All Forum Posts by: Jeff Petsche

@Kurt Pauley Thank you for the comment. I totally agree and yes I have been making contacts with several agents and hard money lenders in the markets I'm researching. Being a Keller Williams agent/Broker here in CA, it's easy to pick up the phone and call any KW agent across the country and get them to respond. The challenge is finding the ones who are willing to 'work' at finding off market properties that meet my criteria. So far, a few of the agents who I started making conversation with don't seem to be taking me serious and are flaking on getting back to me, so they have now missed an opportunity to earn my business because I/we are ready to go.

My goal and criteria: Purchase SFRs or duplexes in emerging markets that are add value properties in B+ to C neighborhoods with a good school district. On the SFR I am looking for 3 bed/1 bath or 3 bed/2 bath that need deferred maintenance. Light REHAB on the property, identify a PM company to market the property for a renter, hit the 1% rule based on ARV and then REFI with a local bank (no seasoning if possible). Ideal price points would be ARV between $120K to $150K (maybe a bit more for the duplexes) and determine acquisition price based on condition of home and motivation of seller.

I have not investigated the Minneapolis market, so not sure if this is even possible???? How and what are you investing in in the Omaha market?

@Jonathan Park As a real estate professional of over 14 years, and I have a saying with my buyer's: "Communicate So We Can Negotiate" Meaning: If you don't make an offer, you will never get into negotiations with the seller. I preach this to my buyer clients all the time and it gets them off the fence of over thinking their decision.

Figure out the price that works for YOU, contact the listing agent, communicate your situation to them like @Bob Razler mentioned, verbally give them your price and if the agent thinks it's worth offering then have the listing agent write it up (unless you are using another agent to represent you). Too many people forget that it's OKAY to verbally get into conversations before you actually write up the paperwork. It never hurts to start that dialogue.

Also, look at other terms/conditions that might sweeten the deal, even if the price is well below asking. There are other ways to strengthen an offer beyond price.

Key: Try and determine the need of the seller, the motivation and work off of that if you can solve their problem.

I just submitted an offer for my buyer on an REO listing that I thought we would never have a chance of getting, but to my surprise the agent called today and said the bank accepted our offer and it was $40K below the comps. So, you never know if you don't ask.

Also, you're investing, so take the emotional element out of the deal. You want to be respectful and professional in your negotiations, but you're not here to make friends either. It's business and I WILL NOT do a deal that doesn't make sense just because I'm worried that I might "insult" the agent or the seller.

Good luck and go get em.

@Ben Wilkins Thank you for your insight Ben. Much appreciated and got to love the investment game where nothing is really so black and white.

Hello BP Family

In order to get a better understanding of analyzing buy-hold deals (SFR and Mult-Family), I am going into the MLS and looking up CLOSED properties and running the numbers that were provided by the listing agent(s). NOW, I understand that there is A LOT more due diligence that would need to be considered to get a true picture of the deal, but I am noticing that the average expenses outlined in the MLS is between 42-44% of GSI.

So my question: If you use the 50/50 rule, would this cover CAP EX?

I know some investors who add $250/door for CAP EX and calculate 40% for other expenses, which includes 10% for vacancy, taxes, insurance, repairs/maintenance, property management (NOT Debt Services).

IF they don't separate out CAP EX per door, they use the 50% expense rule.

Thoughts?  

@Nichole Ovens I ran the 4-plex numbers through an analyzer software I use and even with being  conservative at the 50/50 rule (includes 10% vacancy) AND debt services with a 80/20 loan (5.5% interest rate, 3% closing costs, 1% loan points and 30 year amortization), you still have a CAP RATE of 9%, Debt Coverage Ratio at 1.65, Cash-on-Cash of 15.2% and return on Gross Equity of 17.7% Total initial investment cost: $35,700.  

Based solely on running rough numbers from what you provided, I'd lock up the property and move forward with more due diligence. Verify the rents (are they at market or under performing), what utilities are paid for by landlord or tenant, are there any service contracts in place and if so, what are the terms (can you renegotiate this expense), any other income opportunities (storage, laundry, vending machine), is this an add value property, etc.

If you don't want to move forward, I would be interested in digging deeper, so feel free to PM me the sellers information. hahahaha 

@Lesley Resnick Thank you for your comment and I am NOT wanting to be in the landlord business. I will hire a solid PM company to manage the tenants and I will manage the PM company and the asset.

Jacksonville is a market I'm considering, but keep getting mixed reviews about the market as a whole, the high cost of Hurricane/Flood insurance, etc.

Maybe we can connect and you can give me your take?

I will put your contact information in my phone and reach out to you later today or tomorrow.

@Adam Widdicombe Thank you for your comment. Care to share what TK provider you have used and what part of KC did you purchase?

I'm not sure I'll go the TK route because I am in real estate full-time and have no problem being an active investor, travel to markets, etc. This is my full-time business both with retail in my local market and the investing side.

@Tom Ott Thank you for your comment Tom. I see you have your information at the bottom of your post, so if it's okay I'll be reaching out to you with a few questions about your TK operation if you don't mind.

@Steven Gillmer Thank you for your comment. Did you use a TK provider when buying your properties? Most of the passive investors I know do exactly what you are describing, which is they are involved with a job they love and don't want to be an active investor OR they just don't want to be hands on from a distance, so they go the TK route.

@Ritch Bonisa Thank you for the comment Ritch and I'll be taking you up on reaching out to you. I see you have your contact information at the bottom of your posting, so I'll be calling you.