All Forum Posts by: Orion Walker

So @Eric Z., could you walk me through that a little slower? How is the hard money in first position if seller can take back property before hard money can forclose? Thanks for jumping in on the thread.

Hi Folks,

I recently looked at an interesting property in one of my main target areas. It is a mixed use building with 5 residential units upstairs, 1 downstairs, plus a couple thousand square feet of commercial space/office. Owner willing to carry with 20% down (about 100k). I've run the numbers and I think the place is a good deal for this market. The 6 units need maybe 20k to all be in nice rentable shape. They would bring 5-6k mnth, maybe more with some creativity. Rental market is very strong. Add in the commercial space after maybe 20-40k and you should see rents up around 7-8k. Not bad for this Ca market.

So, my main question is how to go about tying up this property. What cash I do have is tied up in another escrow right now. I've suggested a master lease option but so far they aren't interested. 

Ideas: 

- look for soft/private money lender who will loan me the downpayment. Is that likely? I have excellent credit. would an owner finance seller generally allow me to use borrowed money for the down?

- look for hard money to purchase and rehab. I'd need near 100% financing. I've heard this is out there if you do a first and second and accept high rates, but this wouldn't take advantage of the owner finance option. 

- find a partner who can bring some or all of the downpayment money. seems like a good option, but haven't found that person yet. 

- my agent says I should just make an offer to get the conversation started. I'm not very familiar with some of the finer details on owner finance deals, so I'm a bit unsure on how to structure the offer on price/terms etc. 

Any ideas/pointers/suggestions/feedback? Thanks!

@Evan R. thanks for looking at the numbers. Kind of leaves a question mark in best strategy in that average price at average occupancy would be $1500mnth which is maybe just a tad over what most sfr's would rent for long term. Seems like might have to go on a micro/individual basis to decide if a particular property would make sense long term or short term. I'm sure there some over performers and some under performers. I'll look at some comps based on my knowledge of the area and see how they look compared to these average numbers. Also, any experience in seeing different numbers between airbnb and vrbo?

I asked again about the loan and they said again that it is a Fannie Mae loan from Dec 2012. Fixed rate of 4.04%. A "no recourse" loan. They tell me Payment will stay the same over full course of the loan. 23-24 years. 

@Taylor McClung yeah, I'm learning a lot and coming across some interesting deals. I just looked at another one, a six unit with some commercial space that I'll probably post for advise on tomorrow. Meanwhile the two house fixer I've been in escrow on for the last couple months looks like it might  actually close soon. Folks on BP have been so great with  all of the helpful advise. Look forward to meeting up at some point. Cheers.

oh, wait, fort ross is south so I guess that's the right region. That's a pretty large area though, I'd be inclined to just look at fort Bragg. Interesting though, empty 75% of the time eh, Ill have to see how that compares to a few nearby comps. Thanks!

@Evan R. Thanks but the property is in fort Bragg the area you mentioned is quite a ways farther north.

I love when I'm responding to one post and then after I post I see that a few more posts have come in :)

@J. Martin and @Colleen F., thanks for your comments. I definitely will need to learn more about their priorities. When I talked to them a while back they mentioned that they just don't get over there much to use the place. I think the idea of a deal where they could continue to use the place occasionally might appeal to them. I definitely need to see what information I can gather to make decent vacation rental projections. Time to hop on VRBO and look for some similar places and see if I can access the calendars to see how full they are etc. Also time to talk to local vacation manager folks. 

I've never negotiated an owner financed deal or a master lease deal, so I'm a little uncertain on what kind of numbers/terms to suggest. Any suggestions?

Thanks!

@Larry Turowski, Thanks for jumping in on this thread.

Here are some basic number scenarios. Not sure how accurate they are at this stage. I'd love feedback:

Property Manage as long term rental: $1500 in rent, $150 to manage, boost track record

Property Manage as vacation rental: would need to work with someone local on the ground (I have property near by but live 1.5 hrs away). Don't know vacation rental market well enough to project income. Would be a good learning experience, might be more profitable than basic property management.

Lease Option: Pay owner $1500 per month. maximize property income at maybe $2500/mnth. would need to spend 30k to build out detached garage unit.

Owner Finance: Not sure how these numbers would work. At $450k/5% it seems like my monthly payment before taxes and insurance etc. would be about $2500, so that doesn't work. Am I missing something here?

@Steven W., a few years ago there were some great deals in Ukiah. Wish I knew then what I know now... These days the rental market is very strong but housing prices have gone up quite a bit so I'm not seeing much of anything that would cash flow very well. I think there are some good flip opportunities from time to time. I recently saw a place on mls that needed a ton of work but was probably 200k under arv.  

For myself I've been investing in Fort Bragg. Rental market is strong there and prices haven't risen as quickly. Personally I think over time anything near the coast in CA is a good bet. I'm also looking in Lake County. The rental market is a bit more challenging over there given the amount of meth etc. but the landscape around Clearlake is beautiful and increased influence from Napa/wine is more notable every year. Numbers work pretty well over there but important to know the areas well. Always happy to chat with folks about the northern north bay as I call it. 

Cheers.