All Forum Posts by: Nicholas Morgan

I feel like I have an image in my head of what a rental is and I feel that is affecting my search for an investment property.

I toured a foreclosed property in my area that is a 3 bed 2 bath, large, open concept house. It's just shy of 1900 sq ft. Has a wood fireplace and a large deck outside. Structurally, the place is solid. The crawlspace is like 3ft with lights and a moisture barrier. The roof is new with proper venting and no signs of water damage. The house was built in 1989. Sits on 0.68 acres so a nice large back yard. There's a 3 car detached garage built pole-barn style. So concrete floor, but at the edges it's not sealed so you can see grass and such. There is what seems to be a 2 car attached garage converted to usable space because there is a huge bonus room. This room is big enough to have like a ping pong table and couches around all the walls and then some. In actuality, I'd really like to live in this house haha. The work to be done is all cosmetic. There's a hole in the ceiling where someone stepped thru. Needs new flooring and paint and trim and the kitchen needs a complete remodel. Overall, the place is great. If I purchased it, I'd move in and do a live in flip.

My focus is the BRRR strategy and this house is listed at 86k and would appraise for 150-170k says my agent, however I think it would appraise for the higher end of that (160s).

To me this property doesn't fit the "stereotypical rental house" I have in my head. Which is like a small house on a small lot with an attached garage and overall is simple. But this house with it's huge space, 3 car detached, and large backyard feels more like a home someone would buy and not rent. Growing up, the only place I knew of people renting were apartments or college kids. In my mind, no one rented a house unless you're in a city (I grew up in rural KY) and in my mind you wouldn't rent s property with this much potential.

Am I wrong? Are people renting houses that don't fit a mold of sorts? Are families wanting to rent properties with all this space? A friend who owns a house just down the road from this one rents a 2 bed with a small bonus room for 950 month and a 3/2 typically goes for around 1100 or so. I feel like a property like this should go for 1500 with all the extras it has. Not sure tho?

Any thoughts would be appreciated!

@Jonathan Greer thanks! I'll definitely do that! Although the house is under contract now, I think I'll continue to do a full analysis of the property to show investors what I'm doing. Having some input on rehab would be very beneficial! It will probably be a few days before you hear from me due to me being on a business trip at the moment.

Thanks again everyone for the input.

Unfortunately the house that spurred this thread is gone. The sellers accepted an offer this morning. However, I think I'm going to use this property to build a packet to explain to potential investors what I'm doing and what their money would be used for. That way they can be educated now so when something else arises I won't be calling them up out of the blue and they'll know what's up.

Thanks everyone for your advice.

I should have clarified this is a SFR house.

So what is the best way to try and build an investor network?

Is a good approach to build an investment packet of sorts around this property and use it as a tool to explain to the contacts I have for investing what I'd like to use their money for?

I have a few friends in my life that I believe would be interested in investing. Should I get people to "commit" to investing X-ammount of dollars when a similar deal pops up (and they can make a final decision when that deal comes along) ? That way I can know that I have, let's say, $75k of investor money on standby for when a good deal does come up again?

Additionally, I guess the reason I spurred this question was I thought I've heard Brandon say on the podcast something along the lines of "if you find a good deal, you'll find financing for it. People will want to invest if the deal is strong". So I guess my thoughts were that if I get it on contract and the numbers are strong I could find investors during the inspection periods and such. And maybe set the closing date a week or so out after insepections period to ensure locating finances. Because worst case is if I have to bail on the deal for no financing, I would just lose my earnest money. ... For the record, I have been running my numbers with 15% ROI for investors and only holding their cash for 12mo. I know 15% ROI is high, but because it's my first property like this, I figured that would help get people over the concern of trusting me with their money.

Thanks!

Hello!

My goal for 2019 is to purchase a property utilizing the BRRR strategy....or at least take all of the steps to ensure a high probability of that happening (analyzing 10 properties/week, sending out direct mail, driving for dollars, etc..)

Anyway, I toured a house today I'd like to put an offer in on once I do a more thorough numbers analysis. However, do I need to have a hard money or private money lender lined up before I make an offer? What if I make an offer and they accept and I don't have someone in place yet to pay the ~$40k cash for the house? My thoughts are if I get the acceptance, I can find a lender while inspections and such are happening....but is that backwards? Am I putting the cart before the horse?

This will be my first "real" deal and want to make sure I'm going about this in the right order.

Thanks,

Nicholas

 My concern is that an appraisal is another $500. I'm trying to minimize money out of pocket with wedding coming up. Do you think a new appraisal could hit the 112k? i.e. do you think it's possible the appraisal is 20k off of what it could/should be? 

Thanks, 

Nicholas 

It might be that I agreed to buy a potentially overpriced property. However, it cash flows after management, CapEx, maintenance, and vacancy so it worked for me. With current rents (under market) I'm right at the 1% rule. However I feel like I can get $650/month/unit easy and possibly $700/mo/unit. At current rents and a LP of 92k, that'd be a 1.3% rule. Also I'm motivated to buy because I get married in 6w and would rather not have to sign a 12mo lease with an apartment somewhere.

Thanks for the info everyone. I'm also afraid the deal is dead. Perhaps he'll let me rent the vacant unit month-to-month while I'm trying to find something to buy haha.

If I could get it to appraise for 105k, I feel like I could've made that work. Because I have him paying 4k towards closing costs with our current contract. At 105k, I could pay closing costs and he'd only see a loss of 3k. 

Still open to hearing other options if there are any. Thanks everyone! 

Hello everyone. 

I found a nice duplex that my fiancee and I love. We were really looking forward to moving into after we're married in ~6w. 

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Mortgage company did an appraisal and it appraised for 92k and we have it under contract for 112k. 

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What do we do now? I don't have the financials to bring 20k to the table. I'm purchasing it with 3.5% down thru an FHA loan.

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I'm not 100% sure the appraisal is an accurate representation. Another duplex near sold for 136k this month near it which equates to $74.73/sq.ft.  At our price we agreed to, it's $80/sq.ft. which is more expensive. However, if we analyze our property at that rate that yields a purchase price of ~$105k....not $92k. 

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The seller bought this property for $99k in 2002 (or 2004...I dont recall which one).

Any thoughts on how to proceed? I requested a new purchase price of 92k. He declined (as expected). 

Thanks in advance,

Nicholas 

Thank you everyone for your input! I really appreciate it. Yesterday I got a duplex under contract using my agent so it'll all work out now. Thank you for the advice!

@Slocomb Reed   I bought a list from ListSource.  Not sure I did all the settings right though because some commercial properties found their way into my list. However, I haven't made any calls because as of yesterday I have a Duplex under contract. So, will be holding off on cold calling.