All Forum Posts by: Jon Sheffield

Hello all,

I've been looking at this fourplex that has an out of state owner and looks distressed. Looking at the deed I came across a couple of interesting things unpaid taxes etc. I also came across a portion where a bank was recorded as the appointment substitute trustee. Through my research it says that when a bank is assigned as a substitute trustee the property is about to go through foreclosure. If this is true can you contact the bank to possibly workout a purchase agreement with the bank. Are there any possible regulations against this? This is within Washington, D.C. and I understand everywhere is different bust just wanted to know has anyone done something close to this. I have sent a letter to the owner and not sure if they want to sell and of course as of right now it's not listed anywhere. Thanks in advance for your help.

@Ade Tuyo 

I would say start with yourself ask yourself why do you want to fo this? Which seems like you said you want cash flow to quit your job. So now how do you plan on accomplishing that. Do you want to roll up your sleeves rehabbing house constantly or do you want passive income. 

Next or at the same time there is a free beginners guide here on BP that breaks down multiple areas of real estate that can help narrow your focus. I highly recommend it as well as the low or no money down, but I would read the beginners guide first since your not sure what exactly you want to do.

There's a lot of information on BP read some of the blogs, come to the forums daily, then WRITE down what you want to do and do it.

And I would suggest going to meet up.com and finding some local RE clubs. Lay your foundation get some knowledge then start making deals. Good luck

@Mason V.  

It all depends on what you are trying to do as well if you getting pre-qualified for just one property it will be fairly standard when you meet with them. I am currently getting pre-qualified for an FHA loan the loan officer asked me for were:

1.) Online application to review credit report

2)Most recent 3 paystubs.

3)2011, 2012, and 2013 W2’s, 1099’s, and/or K-1’s.

4)2011. 2012 and 2013 Federal Tax Returns (all pages/all schedules).

5)Most recent 60 days (Nov/Dec) Bank Statements for all your assets (checking, savings, retirement, ect.).

6)Copy of your driver’s license. 

I think that is fairly standard there might be some other things but having that with you will get you started.

So far as the portfolio loan I don't have much experience with that, although I believe the loan is less about you and more about the expected performance of the property. So a big part of obtaining the loan including the standard documentation I'm sure you will need to have a nice packet of information documenting location, home price, rents in the area, prospective repairs after purchase etc. But you can always just can call ask what they need for a pre-qualification no shame in that.    

Welcome @James Johnson 

There is a lot of information, motivating stories, and great people on here. I live in north east DC and understand how it feels to start in this area it can be overwhelming especially when you talk about home prices. But don't let it deter. I'm not sure exactly what you are looking to do but a tip I can give you which I'm not sure will help D.C. right now has some excellent first time home buyers programs that go along with FHA first time home buyers programs. These included D.C. opens doors, HPAP and some more check this link out: First Time Home Buyers Program unfortunately they only work in D.C. but it can't hurt to check them out. Also I find that reading the forum on a daily basis really helps and listening to the podcast, I would suggest podcast 66 Michael blank just because he's in this area and talks about raising money. But dive in and have fun!

@Dana R. First I must say either way you could have run into this problem whether direct deposit or not. Ultimately it depends on what you have specifically in your lease, how far you want to take it and the relationship with the tenant. Personally if in your lease you have a provision up upgrades that are made are at the tenants expense, I would review this with the tenant and explain that payment needs to be made in full. Me personally I wouldn't want to get in the habit of tenants renovating for concessions for many of reasons. I do have a question did the tenant present this problem to you or your  PM prior to the replacement? Again some may say start the notice/eviction process, especially if you didn't talk about it before they made the repair by themselves.  I'm sure more will have a better straight forward answer soon. Good luck

@Terri McColl Thanks I just used the app and it gave me a starting value, I compared the square footage with the buildings on that block which are all four plexes and they average around 550k and $176 per sq ft. Thank you it's helped my evaluation a lot. 

@Elizabeth Colegrove your always on point I have read a couple of your post, I knew not to trust any of those estimates. 

@Kevin Page Yes you have to love bp and your right I now have multiple ways to find a decent price and will be more confident come negotiation time thank you both.

@Kevin Page Thank you that's good information to know, I was really confused because beyond zillow the estimates of what the property was worth went from 500k to 1.5mil. I will do more research and thank you again for your response it has helped a great deal. 

I have multiple questions but first I am going to give you the information that I have. I live in washington, d.c. and I am looking at a four plex that I saw today in DC while driving. It looked distressed plywood over the windows, grassed uncut, all good signs of a possible motivated seller and good negotiations. I immediately typed in the address in google and zillow gave me the last sold price of $561,500 in 2006. I then went to the tax assessors site for D.C. and the assessment is at $384,500 I also discovered an added bonus of an out of state owner with the deed filled in august 2014. I am going to do more digging to find out more, but my first question is in doing my evaluation since a four plex is still viewed as residential property can I still compare it to the comps in the area which goes from 300k-500k. My second question is can the tax appraisal price be used to dictate what's considered high or low price for a property. I know this is more of an area specific question and will vary, but in doing your do dillegence do you use the tax appraisal in determining purchase price?  

@Account Closed I know that you list the rent based on the square footage for example 100sq ft place @ $1sq ft will equal $100 a month. So you set the price based on what you need to cover your cost, and that becomes important. The reason being is everything else that would come with your due dillegence such as location and what's currently in the space. Unlike homes, commercial  buildings could be very specific and have special equipment etc, where as a three bedroom house you pretty much know what your getting. But when you say x amount of commercial space the current setup and what's already in there can dictate the price per sq ft. Location will dictate a lot as well on what type of business you can attract, busy street maybe a retail establishment, a more secluded area maybe market as a business office. I think what you should do is go to other establishments ask them what they are paying what's included what's not etc. Also a commercial agent or broker should get you close to the correct numbers. Think about it this way: 1. if a business were to setup there what kind of business would it be, 2. then is there a demand for that business in that area. That's my suggestion you could also talk to business owners in the area see if they are trying to expand as a potential candidate. My honest opinion if this is your first deal and the basic numbers aren't producing a positive cash flow with just the two tenants and no tenant for the commercial area move to another property.  That's just my opinion, Do you think the deal will cash flow with the way the building is now?