All Forum Posts by: Mariah Jeffery

True, but why would I refi with a 5% interest rate? I would make my offer without any balloon payment involved. I just meant in terms of the seller's acceptance, they're more likely to be enticed by a higher offer price.

Here are some #'s:
-The rents come to just over $30K/month. All 52 units are currently occupied.
-Property taxes run 1.8% of assessed value/year.
-Insurance I have ballparked at .4% of assessed value/year.
-That's about $51K/year in taxes + insurance.
-Property management fee would be 8.6%.
-Properties are in fair to good condition. There is some deferred maintenance due to the seller's age, but for the most part they've been kept up.
-I estimate repairs/improvements to be 20% of rents. I used this value for the properties I own in the same area, and I've found it to be a little conservative since my father-in-law does maintenance and charges less than a pro.

I'm considering making the following offer:
-Purchase price to be $2.3M.
-Owner finance @5% interest, 20 yr/ am., 10% down payment.

Any thoughts on this offer?

I know 5% interest is ridiculously low for an owner financed deal, BUT these sellers are so clueless I'm not sure that they know that. I also know that they refuse to invest in anything that's not FDIC insured and the proceeds of the sales will go into CDs earning about 1.5%. It seems to me to be a win/win situation.

I could certainly give them a higher interest rate but the price would have to be lower. If anything, I'd probably be better off leaning towards increasing the price and reducing the interest rate further.

I do like the idea of potentially taking on a partner to raise the funds I'm lacking rather than sell off all of my other investments. If the sellers agree to my offer, I'll approach family members first and if they aren't interested, I'll post again on BP looking for a partner.

I have 23 rental units now. I bought a duplex in '07. The next opportunity came in late '09 when I met a motivated seller, an elderly couple that gave the a great deal on my next 11 units/4 properties. This couple still has 52 units left. I had hoped to buy more from them, but they suddenly because less motivated and wanted higher prices. I continued to buy more from other sellers, most recently in December '10. I'm pretty happy with the 23 I have now, and although I'd like more, my rental business grew very quickly.

Last night I received an email from the daughter of the sellers of my units 2-11. Dad is about to turn 89, and wants out. He wants someone to buy ALL 52 of his remaining units and will give a good price to whoever does. Tax assessed value is $3M. I wrote back to the daughter and said thanks, but I don't have anywhere near $600K in down payment money to go through a bank for financing (I had brought up owner financing before and they said no way).

This morning I got an email back "We are willing to consider creative financing proposals. Please put together your best offer and get back to me."

So ... they've indicated they could give me a good price and good terms. Do I really want to more than triple the number of units I have? I'll be going through a property management company so it won't be as bad as if I was going the management myself, but it's still scary.

Also, I assume they're going to want at least 10% down. In order to get this much $ together, I'd have to liquidate stock accounts, possibly 1031 exchange a few existing properties, possibly borrow from my IRA and/or my parents. Basically all my eggs would be in one basket, which also scares me. On the other hand, I could potentially get a return of over 20% even with a management company doing all the work. What should I do?

The bank accepted my offer, but the inspection report was not satisfactory. There was evidence of flooding. I gave the bank the option to reduce the purchase price by $20K but they chose to cancel the contract. I will submit a bid $20K lower if this is still listed in a month. The saga continues...

Most of them had tenants in them already, although they had deferred maintenance so I usually waited until the first turn-over, fixed them up, and raised the rent.

The last set of 4 single families I bought had only one with a tenant. One was ready to rent and the other two needed serious work to get them ready. My team is still working on the last one and we have not found renters for any of the new ones yet.

I'm not funding them all through my local credit union.

I think you have to be prepared to buy when the deals come up. I bought my first rental in March '07 and then waited patiently until Sept. '09 until I found another deal, then another and another in rapid succession. I had 2 rental units in the beginning of 9/09, then by 3/10 I had 19. I just kept finding good deals and I was closing on a property every month. From 4/10 until about a month ago I just couldn't find anything worth buying or I got outbid on everything I was interested in. Finally, 8 months later I found and closed on my best deal yet, 4 single families in a package. Yes, you can get in over your head but as long as you have a plan and a good team in place, you'll be fine.

The elusive 6-plex was finally listed this morning for $159.9K. I offered the asking price, in cash, with a $1K earnest deposit. Bank (seller) countered back with the same price and 10% earnest deposit, plus closing within 2 weeks. I countered back with same price and $5K earnest deposit. Bank claims they won't take less than 5% ($8K). I've never heard of such high earnest deposits. I think I'm going to accept and finally get this one.

I bought it strictly to use as a rental so I'm pretty much SOL there. I really would rather leave it off of my tax return for 2010 just because of the hassle, but I don't think I can legally.

The property taxes ended up working out nicely. They are about $6,300/year for all 4 houses. Since they are paid in arrears, the seller owned me a credit of ~$6,250 at closing. That significantly reduced my upfront costs, and now I have to pay half of that in April and half in October.

Ditto. I stick with what I know.

We ended up closing and settling on 12/30 because the title co. was closed on 12/31. I received $51 in rent for 2010.