All Forum Posts by: Michael Miller

Howdy y'all,  I would appreciate some insight into my situation.  I have two deals, but I can only finance one.

First deal: 4-Unit Building for Buy-and-Hold

-28,00 down, 188,000 asking price (about 85-90% market value assessed through comps)

-owner financed for two years with refi-balloon, owner pays insurance and taxes AND will take ALL of my payments toward principal (28,800 over two years), leaving me with 131200 left on principal after the two year period

-property is in a small, clean, safe, and well-to-do 'podunk' town between three of four of this area's biggest cities, allowing less than a 20 minute commute to all of them

-the property will likely need few, if any, repairs and cap-ex over the next few years as it was gutted and completely rehabbed 18 months ago

-I would be paying ALL utilities and internet access, at least for the first two years prior to my refinance

-proforma:

Deal Two: 3/1 for partial rehab and flip OR buy-and-hold

-in a family-neighborhood with good schools (where children in the public schools get free college eventually), in the wealthiest and fastest growing of those 3 cities mentioned above

-needs a 50% rehab (ALL new appliances, new kitchen, new windows, full cosmetic throughout

-has a basement and space for a master bath to make it a 3/2

-comps in the area run 80K to 100k

-monthly rental price could be 1100-1300

-buying it from a wholeseller with whom I could establish a relationship for future benefit

-Estimates:

Often I read here and have heard multiple times on the podcast questions concerning the usefulness of being a licensed agent, when one's ultimate aim is to invest, not to be a salesperson or broker.

However, I am now sure that I must become a licensed agent so that I can pull the proverbial trigger on my preferred schedule. These last few months, three awesome deals slipped past me, in part, due to my agents' scheduling conflicts. They either couldn't show me a property for days, or they were not prompt in placing my bid in to the HUD system.

Today was the final 'straw'. For a week I've been more or less begging agents to show me a house listed at 26k in an area where comps are 80-120k, and this property was 3k in repairs away from being ready to sell to home-owners (e.g. floor coverings, paint, etc.). It was a HUD on daily bidding. Finally I saw it today, but it turns out somebody won a bid yesterday. I was going to have my agent place the bid at full price tomorrow morning.

Either I'm finding the wrong agents, or I need to take matters into my own hands.

After reviewing many medium-sized cities, mostly near my hometown in Southern Michigan, I discovered Fort Wayne.  Statistically, the city has low rates of crime for a city of that size within the 'rust belt', average income and unemployment figures, relatively low rental vacancies, and, most importantly, SFRs at less than 30k which, based on my understanding of the area, do not follow the popular negative sentiment on homes at this price point.  Despite low entry costs, average rents are only slightly less than those in comparable cities with houses two to three fold in price. As a result, the so-called 2% rule should be easily met, if not greatly exceeded. What's more, many of these homes can be had near two of the city's growing university campuses.

Does anyone have any insights about this city?  Is this a golden opportunity for buy and holding?  Is my exuberance warranted, or have I missed some important variables?

Sources:

http://www.pediacities.com/city/fort-wayne-in-1600...

http://www.neighborhoodscout.com/in/fort-wayne/cri...

http://quickfacts.census.gov/qfd/states/18/1825000...

Super helpful, Mr. Padilla, as always.  Thank you.

I scoured the interwebs but couldn't seem to come upon an answer to a simple question.  While not substituting for legal advice, can anyone tell me if, (in the state of Michigan or generally, I could take out a conventional loan on a house which is currently under land contract.

The story: Vendor for land contracted house created the 20 year note last year.  The purchaser (vendee), who is a friend of mine, had to move away for work. My friend offered the home to me at a significant discount.  I haven't got cash for it.  Can I take out a conventional loan for it?  I assume I would nullify the vendee's claim and pay off the vendor at the same time.  Is this correct?

@Brian Johnson,

Most states have a real estate commission which has the legal requirements posted.

If you're in Lexington:

http://krec.ky.gov/Pages/default.aspx

I just find that what is legal and what I'm observing in practice here in my hometown is not consistent.

@Usula B.,

The official rules in MI are the same as with NC.  Thank you for the input.  It seems that I have these two years to prepare while waiting for my eligibility.

I am aiming to establish a property management firm in 2016-17 after I have obtained adequate experience.  However, I feel a bit confused about the difference between legal requirements and actual industry practices. 

I am currently employed as a leasing agent for a few-hundred unit student housing community, and despite performing many property management functions, this doesn't require any specific licensing.  I learned that I must have a brokers license to practice as a property manager in most states (links: 1, 2).  Is this true, or are there exceptions and industry practices contrary to this?  My confusion can be further illustrated by this example: I have met property managers here in my hometown who practice without licensing and manage hundreds of units.

As much as I'm willing to do the work required to achieve my goal, if there is a way to avoid having to get my sales/provisional real estate license, then practice under a broker for two years before finally becoming a legal property manager, then I would like to take the more expedient route.

I appreciate everyone's time.

I'm in the process.  Thank you for the advice.

@Rafael Norat, 

This is exactly my idea.  I would like to purchase it with hard money and fix it up, then take conventional financing to pay off the hard money loan.