All Forum Posts by: Kyle Knapton

They are divorced and this property is the only thing that they have in common. Their insurance is going to cancel because of the condition of the property. They both want out and have had it on the market for a couple of years.

With a 10%cap rate it is worth about $150,000. It needs $50,000 worth of improvements. I see the FMV as $100,000.

I have used my own money up to this point for investing. After reading Brandon's Book on No and Low money down investing I want to change my strategy.

I am looking for some ideas how to approach this deal. The property has good bones but needs some work.

 They haven't done any capital improvements over the 10 years they have owned it so I will verify the numbers with my contractors prior to purchase. Looking at an immediate $50,000 rehab then a spruce up for each apartment with tenant turnover.

The rents are easily $125.00 - $200.00 below market value.

They are about halfway through their 20 year mortgage and owe around $115,000. I would need to get it for $100,000.

My thought is to offer a lease option to purchase within 3 years. Over the first year, I could do all the work needed and then they would owe around $100,000 so they wouldn't have to take a hit.

Then I could get a loan for the 70% of the value.

The ARV would be $225,000 - $250,000 depending on the cap rate they would use. This would give me a 20% equity stake after the new mortgage and only have 10% skin in the game.

Is this possible or maybe their is a better way to go? Maybe make an offer where they need to come to the table with some money and I use hard money for the purchase?

I look forward to hearing from you.

Thanks,

Kyle

I appreciate your recommendations. I will keep calling around to try and find a portfolio lender.

First time asking a question on here. I found bigger pockets after I purchased my first SFR to start my buy and hold strategy.

Everything is going great with the property and it makes good money. I paid all cash for it less than a year ago thinking I would have no issue refinancing to cash out and find my second investment. However that is not the case.

It seems banks are unwilling to count the rental income in my debt to income ratio. This is putting me above their underwriting guidelines. Any suggestions other than sit and wait? I have spoken with national banks, local banks, and mortgage brokers.

As a side note, I beleive the property taxes in my state are the highest in the country but the rents are high as well.

To go along with the fact I am having trouble refinancing, one broker mentioned not listing many write offs in my taxes because they will be looking at the adjusted rental income and not the gross. I spent a lot of money fixing the place up so I would be able to show a fat loss on my taxes. Would they not take this into consideration?

Any suggestions would be much appreciated!