All Forum Posts by: Wilson Lee

My husband and I are in the greater Birmingham market.  We found this property and are preparing to make an offer.  The listing agent is sending us rent rolls and all other documents they have right now.  We have asked the owners if they would owner finance and they said yes depending on the terms.  What offer should I make them? What risk am I not seeing? Will this make my family money? 

Property

54 Worthington Dr # 15, Woodstock, AL 35188 <-  Link to Redfin

4 2bed/1bath for 524 and 1bed/1bath for 485. 

Concerns

The 5plex property is located 20 minuets away from any shopping or dinning.  It is rural. there is a farms and national parks on the same road.  It seems to be the only rental property in the area.  I drove around and could not find a for rent sign.  Online I can't find any past rent postings for nearby homes on Craigslist, Hot Pads and others.  

2 units are vacant, We could move in to one if we wished.

"The" Numbers

Annual Gross Rent are 31020. Asking Price of 185000. Down payment 17500  

What should I offer?  Below are cost if I pay 185,000 for it.  I get about $105 per door.  My estimates are very high on expenses.  There are no comps.

Expenses

Monthly PITI payment $1078.28 This is derived from a 360 month term at 4.5% interest. Property Tax of $1348. Insurance of $1350 this is a blind estimate quote pending. Wells Fargo has per-approved us at 4.275% interest last month.

Maintenance 4000 annual. estimated as 2% +500,  I feel this is a high estimate. 

Vacancy rates are unknown in the area and are estimated at 8% annual for $2481.60

Property Management for the future, if we ever need it, is $2853.84 annual

Repairs and CapEx

The duplex has a new roof put on 7 years ago and looks good.  The triplex's roof is 31 years old and has been repaired over the years. Currently there are 4 10x10 feet areas that need roof patching.   the floors in 2 units need new carpet and paint now.  The HVAC are 2 tons for each unit and are less than 7 years old.   5 4x8 patches of dry wall need to replaced.   3 water heaters are less than 4 years old, 2 are about 8 years old. The stoves, fridge and dishwashers are all about 5 years old.  No pluming issues are seen.

Data is form a onsite inspection last week.  I report on damages on ROE to banks for a living.

Schools

The school scores 6/10 on GreatSchools.org compared to the lower scoring neighboring areas 2/10 and 4/10.

Thank you Steve that makes sense.  

Hi bill

Please recognize rental  income deposited in to a bank account is not the same as security deposits. 

It is completely up to the investor if deprecation is claimed against income and dose not constitute mortgage fraud.

The question is what different proofs of income can an investor use.

When is it correct to maximize rental income reported on our SCHEDULE E (Form 1040) for additional mortgage qualifications?

For example, an investor already has a few preforming rentals purchased last year. Now that investor is depending on the income form the rentals to offset his debit to income ratio. Must this investor skip out on tax breaks, such as deprecation, in order to prove his income to the lending institution? Further more, would only bank statements, showing rental deposits and expenses, stand as proof of income? Even when the investors tax documents show a smaller annual profit. 


Thank you all

Lee

Yea sorry,  My post was not very clear.  I would really like an edit button.

 Alex,  we don't know what he has lead the homeowners to believe.  He may or may not have explained to the homeowners his desire to exit the deal.

There is no need to demonize a class of professionals many of whom are the only ones that can help out a given seller.

I do not whole sell my self.

I apologize for my poor spelling this morning.  I can't seem to find the edit button. Please read past that. 

James is correct.  In most cases, If you show your buyer the house before you have the deed.  You are selling a house you don't own. Aka brokering, You are acting as a broker and need a Restate License.   What is league for you to do is sell a contract.   You can only show the buyer your contract.

Now.  you make be thinking "how dose the buyer see the house before buying it?"  Here is an ideal oh now to do assignments. (take with a fist full of salt)

I go out and get a contract with a seller to buy their property with a long inspection period and assignment rights.

I show my buyer the property contract.  I make a assignment contract with buyer.  In the assignment contract by buyer agrees to assume my place in the property contract.  My Buyer will play me X amount on the same day the property contract ends it's inspection period. 

My buyer now is in the contract and can now go view the seller's property.  My buyer will assign the same contract back to me If he dose not like what he sees.  We release my buyer form our assignment contract in the same stroke.

Ask an attorney to create contracts for you It cost about $150 per hour here in Auburn AL. 

Ask an attorney to reviewing and editing your own creations is an option too

Hi Alex.   I dont' know everything about whole-selling.   With that said,  Anytime you are selling something and money is not exchanged right away.  You should enter a purchasing contract.  You are selling a contract.  So, make a purchasing contract to sell your contract.

Also,  If anyone could speak out about how the JOBS Act lifting the ban on advertising for securities can change how you raise funds.