All Forum Posts by: Lucas Miles

@John S. LaGoff persistence is key, keep working and it will eventually pay off. Narrow down what you are looking for, buying a duplex vs buying a 25 unit are different animals. Financially are you able to close on a 25 unit? Be more specific on what you are looking for then focus on that type of property. 

Another option is to look for properties that are off market (before they are listed for sale). Driving for dollars, drive around the neighborhoods you are wanting to invest in and look for distressed properties. Depending on your area its also possible you can do searches for property types on the online property tax assessor database. Find some phone numbers and start cold calling.

@Bryce Bunton if the main concern is short term capital gains on the 2 properties, an option is to do 2 separate transactions/closing. First purchase the properties that do not fall under short term capital gains now. Put the other properties under contract with a closing date of 6+ months so the seller gets the long term capital gains. Could also just put all properties under contract for 6+ months if that is easier. 

Another option is a master lease (lease option often called) agreement. You are essentially leasing the property and then renting to the tenants like normal. In the contract you have the option to purchase in 6+ months. You can get control of the property right away, but the actual closing won't happen until later on. Work with a attorney to draft these documents for you.   

@Tim Swierczek thanks for the recommendation!

@Shawn Alexander driving for dollars and searching tax records have been how I have found my deals. Looking for distressed properties and/or owners they have owned properties for a long time. Find their phone number and cold call has worked for me. Not the most efficient route, but if your willing to put in the work there are deals to be found.

@Shawn Alexander lot of this has to do with market cycles. Last 10 years real estate has been a very good investment to most people. This has led to a lot of people who've made money, gained appreciation, etc and have a lot of cash to deploy into another investment. This  high demand to invest combined with record low interest rates and very easy to obtain financing have pushed cap rates down and people taking on deals with smaller margins. Who knows if this will continue or not or if there will be a correction. In today market you have to get creative by either finding better deals or creating better deals. 

@Anna Bee the key is definitely to find motivated sellers. Properties that have significant deferred maintenance, poor management, high vacancy, low rents, etc.  How I started was driving for dollars, driving around my local neighborhood and looks for properties that looked to be in poor condition, wrote down the address then researched to find the sellers phone number. 

@T.J. Beckett congrats! Inherited tenants in my experience has been hit/miss. Hopefully you are getting current/past rent reports to get an idea who has been paying. I would work with the current owner to understand how he/she gets in contact with the tenants, phone/text/email, etc. I would send out a welcome letter informing tenants of new ownership and how they need to pay rent going forward, include in this letter something to give tenants an opportunity to inform you of deferred maintenance. Read through the lease they have signed (maybe have an attorney read through it also), see if there is anything that stands out. If there is anything concerning you might be able to have them sign your lease (might depend on your local/state regulations) with the same terms. 

@Anna Bee bring a money partner in to provide the extra 10% (or more) to the table in exchange for equity and/or cash flow. Another great option is seller financing, ask the seller to finance 90% of the purchase price, then you can only need to come up with 10% + rehab funds. Another seller finance way is to ask the seller to hold a mortgage in second position. Bank gives you 80%, seller in second position at 10% (or more), and you come up with the rest. Make sure your lender is comfortable with this type of structure before asking the seller, generally smaller community lenders are okay with the seller having a second mortgage. 

Looking for recommendations for an expert commercial real estate attorney in Minnesota that has experience with creative seller financing structures, specifically master lease agreements. Thanks in advance!

@Josh Green another option is seller financing or private money. Couple options 1. If the seller would finance 90%+ of the purchase price (seller is basically the bank in this situation). 2. Bank provide 75%-80% in first position, seller holds a second mortgage of 10%+, you come up with the rest. Make sure your bank is okay with this setup, generally small local lenders have no issue with this. 3. Find a partner to come up with the down-payment money for a portion of equity/cashflow in the deal.