All Forum Posts by: Jonathan Towell

It depends on the bank. Some banks will do it on Day 1. Some require a "seasoning" period of a few months.

If you do it before the rehab, the appraisal value will be lower than if you did it post-rehab. If you refinance at a much higher appraisal value than when you bought it, you might actually be able to pull out more cash than you originally put in. If you can do that, your cash-on-cash returns will break your calculator. :)

We set up all our multi-family properties to use ratio utility billing (RUBS). This allows you to bill back to tenants the actual utility amounts rather than just a fixed amount. 

If the property is 4 units or less, buy it at a discount to a comp-based appraisal.

If the property is 5 units or more, buy it at a market cap rate based on actual T12 performance, not pro forma.

I hope that helps. I wish you the best.

Hi Mark,

I highly recommend subscribing to the BP podcast. I also recommend buying and carefully studying books written by Gary Keller. My favorite is Hold.

I wish you the best.

It would be good to see a pro forma to provide more specific suggestions, but here are a couple of thoughts.

1. Have you checked to see if the seller will owner finance?

2. Have you checked to see if the seller will do a lease-to-own?

3. Can you take out a HELOC or secure a line of credit some other way?

4. Can you live in it enough to justify it as your primary residence, but have a second home closer to school?

If you bring in an investor, a typical structure might be give the investor 100% of the profits as return of capital. Once capital is returned, you get ~20% of the profits and the investor gets the rest.

In that scenario, you may not get paid for a long time unless you are buying the property at a steep discount. In that case, you could buy the property with 20% down, then do a cash-out refinance a few months later to return the investor's capital more quickly.

I hope that helps. I wish you the best.

You should be able to look that info up at the county tax assessor office. Many counties have this info online.

I'd call your title company and ask them to step you through their fees. Also, the lender will have fees that they can quote for you. Between those two, you should be able to get a solid idea of all the fees.

Disclaimer: I'm not an attorney. :)

1. Protect their interest by aligning incentives. For example, make sure they get paid before you get paid.

2. Raise capital by building trust and having a solid plan.

3. Legal structure will depend on the debt, the investor's desires, and tax issues.

4. How to structure the deal will depend on the returns, the debt, taxes, etc.

5. You should return all the equity plus at least a market return for the asset type.

6. You should network before you have a deal so that you begin building trust and getting your story out there. You need to have a deal in place before you ask for capital.

A few more thoughts:

1. I wouldn't raise $50k from 5 people. I'd raise it from 1. The more investors in a deal, the more complicated it will be.

2. We shoot for 10% cash-on-cash and an exit that will double the investor's capital.

I hope that helps. 

@Benjamin Blackburn

I'm interested to hear how you would use a code violation lead list. Are you looking for folks who aren't caring for the property and are therefore more likely to be in financial distress?

Wild situation. I'm no attorney, but I'll take a risk and share what I think I'd do...

I'd probably put all the valuables in storage for a few months, maybe a year. Then proceed with the house as if the owner were indeed gone for good. After a year, I'd sell the valuables.

If the owner ever returns, I'd sit down with her, talk through the situation face-to-face, and try to find a reasonable way to do right by her.

Just my $.02.

Good luck!

First, spend less than you earn.

Second, I love live-in flips. And, you could probably live for free if you acquired the right triplex or fourplex. Look for an older, retiring investor who owns a property and is ready to give up the property management game. Offer him a fair price for the property if he will seller finance.

To find a guy or gal like this you need to really do a great job of networking. You'll need to buy lunches or coffee and hear their stories. Ask great questions and show genuine interest. This builds trust. You'll also learn a lot. Create a goal to meet with a 3-5 new investors every week.

After you get your property, take every dime and put it back into paying down debt or as down payments on new, bigger properties. Do this while you continue networking. 

Be honest, kind, and humble. Do the right thing.

Rinse and repeat for 10 years and you'll be set for life.

A little more than you asked for, but I had fun getting carried away. :)