All Forum Posts by: Michael Prim

Thanks for the responses everyone, very helpful. Sounds like a 'it depends' type of situation with these letters.

@Andrew Johnson Thanks for the reply. Ok, a verbal offer route seems reasonable for SFR.

Yeah, I understood this letter was more common place in commercial multifamily, etc. as well. I definitely see the advantages to both seller and buyer in that case.

Any thought to calling the listing agents yourself - cut out the middleman (the agent) - for the time being, and then get them back in the loop once a price is agreed to? 

I guess this questions the effectiveness of my agent, and perhaps a more motivated/creative one would be suggesting this and carrying it out.....? But perhaps the listing agent might not be as trusting with Me, a random investor, calling them vs. an agent? I guess I'm thinking out loud...

Curious if anyone is using or has experience with using a Letter of Intent to purchase real estate? See link: https://www.biggerpockets.com/files/user/PRoob/fil...

In talking with my attorney, he was familiar with this type of letter, and said it could be used for both commercial and residential properties. I asked specifically about multi-family units, be he said it could also be used for SFH.

However, I introduced this to my agent and she had some push back:

 My intention with this letter, as I've heard other investors using them (I believe I heard a biggerpockets podcast talking about them), was to speed up the offer/acquisition process, and spend less time touring properties with a seller who isn't even in the same ball park as me, when it comes to the purchase price.

Any thoughts, suggestions when using something like this? Also, to my agent's point, why would a seller entertain something like this? How is this to their advantage?

Any help is appreciated.

Thanks,

Mike

Thanks everyone for the responses. Absolutely, properly identifying the market and proper comps is key to establishing current rents and future rents. Just curious about standard practices. Thanks! 

Hello BPers!

New to the REI community and looking to get some great guidance and advice from the seasoned vets and learn as much as I can.

Have been doing some initial research into Multi-family, buy-and-hold, (>,=2 units) in the Chicagoland area (mainly western suburbs, Brookfield, LaGrange, Downers Grove, Wheaton, and the like) and found some units with potential.

Here's my current question:

I've found a property that I believe has some potential. It appears the units are below market, however with some cosmetic repairs and perhaps some capex's I feel I could increase the rent by at minimum (based on local comps) 68%.

I would offer 85% of list and estimated $20,000 in repairs/upgrades (this is probably a generous estimate - the property appears to be in good shape, basically needs a face lift).

With all these figures, including the 50% rule, financing with 20% down @ 3.5%, I come out to a profit of $262 per unit and a cash-on-cash return of 9.53%.

So, does this seems reasonable? Is it wise to project future rents? How about offering 85% of list - too high? should/could it be less (I'm leaning yes.)?

So for you Chicago investors - any comments? Anything I should be wary of?

Thanks so much!

Mike

Hello BPers!

New to the REI community and looking to get some great guidance and advice from the seasoned vets and learn as much as I can.

Been investigating business opportunities for the last few years, and have recently been investigating REI and all the strategies and opportunities available. I feel with my Engineering and MBA background, this is something that really suits my skill-set and something I can sink my teeth into. Currently working full-time as a Senior Engineering Member of an engineering services company in Downers Grove, IL, and looking to get into REI on the side. My 5yr goal is to be doing REI exclusively (dreaming big!). I've got some cash, but certainly open to talk with other investors!

Have been doing some initial research into Multi-family, buy-and-hold, (>,=2 units) in the Chicagoland area (mainly western suburbs, Brookfield, LaGrange, Downers Grove, Wheaton, and the like) and found some units with potential.

Here's my current question:

I've found a property that I believe has some potential. It appears the units are below market, however with some cosmetic repairs and perhaps some capex's I feel I could increase the rent by at minimum (based on local comps) 68%.

I would offer 85% of list and estimated $20,000 in repairs/upgrades (this is probably a generous estimate - the property appears to be in good shape, basically needs a face lift).

With all these figures, including the 50% rule, financing with 20% down @ 3.5%, I come out to a profit of $262 per unit and a cash-on-cash return of 9.53%.

So, does this seems reasonable? Is it wise to project future rents? How about offering 85% of list - too high? should/could it be less (I'm leaning yes.)? 

So for you Chicago investors - any comments? Anything I should be wary of?

Thanks so much!

Mike

P.S. sorry for the novel! :$