All Forum Posts by: Lucas Miles

@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.

@Ian Murray without knowing all the numbers/details your CoC estimates seem pretty high. Numbers on 4-plex, if you assume 50% rule (50% of income will be used to pay expenses) leaves you with $1200/month, your debt service will be around $900/month. Leaves you $300/month profit. $3600 per year / $45,000 is an 8% CoC. Not to say that this is more accurate than your numbers, or that a 8% CoC is bad, but I think worth a second look at your numbers.

I always like to look at the "value add" piece when it comes to this. Which property gives you the best value add play (raise rents, decrease expenses, etc)? Location is definitely a factor, which properties are in the better areas? What properties will need more/less Capex type input (roof, siding, etc) right away that will affect your return? Personally I would rather own a 4-plex than 2 duplexes (half as many roofs, siding, driveways, lawns, etc) economies of scale are in your favor. Just a few things to consider.

@Donovan Haynes If you are able to walk through the property before getting it under contract (recommend doing this if your inexperienced) then have a contractor (or someone with more experience) walk the property with you to get an idea of what the property needs and ballpark estimates. Once you get the property under contract then hire a licensed inspector to perform a formal inspection, to inspect the property in much more detail. 

This being said, don't waste a contractors time with walking a property with you unless you are serious about purchasing and already have financing arranged. Inspectors generally do not give estimate on repairs but can probably give you a ball park idea or what to look out for. 

@Kaylea Blackburn before you spend any time finding a property to buy, make sure you have a plan and are able to close on a property. Get preapproved from a lender for whatever type of loan you decide to go with. Once you have you finances in place and have the ability to close then find a property. 

Driving for dollars is a good way to find your first deal (drive neighborhoods and look for distressed properties). Connecting with local agents who have experience working with investors is also a great way to start. This can also be a good way to find a lender in your area that can help you with financing.