All Forum Posts by: L. Brown
L. Brown has started 23 posts and replied 70 times.
Quote from @Kate Sanchez:
@L. Brown If you're confident about appreciation + can reposition later, it might be a strategic play. But cashflow neg upfront = risk. Can you raise rents or cut costs long-term?
@Kate Sanchez- thanks for your perspective. Yes, the town permits at 4% rent increase per year.
@Greg Scott- Thanks for your input. Just to clarify, how did you calculate $20-30k negative cashflow? Over 5+ years?
@Priyanka Verma, thanks for your input. You make a good point about making sure I buy with some built-in equity. Would you recommend putting something in the offer that allows me to back out if it does appraise above a certain amount?
To your point, I'm am thinking about how realistic it is that the tenants will leave. My realtor said the tenants will sign an affidavit saying they will leave, but I'm not sure how comfortable I am with that for the reasons you explained. Any thoughts on how I can structure the deal to protect myself if the tenants don't leave?
Thanks for your offer to look at the numbers more deeply:
Sale price: $840k
Downpayment: $210k
Mortgage balance: $630k, 7% interest rate
Reno costs: $10k (this is a guess as I haven't had the inspection yet, but the property looked in very good condition)
I welcome your thoughts.
I am interested in a 4-family property. The asking is $850k. Comps are between $890-1.1M. It's priced low because the units are rent controlled. I have been negotiating with the seller and we have come to this:
Sale price $840k
Closing contingent upon tenants in 3 of the units signing an affidavit that they will vacate in 60 days
buyer will contribute $10k to seller's closing costs
Once the vacated units have tenants paying market value, here is the math:
income=between $6950 and $7250 (parking space optional)/mo
expenses (all in)= $7565/mo
balance= -315/mo
This is cashflow negative by $315. Is this a good deal? I'm thinking wrt it's appreciation over time.
@Simmy Ahluwalia it will be an investment (rental) property
I have a friend who wants to sell his home and buy another home out of state. He is open to selling it to me as an off market deal. He wants $375k for it. Based on my numbers, using traditional mortgage, I will breakeven (income=PITI,expenses, cap ex, etc) if I buy at $285k. I got him down to $330k. I spoke to him more and found out he needs $120k proceeds from the sale of his current house to go towards the purchase of his new home.
I am trying to come up with some creative financing to make a deal. One thought I had was to give him $120k cash and then assume the mortgage on the house. The issue is I’m not sure if I can assume the mortgage if I plan to use the house as an investment property (the house is currently his primary residence).
I welcome any other ideas, thoughts and suggestions!
Quote from @Michael Glunk:
-Look at properties that were listed and taken off the market. Reach out to these owners (or have your realtor reach out).
@Michael Glunk- following up on one of your ideas- how do I find properties that were listed and then removed?
Quote from @Michael Glunk:
Everyone has listed great points. Double-clicking on a few of those points and adding a few more...
- Look for properties that have been on the market for a while like @Carlos Ptriawan mentions.
-Look at properties that were listed and taken off the market. Reach out to these owners (or have your realtor reach out).
- You might consider sending direct mail. You can go and buy lists and whatnot, but based on what I understand your approach to be, I would research properties that are interesting to you. Do some drive-bys. Get the addresss. Look up the owner information on the county website for that location. And reach out to them! Properties that might need some work or look like no one has been there in a while or have been owned by the current owners for a while or just properties you like (you never know the owners situation!) and send them a letter. This can be cumbersome, but if you are only doing a few, it's not bad. And I have found about a 30% response rate with handwritten and/or typed and then a personal note and signature on these letters. I always ask for a response back even if they aren't interested again so I know their interest or lack there of. And so I know they got it and I stop bugging them. And I provide phone, email, and address so they have options to reach me. Again, not an approach for mass mailings.
- Reach out to wholesalers and tell them what you are looking for. Not every property a wholesaler finds needs a gut reno. You might get lucky here.
Don't forget to remind yourself that you are doing awesome! You've already purchased a property that seems to be working for you, it just feels a little inconvenient right now. Get comfortable inconveniencing yourself. Most people don't want to do this and this factor alone stops many people from starting or continuing to invest in real estate. It will pay off in the long run!
@Michael Glunk- Awesome advice, many of the things you mention I haven't done, and am more than willing to try. Thanks!
@Carlos Ptriawan - Great idea, hadn't thought of that!
Thanks for your advice, Benjamin. Yes, I can certainly hold on with living in the attic- at the end of the day, I have a roof over my head, running water, and temperature control. Just not happy with my living situation. I'm unhappy, but it's not death. :-)
At first I was looking for duplexes or more but I was getting beat out on numerous bids so recently I switched to looking for single family houses that I would live in and rent out if/when the market got better, just so I could have some more space. Maybe I'll rethink what I am looking for.