All Forum Posts by: Scott Seaman

Sounds like the seller/agent wants to use your full price offer to wave in front of their current buyer who doesn't want to pay more than it appraised for "see, we don't need to lower the price, I already have another offer for full price"

The only way you can come out on top of this one is make them play to you, not the other way around. Ask them to counter your previously submitted offer. Then you'll get a good idea if they are seriously looking to deal with you because the first contract is on it's death bed or if they simply want to use you to get the price they want above what the appraiser says it's worth - lose/lose scenario for you since you don't wind up with the property you want and this property closing above appraisal to that buyer is now a comp you have to deal with when the next property comes up "so and so down the street got $XXX for his place, mine must be worth $YYY ..."

If you can't walk through and estimate repair/upgrade costs realistically, take along someone who can. Don't guess, you'll always be too low.

Do your market research - what are units that size in that neighborhood renting for? Talk to some of the local property managers about rental rates and expenses. Talk to city hall about the taxes & assesments - check for permits and you can probably find out who replaced that AC unit and when they did it as well as how much they got called back for other repairs, talk to your insurance agent about rates.

Basically, getting the numbers from the owner is a great start - but you have to be able to verify them against the market to know what's reality and what's fluff - always. Sometimes it's easier to do this because you're not influenced by a sheet of numbers you got from the owner. If you keep working the same areas, you'll be able to do this pretty quickly from the information you're already researched - then when the seller hands you numbers, you can look for the things that don't match what you expected.

It's in the seller's best interest to make the numbers look great, it's in your best interest to buy based on reality. Listing agents have a very unique ability to come up with pro-forma sheets that always reflect this great "market" rent. It is always higher than current rents. I'm old school enough to think "market" was what someone was willing to pay and someone else was willing to accept. Without some compelling reason like a ton of fix up money spent per unit, "market" rate is what the owner is currently collecting - or he'd have already raised the rents.

I think there is another factor that isn't talked about as much. After the crash, there were a lot of displaced families from foreclosure and how much new construction slowed/stopped. But too often the prediction was basically one family for each foreclosure.

Never an adjustment made for last part of the boom years where new homes and condos were selling from speculator to speculator - 4-5 deed transfers in under 2 years with no actual occupying buyer in sight. And builders dropping a dozen more foundations into the ground before they even closed their first spec house. The sky was the limit. In some areas, for every 3-4 displaced families, there was one property that had never been occupied.

Now that we've sifted out of the bulk of foreclosures and normal household formation has eaten up some of that overbuilt inventory - the rental market is getting back to 'normal' much quicker than the buying markets. Less reason for rents to keep increasing.

If you are going to manage it yourself, pay yourself for that function as well as paying yourself for the risk of being the investor. If nothing else, put it in a separate fund to go towards your next deal.

If not, you're simply working for free to make a deal look better. And when that day comes when you no longer want to manage it yourself, you're not sweating where the money is coming from. Also, if you want to go to the bank for financing, they're going to put that figure in there and if your debt service ratios aren't high enough after that, you aren't going to get the loan

welcome. Check with your lender on qualifying just on your income or if they'll require 6 months PITI in reserve before counting any of the rental income

A bit more of that sort of publicity and ads mentioning "locally owned" could lead to more calls and higher rents

VA requires a one year occupancy by the owner - they automatically ignore that for an active duty owner with valid orders to another duty station. They also require that the purchaser begin occupying within 60 days of closing but I have gone 30+ days beyond that once while rehabbing the unit before moving in

Surely you meant the intern to the helper to the assistant to the executives being indicted?

Just kidding - apparently Dimon is still trying to negotiate more money in lieu of any criminal charges as part of a settlement with JP Morgan. I wonder how much that jury verdict against BOA/Countrywide yesterday played into the agreement getting so close to being final?

Screenshot of google maps/earth then pull it up in any photo editing software like photo shop to add the other elements you want

@David Schulwitz - I can't tell from what you posted if you are using current rents for all units or have already subtracted the unit you plan to live in. Overall your expenses appear to be over rather than under estimated, so you should be in good shape there. Insurance & accounting will probably run you more than budgeted because of that hybrid owner/occupant plus tenants situation but not a ton of extra cash.

As far as depreciation, you can't write of the portion of the building you live in (assuming 25%) - you'll also account for the interest portions differently than if it was just OO or just tenant occupied.

Not sure if you are planning to self-manage since you included money for a property manager - but recommend that you do it yourself for a few months. The hands on experience will give you a better way to gauge any PM you are interviewing later on

Have you talked to your VA lender yet? Without any recent property management experience and/or 6 months of PITI in the bank as reserves, they many not count the other units' income toward your ratios - could be an issue if you need that to qualify. They can also give you a quick run down of what fees a seller must pay and which other ones you can negotiate for the seller to pay on your behalf. If you don't have an agent already, find one who works with VA loans - the rest of the market acts all freaked out over them, but they really are the most straight-forward products out there.

If you have a rating, the funding fee is waived - or if you're eligible for one but don't collect due to current active duty status. And the 1 year occupancy requirement is automatically waived should you get valid orders to transfer. 7,900 sq ft? Those units must be huge

Good luck with it!