All Forum Posts by: Johnny Hastings

I've been digging on this for a little while, and can't find anything concrete on where to start. 

I have a 12 unit that I bought in a medium state of distress in 2013 that I've since turned around. The place is running very well now, and I've done tens of thousands of dollars worth of capital improvements to improve the outside, the parking lot, the individual units, and the heating infrastructure. 

I paid $420K, and I've had investors come along and offer $625K for it; despite the fact that it isn't even on the market. If I math put it into my valuation spreadsheet, at a cost $792,500 with current incomes: the cap rate is at an 8, and it cash flows $800 per month if a person were to put 20% down and get a 4.5% rate at a 20 year amortization. So there's definitely definitely some room to work with here, considering I owe around $290K.

My question then, is: How do I go about doing a cash out refinance on this?

Should I take it to my local bank that currently has it financed, and see what they'll do for me? 

Should I shop it around to other local banks? 

Is this something I need to seek a mortgage broker on? 

How and where would you start trying to get this done?

Any and all advice is appreciated. 

It would be handy to have a standardized key! I keep a little storage bin in my car that opens on both sides, and has about 20 to 30 little divided sections. I keep all the keys in that, labeled by what they go to. It works well, but it would be so much simpler to have one single key.

I've used the Kwikset Smart Key system on my house, and the house I owned before this. It makes it so that the lock can be rekeyed, without changing it out. They're a little more expensive up front (just a few dollars each), but it'd be a time saver from having to always swap deadbolts. I've been thinking of switching to that system. The only concern I see is that I have to keep track of actual key codes, what key was on what lock, and make sure that no two locks end up the same. Right now I just have 4 or 5 old deadbolts in the back room that I cycle through. 

I'd be interested in hearing how other folks deal with this issue. 

I never really had a formula for this. I took a bit of a guess, and went with it. For my first building (12 unit), I figured out the cost of a new boiler and water heater. It was about $13K. Since that's the only real mechanical components in the building, there's a newer steel roof on the place, and there isn't anything else major that could go wrong; I set aside $15K for it. 

As I bought other properties, I did something similar. I later bought a 2 unit that's in really good shape, and a 3 unit that is in decent shape, but is over 100 years old. I figured furnaces, roof conditions, water heater conditions, and so on. In the end I just decided to set aside $5K per building. So now I have 3 building, and a total of $25K. 

If some kind of worse case scenario struck two properties, I'd be covered. If it struck all three, I may be OK, but I may not. In that case though, I could leverage a few grand easily; so it doesn't seem sensible to tie up much more than the $25K. 

I know a few other investors who don't maintain anything near this amount. To me it seems rather unsafe, but everyone has their own way of doing things I guess.

That can be accomplished with a quitclaim. Do a google search on 'quitclaim deed transfer to llc', and you'll get a bunch of hits. Some of the hits will lead you right back to this forum. 

I'd do it. That said, you could reach out to the seller and ask for permission. If they OK things, then there's no reason not to. 

A good deal to you won't necessarily be the same as a good deal for others. Does it make sense to you?

You don't list the expenses or condition (siding, roof, appliance age, furnace/AC age, dated vs outdated condition of units, etc), neighborhood info, whether tenants pay utilities themselves, or anything else. Without those, I can't tell you if it'd be a good deal for me. 

You're asking the $5,000,000 question! 

Seems to me, there isn't anything you can do to convince them to sell to you. You can introduce yourself, tell them what you're trying to do, explain how it will benefit them, and all that via your letter. Actually convincing them to sell is another story. Make your letter as informative as you can, while being succinct, friendly, and all that. If you have access to a phone number service you could cold call; if you're bold, you could knock on doors. I'd expect to get treated unkindly as often as not. 

You don't mention if you're looking at preforeclosures, or tax lien situations, or any of that. It sounds like that's what you're looking for, but I'm not certain of your intentions. If you're looking at people that aren't in any kind of distressed situation, then I think your odds are slim to none. Normal people in a positive situation aren't looking to sell their house to a potential investor type for less than what it's worth. 

A quick google search turned up this:

http://www.sedgwickcounty.org/treasurer/foreclosur...

Looks like it has all the answers you're looking for. You're never going to make it in real estate if you don't have the hutzpah to figure stuff out on your own!

I've found that text message works best, hands down. There's the occasional time when they've changed their number, but that's my best bet. For something more important, like in this instance, I'd also snail mail a letter. Whenever I mail them anything, I put a copy in their file, with their lease and other documents. That way if there's any question later, I can tell exactly what I've sent them by looking in their folder. 

I did a little digging. The guest's name was: Glenn McCrorey. He was on episode 159 of Kevin's cast. A quick google search turned up that he was also on the BP cast. I can't vouch for the BP cast yet, but the info on Kevin's cast will get you a wealth of info. You can find that at KevinBupp.com.