All Forum Posts by: Michael Zau

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $380,000
Cash invested: $5,000

After an NOS, bankruptcy, ( by seller) and 2 years of negociations, we closed on this 2 unit purchase in San Diego. I know we dont do that many deals, but when we do, we hit home runs. Not too many times that we can BRRRR in San Diego. I love this purchase.

What made you interested in investing in this type of deal?

$250,000 in equity upside after repairs...

How did you find this deal and how did you negotiate it?

Realtor relationship that I had forged over 2 years of trust in closing mortgages for him. Made him look good.

How did you finance this deal?

private money. Not hard money, private money

How did you add value to the deal?

buy it, take care of seller financially and emotionally. fix it up and got property manager to provide advice on the rehab.

What was the outcome?

so far in the middle of rehab, but we are looking good at getting tennants and finshing rehab a few weeks late, but in budget.

Lessons learned? Challenges?

COMMUNICATION is key with all parties. One of my private investors did not get proper communication from ME. This cause some stress, however her trust in my ability, ( due to past experience with me, ) created an oversight on her part. Meaning, that forging the relationship for the future by my seed planting was greater than the communication mistake.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, me..... not kidding, I've been playing cashflow 101 for over 10 years and using creative financing tactics and contracts and negociations for the game.... training for deals like this using a game is awesome! But having Tony Ambre with WFG title help me out with title issues, refi binders, ( yes refi title binders is a trade secret). Russell Walker is a great realtor to have in your back pocket.

@Jerry Padilla great answers. However in this public uninformed forum. Careful that it’s not misused for straw buyer purposes

@Suny Capezzuto. This is a “means” question. Not an ends question. It’s ok to to do either depending on the marketplace that you want to live or invest. It’s harder. To do owner occupied in higher cost areas such as so cal or Manhattan. But Cleveland is easier. So it’s up to the earner as an opportunity cost question.

@Christy Osterkamp. Don’t know if you did it yet. First what is the value? What is the amortization schedule ? What are costs involved?then regardless of cash flow you can determine irr after a specified period of time. That is the real indicator of whether you are numerically getting a deal or not. Not enough info on this whole thread to determine.

I may have duplex for $650k... I am in the middle of renovation now, so too late on renovation, but the front is 3 bed 1.5 bath and the back unit is 1\1 with ample parking for both units.  South of 8 and just east of downtown.  Amazing view of Coronado bridge. 

I work in an financial advisers office and their rules are that taking cash out for variable investment purposes is risky and not necessarily recommended.    If you can afford that increase in payment, are secure in your employment, or even are secure enough in not receiving rental income in the event that your tenants do't pay. then go ahead and make the investment.  The numbers always work.... but tenants and job circumstances, do not necessarily work in the landlord or owner's favor.  BTW,  I am in favor of the cash out, but throw caution to the wind for those who are uncomfortable in first glance. (I.e. you posted on this site. ) 

San Diego, isnt a cashflow area and the term investor really applies here. The negative cashflow in the long run is probably smaller than the average appreciation over the course of 20 years. I use 20 years because any expectation less than 5 is not an investment, but really speculation that the rents or values will increase. If you need the money, (since the military traditionally doesnt pay well), then you may need to cut bait just for living purposes. However, if you can put it into your budget that this is just a longer term hold and that over the course of time, value and cashflow will come to you, then your investment will pan out. You may have purchased with a VA loan financing it 100% which means that, of course will have negative cashflow in San Diego. @Kat He has the right idea in short term living, however you as the owner need to understand your HOA bylaws and what are the plus's and minus's in that choice. I'd love to be in that conversation with Kat and you if you make that choice, or would be happy for any offline convo.

I'm in San Diego, can I help you? in effect, licensed loan officer in San Diego. 

go to one of the weekend workshops and talk to a few flippers in your area, they may give you a wholesale contract if they like the deal. 

you will have to read the entirety of the sentence.  You have made this too ambiguous to really answer: however I think that it means that the seller or buyer can back out if the partner says no to any  part of the contract.