All Forum Posts by: Matt Maluchnik

I was at an event where the speaker (Bill Bronchick) mentions he uses his Self-Directed IRA to invest in properties; however, I can't recall the term... But he basically said he runs it out of his own check book. Almost as if he doesn't have a custodian or company he works with... He does it himself? Maybe to save money or move quicker? I'm not quite sure, anyone know about this?

I keep running into situations where RentOMeter and RentJungle are giving me averages of what rents SHOULD BE.  And the current landlord's have rents lower then what I'm seeing.  In many of these cases the landlord's admit..."I kept the rent low so I didn't have to worry about people leaving".

Now they are selling their properties and I'm having to value it at what the CURRENT cash flow is, not what I THINK it should or could be. (unless it's vacant, then I am forced to do that).

Is this what most others are doing?

Situation: Triplex - currently valued at $109,000 offer price using conventional loans will deliver a 8% COC return.

The owner will also look at financing it herself (no loans on the property).

IF I believe the property WILL BE WORTH $132,000 10 years from now (assuming 2% appreciation)....can I offer that FUTURE price, but have her finance it for 15 years?  I'm thinking as long as the cashflow makes sense, it's okay to offer MORE then it's current value since the owners will be financing it at a 0% interest (or low) interest rate?

Does this make sense?  Or am I off?  I'm trying to figure out how to create multiple offers depending on the sellers situations I keep running into.  And I'm thinking this is one way to make it attractive for a seller to carry the note.

Yes, at this point in time all of the tenants pay for those.  And one of the tenants, who has the lower of the three rents, does the lawn care to make up for the lower rent.

With that being said - the main question has to do with the way I'm figuring purchase price.  I wondered if anyone else did that the way I looked at it?  It's worth $109,000 now...but 10 years from now it will be worth approximately $132,000.  SO, I'm "buying" it from them for $132,000....but they are holding the note for 10 years.  So in the mean time the tenants are paying it off....I'm still keeping some of the cashflow ($0/down)....and after 10 years when the note is due..most of the house is paid off.  Bottom line, because they are financing the sale, I'm able to offer them ABOVE market rate.  Make sense?  Anyone do this....it just kind of came to me today, so I want to double check I'm not missing something.

I don't think the rental calculator applies in this situation, because what I'm doing is a bit different.  The seller would be financing it, and I'm essentially saying a purchase price more then what the current market value is...but because the cashflow is there I'm thinking this makes sense.

Triplex - Based on cashflows I can get an 8% COC Return using a conventional mortgage and offer $109,000. (Seller wanted $170's...but she really wasn't sure what it was worth...and she even mentioned she would be interested in financing it)

Since, I can't get to $170k and make sense I thought maybe I have her finance it.  If it's worth $109k to me now...then 10 years from now assuming 2% appreciation it will be worth $132,870.  So i figure I break it down with a $132,870 purchase price but she finances it with a 10 year note (0% interest).

Income: $1,500/mo (fully rented as is right now)

Fund: $450/mo for Repairs, Management, and Cap Ex (30%)

Payments to them: $710/mo

Profit to me: $340/mo 

Then after 10 years the property will be paid off mostly by those tenants and I can refi to pay the remainder off.

Am I missing something?

I have a few leads that I'm going to make an offer to, and I would like to throw in a second option that doesn't require my financing. So I'm going to make a Sandwich lease offer where I will lease with option to buy from them...then do the same thing to my new renter. What's the equation I use to figure out my Max Out Of Pocket I can give them and monthly payment?

-=DEAL #1=-

ARV: $60k

Repairs: $10k

Rents for: $600/mo

(Current buyer owns all cash)

**Am I on the right track...**

Usually I have been using 10% for Management, 10% Repairs, 10% CapEx...so right off of the bat 30% ($180 in this case) gets set off...so I know I can't give him more then $420 ($600 - $180). Is this correct? What else?

I have a few leads that I'm going to make an offer to, and I would like to throw in a second option that doesn't require my financing.  So I'm going to make a Sandwich lease offer where I will lease with option to buy from them...then do the same thing to my new renter.  What's the equation I use to figure out my Max Out Of Pocket I can give them and monthly payment?

-=DEAL #1=-

ARV: $60k

Repairs: $10k

Rents for: $600/mo

(Current buyer owns all cash)

**Am I on the right track...**

Usually I have been using 10% for Management, 10% Repairs, 10% CapEx...so right off of the bat 30% ($180 in this case) gets set off...so I know I can't give him more then $420 ($600 - $180). Is this correct? What else?

I'm in Ohio and found a Vacant, Bank Owned, Unlisted property.....I looked on the county auditor website and it shows its owned by:  

US BANK NATIONAL, 4801 FREDERICA ST, Owensboro, KY.

It's been sitting unlisted for at least two months and I'm interested in buying it.  Do I just call up the bank? If so, who am I looking to speak with?  I would like to sound as if I've done this before ;).

Would this be considered a Short Sale?  Or is a Short Sale BEFORE it goes to an auction and gets taken back from a bank?

A friend of mine is buying his home all cash. For the purpose of asset protection (protect against frivolous law suits Ect) -- Should he put it in an LLC? Because it's not technically ran as a business, would this make it easy to pierce? And/Or because it's in Ohio is the homestead exception the best bet and leave it in his name?