All Forum Posts by: Naveen Desai

Hi,

I am part of a group of 7 people who all started out in Real Estate in 2010 by pooling in money. After 3 years of being together, & due to job and location changes, we all have now operate individually, but still meet together for brain storming, strategy discussion and exchange ideas and deals. Sometimes we still partner depending on the deals etc.,

So, earlier this week, we met to discuss on what should be the strategy for 2014. Our previous model of flips were buying off the auction websites, rehab and resell. That model does not have returns anymore. It worked well for 2010/11. Since early last year we shifted to buy-hold and rent properties out.

Couple of thoughts that were thrown out:

Now that each of us have built equity, we can pool again to buy apartment complexes of 60-70 units. Immediately another person suggests, if pooling in money for huge investments, then why not a Motel?

Looking at these options, I was of opinion that we can put down payments for both projects and work on both together. A lot depends on how much we can collectively bring together and the group's expectation of returns, cap rates.

It ended up being a good 2 hours brain storming and we dispersed stating that for either apartments/motels, we have to do lot of research and we will focus on that. So nothing is going to happen immediately.

In the same lines, I want to get some insight and opinion of folks on here.

How different is Apartment complex investment and Motel investment.

Excluding that they are different operations, what are the factors to compare and come up with list of advantages/disadvantes of each, that will help a group decide on next step?

Thanks in advance for all your inputs.

Hello Yu, I am surprised you are even getting a structured financing deal in Bay area ( assuming that property is in bay area based on your location). If the current owner wants to sell it, they would do it in the open market as the prices are at peak in most parts of bay area at the moment. They may only make a structured deal if it is going to be a lot above FMV.

@James Wise , I am looking for the same info and it is timely for me.

Just want to add few more questions.

1. If the PM company wants to leave, how do we ensure, we have backup. Any clause that we may add in the agreements.

2. I have a clause that if the tenant gets into a situation that we have to evict during the 1st year the PM company returns me half of the tenant aquisition fee they charge upfront!

3. If we have to replace with a new PM company with an already existing Tenant in place, what should be the terms?

Thanks,

Naveen.

@Bob Gordon

Thanks for your comments. Just to clarify, one of the property in question in CA is occupied by renter and renters are willing to stay longer. So the seller is mainly considering investors to buy! I wonder after being idle or months, if m offer would motivate another investor to make the move now!. Also, if it worked for them, knowing how it would work for them is what I may have to learn!

@Justin B. Just what you have read, I experienced last month. I live on the same street of the property here in MA and when I saw an REO that came out and listed for 39K, I jumped in & called the guy and he said its on pending!

I mean within hours? He did mention they plan to rehab and he will get back to me before putting to MLS. He had told it will be back in 2 months, instead called me after 3 weeks, but the price was 94K now and with HOA of 350 a month. Not a deal.

@ 39K, 350 HOA(with water/electric included) and owner occupancy restriction, would still been a deal to me.

Hello Denice,

Welcome onboard. Now where in Peninsula- bay area are you planning to get under 200K properties? I am looking too, and hard to get those. I am in process of closing a property in east bay though, Concord, CA. Again that is under 300K and not 200K. If you find something and that you are not interested, please alert!. Thanks.

Hi Derek,

Nice start with your first property and the goal and all the best in the new FullTime profession.

Since you talk of wholesale, I suppose you have no financing on it. While that is good and if you have rented it, it can start showing your revenue. Primarily with the goal of having 20 income producing rental properties, if you wholesale, you have to see if you can buy today. I suppose prices have gone a little higher too.

If you do wholesale and get some money, for the next purchase, I would recommend you look for a duplex, where the risk is split and your stream of income may improve as well.

Other options to look at is places outside of where you live. There may be better rentals in other places in the country.

Regarding financing, that is a hassle, when self employed. Generally you should have 3 years of tax filing for llc or a w2 with substantial income, ( which also means you are paying substantial taxes :) ). Otherwise, just have to do some tricks with "creative financing", and owner financed properties. If you are open to purchase and rent around the country, 20 houses is a reasonable goal to attain.

Good luck!

Thanks for replies, folks.

To give some background, why I am asking this.

I have made a successful bid on an auction for cash by. While I do the cash buy, I dont want to buy it and get low on cash. Since the auction contract is "Cash Purchase", I cannot finance it now. Therefore the thought. I can wait for some time and rent it out and eventually get an equity. Till then, I would be stuck. I am looking for that liquidity for the period in between.

I do understand, that the lenders would look for assessment and valuation. I am banking on the fact that i got a deal on this buy lot below the actual value of the property plus I am doing a 25% of my purchase cost down. Well, no harm in throwing out a question and may be learn, if there is really such an option.

"Or just put it under crazy category :) ".

-N.

Hi,

I suppose folks here dont cross me off as crazy. ( I think am tyring to be creative). May be many people may have already thought about this.

I am in a contract to buy a house. I will bring in all the cash for the closing, but looking to get a cheque back from escrow through any lenders, banks who would give me a home equity right away. Is that an option?

Thanks,

N.

Actually 1 was FMV and other 2 priced less! - just because they have been on market for months. Agents told me so. Therefore, wont expect, it was already pending.

@ Justin - Lol, you know I wish I am convinced to buy just because I see the competition on other side of the wall. But no. I am flexible, however I am looking for deals!. So after the limit, there is no sretching. I let em take it!

Brant, I cannot go to each and every property as I also have a job and I work in MA, trying to buy in CA. I do have some folks who help me, take a look and review for me. But these offers were not just verbal, but contracts signed on CAR forms!