All Forum Posts by: Jonathan R McLaughlin

Imagine a job candidate who, when asked about why they wanted the job, talked about the reasons they hate their current job? That person wouldn't be a successful candidate for the position and shouldn't be...you need to be able to step towards something...and give an employer a reason to hire you. 

I believe its the same with any form of entrepreneurship, real estate included. Hate a day job or love a day job...thats just step one; do real estate because you are drawn to it and your skill sets and temperament are a good fit with your chosen niche. Then you are off to the races you want to run.

When I read a variation on the "hate my job and I want passive income" I always think...so what? Now tell me the story of what you want to DO and how you want to do it. Money is received in return for perceived value, what value are you offering in real estate?

And the phrase "passive income" probably does more damage than any other to people entering the profession. Its only passive if you spend a lot of time and thought on it :)

how did this work out, anyway?

@Matthew Paul  Well, if you risked 1M to make 1 dollar I submit that would be too much risk of for the amount of potential gain. If you risked 10cents to make one dollar I'd do it in a second....

Agreed with the spirit, though, and 15K-20K is nothing to sneeze at in my book.

Depends how much you are risking...

your proforma on the calculator said cash needed 7K

@Joshua D.Forgot to ask, do you have a reset and/or balloon on the note?

Jon

Hi Joshua,

OK, light dawns on Marblehead...the bank is loaning you 280K which allows you to pay the purchase price of 245 and plan to sink 35K into rehab, yes? 

I think you are double counting your surplus as I read it. You have a loan of 280K and have to come up with 7K in cash to close the deal that way. Nice.

I'm not sure COC is a particularly relevant metric here since the cash down is so little. But seems to me if the numbers are real you have an all financed deal that cash flows decently at a solid debt ratio. Thats hard to do.

I would suggest modeling 0-1% appreciation, since after rehab your ARV accounts for your initial boost, and its hard to see appreciation continuing that steady climb with those rents etc. I also might add a turnover/refreshing apartments line item. Some of that is likely covered by the 10% management fee but at this rental range a separate line item might be prudent?

And how confident are you in your 306 valuation? Whoever you sell this to will want to make money too....and how feasible do you think more upside is.

Still, that should come out to some nice numbers at 99% or whatever financing. If you are confident in your numbers and like the property I can see it. 

Hi @Joshua D.

I'd be happy to try and be helpful, though take any advice from a stranger on the internet for what its worth :)

To be most helpful, can you send the updated calculator and loan details? Feel free to PM if anything is sensitive and you can share what you feel comfortable with on the forum later. I'm not sure what you mean by "approved" and the 118% COC ROI

You haven't mentioned the certainty/uncertainty of the gas rental guys income and thats a major piece of this.

I wouldn't sell this one at ALL, you put yourself smack in the middle of where the city is going over the next 20 years, bravo. This isn't an appreciation play per se its "path of progress" and you are positive cash flow (after move out) already. I think you have a huge win here. The amount of land thats been quietly bought up for redevelopment in the area is staggering. Some of the players that have made heavy bets on Harvard Square etc. are down here. UMASS Boston is aiming to become a huge destination and residential school...check out the new campus buildings. Congrats

@Russell Holmes yes I think that should be true. It sounded a bit like there was a chance that wouldn't happen (i.e people recommending the sellers just giving him a discount and no records) and as a practical matter I'd hate to have the tenants be looking to be made whole from him and that spilling over to my day to day. 

And who knows if the law in CO has one of those random wrinkles about knowledge of improper handling surviving transfer/superseding estoppels etc. Stranger things have been adjudicated. 

The buyer should be able to combine all the security deposits in one umbrella sec dev account (you can in MA) as long as  the funds are traceable, interest paid etc. No legal advice given. Id be curious to learn what the seller winds up doing here.