6000. When I include insurance and taxes, it becomes $3400.

Update on this and would like some thoughts. Offered $170k for two of the properties. He wants to sell all 4 so he said $395k for all 4. This is about $65k off of his combined asking price. I think he's $20k high so let's assume I can acquire these 4 duplexes for $375k. ARV is around $500k combined and I'm still looking at around $80-$100k in repairs. All units are currently rented for $5850 combined. By my calculations, my PITI payment would be $3400. My plan would be to reinvest all of the cash flow on improving the properties over the next couple of years. This is in upstate NY so this would probably be a cash flow play only with very little if any appreciation other than forced appreciation from repairs. Quality of tenant aside, I'd love to hear from some experienced folks about the idea of investing for cash flow only. I'm either smart to think that the lack of appreciation in this market should make me walk away, or I'm making excuses out of fear on my first potential deal.

Travis Paez thanks for taking the time to outline an example. Very much appreciated. That makes a lot more sense and gets the creative juices flowing! Thank you again. Brent Coombs agreed on the quality of tenants. This is a college town so three of the for would be better served as college rentals. Better income and tenant quality believe it or not! The fourth is probably a section 8 or lower income tenant. So there's some work to do. The loans are separate from what I understand. I'm grouping it all together because I think that's the only way this owner would consider a large reduction on his asking prices. As Travis Paez outlined, there's probably a way to frame an offer that gets both of us what we want. We'll see.

Thanks Travis Paez In the scenarios you outline of two higher dollar options with some form of seller financing, does that rely on the initial purchase being cash? I would need to finance the initial purchase and rehab with private money and then refi with traditional lending after he rehab was complete. With an increased offer to include seller financing, I'm struggling to do the math on how to still cash flow with the addition of seller financing. I'd love to do something creative here and offering options is a great idea. If you can expand at all or provide an example I'd really appreciate it. Thanks again!

Nathan Miller and Michael McDevitt thanks for your advice. I think I just needed to hear that. Don't get too attached, other deals are out there and just offer based on the numbers. I appreciate you both taking the time to read through my post and comment.

I have a potential opportunity to acquire multiple properties from a single seller and wanted to get some advice from folks. This would be my first time attempting this. The properties are 4 duplexes (8 units) that were purchased in 2007 by this owner for about $380,000 combined. One is in really good shape. The rest need work. The repair budget in total would be up to $100,000. I've played around with numbers and believe the debt the owner still has combined is somewhere between $250-$280k. These are all listed on MLS for close to a year by the same agent. The owner lives 4 hours away right now and wants to sell because he has to move out of state completely. There is also one tenant to evict. Between his need to move, the eviction, the state of these properties, and the length of time on the market, I have to believe this seller is motivated. The realtor is frustrated with the seller because he's been difficult to get a hold of. Whoever his property manager is, he's non existent. The tenants are unable to get him or the owner on the phone to take care of issues. One tenant even said a neighbor will just mow the lawn so he doesn't have to look at it being out of control. I'd like to structure something that takes all 4 properties off his hands but at a price that will allow for adequate cash flow and the ability to refinance a short term loan for repair and purchase. The problem is, I'm calculating an offer at $200,000 which is at least $50k below what he owes. Obviously I can make that offer, but I'd love to hear some ideas from more experienced folks out there. There's leverage here given the factors above but I want to get some advice and creative strategies to solve this sellers issues and get a good deal. Thanks in advance for any help!

Thanks Ben. This is in a college town so the initial instinct was student housing. When we found this instead it really made it hard to consider a student rental at that point. Maybe at some point in the future. But I get why seasoned investors always push to buy lower maintenance buildings. 

Hello all - I wanted to get some input on this potential deal, which would be my first. I know some will see the numbers and be tempted to respond, but please read my thoughts before you do.  Some points about me and this property:

- it consists of four 1-bedroom apartments - rented to young professionals

- this is B property in a B neighborhood

- current rents are $2300 ($550x3 and one $650 - the $650 is the newest tenant and the apartments are identical - so it sounds like the rents can be increased in the other 3 upon lease expiration)

- it's listed at $139,900 and has been on the market for about 3 months

- my calculation on this property is based on full asking price and current rents

- The COC ROI is misleading based on the way I did the inputs -- the only cash out of pocket will be closing costs which I've been quoted to be about $7000 out of pocket. The down payment is from a HELOC

- The expenses are below. The $510 decamps to $208 for the HELOC payment, $75 for lawn care/snow removal per month, and $227 monthly in owner paid utilities -quoted by the utility company

- I plan to manage the property, but budgeted for management expense anyway

- Furnace and roof were recently replaced

- Loan terms are 3.75 with 3.125 points (included in the $7k closing costs above per the bank) - 30 year mortgage

- My goal is to buy and hold with an eye on retirement, but of course I'd like to cash flow now. Any cash flow would honestly go toward the HELOC principal right now.

You can see the monthly cash flow as it calculates below.  Not impressive at all.  My thinking, however, is the management fee would be cash flow for now since I plan to self manage, rents will be corrected and increased by $300/month total making for a likely potential of $530 in cash flow.  Talk me in or out of this deal!

Monthly Income: $2,300.00	Monthly Expenses: $2,289.26	Monthly Cashflow: $10.74	Pro Forma Cap Rate: 3.61%
NOI: $5,960.00	Total Cash Needed: $46,753.91	Cash on Cash ROI: 0.28%	Purchase Cap Rate: 4.26%

Total operating expenses:	Mortgage expenses:
Vacancy:	$115.00	Repairs:	$115.00
CapEx:	$230.00	Water & Sewer:	$20.00
Insurance:	$100.00	Management:	$230.00
P&I:	$485.92	Property Taxes:	$483.33
Misc:	$510.00

Thanks for the replies everyone. I learned that the property is under contract with a buyer. But I learned a lot from the posts!!