All Forum Posts by: Ronald H.

Thanks. I do agree that I need to have the skills to estimate the fix up costs. How long could it take to get them? 

I have purchased the Estimating Fix Up Costs book from Biggerpockets, although I really want to get started as soon as possible. Even with the book, how long should I wait, in order to get started?

Getting started now, is the only way I could change my financial picture in a time frame to my liking.

It does not appear as if there are many deals in my area. Everytime, I do keyword searches of the Internet using keywords, such as "Must Sell" "Rehab" "Moving" etc, I end up seeing many in Connecticut and Rhode Island and hardly any in Massachusetts.

Thanks for the feedback folks. I seen a Condo advertised for 40% under FMV and I replied to the guy. He called me back and told me that it was a condo. Once I found out this, I politely told him that I don't like to buy Condo's because if the HOA issues.

Hence, the reason why I posted here. I wanted to see how other Investor's feel about them. I listed to a Podcast here about HSA's and how some of the member's of an HOA get power hungry and I agree with this.

Hi, Kim

If assigning is balked at, then I could just buy it, and do a double close.

I have seen a couple of properties on the web that appear to be good deals. I have replied to some, and have not gotten answers. Lot of BS posters

I am looking at one now for $59,000 in Bristol.. I did a search of Trulia.com using 3 bed, 1 bath parameters and the recently sold properties, which I used as comparables, in that area are similar in square feet, bedrooms and baths showed me homes that were $100K higher in price. Average sales price appears to be around $161,000.00.

In the past, I did not have good experiences with Real Estate Agent's. They all wanted to stifle my dream, but a lot has changed these days and I can now use a Transactional Funder to buy. I would kind of wonder why a Real Estate Agent would work with me, if he knew how to estimate rehab costs himself. Why wouldn't he just buy himself?

The only way to buy sight/unseen I can think of is, to send a letter of intent "If it is a deal" with a 10 day Inspection contingency and have an Earnest Money Deposit stated in the letter to show Good Faith. Before I send the LOI with the EMD, I would have the attorney review it.

To establish if it is a deal, I would get comps, I could use comps of similar properties on Trulia or Redfin, but in the beginning, I might want to get a Broker's Price Opinion or an Appraisal, but only if there is interest from the seller. If the comps are good, have the attorney send the letter of intent with the EMD to escrow agent.

If seller accepts, I would now send the Contractor over to establish Scope of work and give me an estimate. Probably getting a couple Contractors would be prudent, but how much will I have to pay them would be a question, I would be thinking about.

How am I doing?  Do I got it covered?

Not seeing many deals in Massachusetts and I am searching Connecticut. Looks like Connecticut has many deals. I will be using the Bureau of Labor and Statistics to see what the economy looks like down there. Also will look at Recently Sold props and Rentals to get strong idea of Markets.

My questions

What are the steps in order to buy, and assign my property to another Investor and be safe. I will be using an attorney to review my first couple transactions.

I would be VERY grateful to another Investor here, if he can give me the steps he takes to buy properties that are long distance from him.

Since I need a Contractor to help me calculate the rehab costs, how do I get an Interest in the property if the Rehab costs are unknown. If I have NO interest, the contractor could buy it and I would lose the deal????????

Please help and be specific. Thanks in advance. Ron

I constantly search using keywords to find potential deals. Problem is, I don't see many at all here in Massachusetts, unless I am doing something wrong.

It seems like there are a TON of low priced homes in Connecticut. This is a headache for me, since I have to drive 90 to 100 or more miles to get to them. I have made some contacts with a Contractor down there, so I have that in place. 

I believe, I should start out with a lawyer reviewing my contracts, and I have gotten some referrals here for that as well.

It is TIME for me to pull the trigger. I still have not mastered the Estimating Rehab costs, so I am going to be relying on the Contractor a bit more than I want to. Any advice about this?

Should I find a Home Inspection company to inspect the properties and take pictures for me? or hire someone off Craigslist to take them. Doing the latter, has some implications and potential problems associated with it.

I would like to buy, flip and sell remotely from here and only travel down to CT when and if it is absolutely necessary.

Obviously, I need to get the ARV nailed down with Recently Sold properties off of Trulia.com or some other website.

How can I make offers on these properties. What are the steps, please??

When does Title Insurance come in?  

My offers will need to have expected legal expenses factored in, until I understand the laws in Connecticut.

I have more questions, but I will keep it shorter for now?

Again, my goal is to get an interest in the prop, or get it under contract, then inspect without going down there to CT, then buy the property, and flip to another investor. I want to do this with confidence and eliminate un-necessary trips that could become very costly and time consuming.

I am curious as to why I do not see much said about Condominiums here. Did a search and not much came up.

Any Investor's buying Condominiums in Massachusetts?

Welcome dennis!

If its Real Estate Investing Information you want, you have come to the right place. Don't overlook the Real Estate Investment clubs. You can introduce yourself and get your name out there with the clubs.

Welcome, there Rachael

You are living in a great place to find Low Priced housing. Get to know your area's housing prices, job growth and go out and get them.

Ask MANY questions here, and procure a lawyer of you do not understand a contract.

Find a niche, whether it be wholesaling or buying to hold and collect rent.

Good luck, Rachael.

Yeah, Bill

You're right. I get a sense that the Vacancy Rate was never going to accurate from the owner. Nice enough to talk to. Actually had some rapport with him in our calls. He seemed to insist it is worth much more. Used examples if similar props down the street. Yet it is appraised at 300K. I do realize that what the property generates creates value, but the appraisal also has some bearing.

Below was copied from his documents called Rent Roll, Expenses, and Projected Rent Roll.

I have stopped analyzing this. When asked if he would show his Schedule C, he said something, but I have forgotten.

RENT ROLL FOR SUBJECT PROPERTY

(LOWER LEVEL )

1A VACANT _______________________ $0 (1 BED $450)

2A Tenant 2 _______________________ $450 (1 BED)

3A Tenant ________________________ $690 (2 BED)

4A Tenant ____________________ $500 (1 BED)

6A Tenant _________________________ $500 (2 BED)

( TOP LEVEL FRONT OF BUILDING )

1 Tenant ___________________________ $500 (1 BED)

2 Tenant ____________________ ______ $500 (1 BED)

3 Tenant ____________________________ $575 (1 BED)

4 Tenant ____________________________ $575 (2 BED)

5 TONY CAP (*MAINTENANCE GUY*) _____ $0 (1 BED)

( MID LEVEL )

6 Tenant ____________________________ $750 (3 BED)

7 Tenant ____________________________ $500 (3 BED)

8 (NEW TENANT) _____________________ $550 (2 BED)

9 Tenant ____________________________ $575 (2 BED)

10 Tenant___________________________ $650 (3 BED)

11 Tenant ____________________________$590 (3 BED)

(3 STORE FRONTS )

Commercial Tenant __________________________ $300

BUILDING RENTAL OFFICE ___________________ $420

LARGE STORE FRONT VACANT ( COULD BE $600 TO $800 )

TOTAL RENTAL INCOME _________ $8,625

EXPENSES FOR SUBJECT PROPERTY

ESTIMATED MONTHLY EXPENSES

COMMON ELECTRIC = $200 <- Melarchy for 19 UNITS!

WATER / SEWER = $400 / $350

PROPERTY TAXES = $250 <- WOW this is low

TRASH REMOVAL = $350

OIL FOR HEAT & HOT WATER = $1250 <- WOW. How does he do it?

( HEAT OFF 5 MONTH A YEAR, HEAT CAPS OFF AT 70 DEGREES IN MOST UNITS )

MAINTENANCE / MANAGEMENT = $450

PROPERTY INSURANCE FOR $775,000 = $600

EST TOTAL EXPENSES = $3,850

[ ONCE CONVERTED TO ELECTRIC HEAT WE WILL SAVE OVER $1,000/MOS ( THIS UPGRADE WILL COST ABOUT $30K )

$3,850 - $1,100 = $2,750 TOTAL EXPENSES ]

BELOW IS A SCENARIO HE HAS FOR BOOSTING VALUE OF PROP, but he does not take into account that he will lose quite a few tenant's. From our discussion on the phone, it sounds as if all the tenant's are on SSI or SSDI. If he raised rents by a whopping $100/mo, MANY of these tenant's are going to move. So in reality this will take from 2 to 4 years to work.

POTENTIAL RENTAL INCOME FOR SUBJECT PROPERTY

(LOWER LEVEL )

1A NEW TENANT ____________________ $500 (1 BED $450)

2A Tenant __________________________ $550 (1 BED)

3A Tenant ___________________________ $690 (2 BED)

4A Tenant___________________________ $550 (1 BED)

6A Tenant ___________________________ $575 (2 BED)

( TOP LEVEL FRONT OF BUILDING )

1 Tenant ____________________________ $550 (1 BED)

2 NEW TENANT ______________________ $550 (1 BED $500)

3 Tenant ____________________________ $575 (1 BED)

4 Tenant ____________________________ $625 (2 BED)

5 Tenant and (*MANTENANCE GUY*) ____$550 (1 BED)

( MID LEVEL )

6 Tenant _____________________________ $750 (3 BED)

7 Tenant _____________________________ $600 (3 BED)

8 (NEW TENANT) ______________________ $650 (2 BED)

9 Tenant ______________________________ $600 (2 BED)

10 Tenant ____________________________ $650 (3 BED)

11 Tenant _____________________________$590 (3 BED)

(3 STORE FRONTS )

STORE FRONT CHURCH ________________ $400

BUILDING RENTAL OFFICE ______________ $475

LARGE STORE FRONT (RENT TO NEW TENANT) $650

TOTAL RENTAL INCOME _________ $11,000+ MONTH X 12 = $132,000 PER /YEAR

Recently came across a Large, mixed use, residential, commercial unit and I found myself interested in it. I spent some hours analyzing it.

Sale price $$258K

NOI $57.3K/Yr

Expenses $46.2K Owner was sketchy on vacancy rates. Not verified. He did not include Office, Legal, Prop Maint, Snow Removal.

This owner loved to talk and I felt I had rapport going.

Owner needs cash, in order to be relieved from a 400K debt from a bank.

I thought about JV But I have no landlord exp. I have confidence in the financial side but not on the handyman side. "Fixing everything."

Could not flip due to price.

NOTE: I then got to figuring, could I do this? Do I want to do this? I can fix things, but I am not considered extremely handy, and with this property, I would be having to fix things, ALL THE TIME. Many units.

I find myself still wanting to do this, but I would need someone full time that could fix things like the toilets, the walls, the masonry. What would I pay him?

End result. I find myself wanting to do this, but a partner would be needed. Would a partner even do this with a newbie?

I thought about how to arrange a partnership with the hypothetical figures.

Partner provides the Cash in the tune of $258K. If we split the NOI at 50% each, we both earn $28,650/Yr

I provide the Management by keeping on the current owner at 8% of NOI for $4,584/Yr This $4,584 come out of my pocket. What should his duties be? Rent apts, fix minor things. He definitely won't do major things for $4.6K, so I would need someone to fix major things and pay for it out of my salary of $28.6K

I have stopped my due diligence on this, because it does not appear to be lucrative and I don't want to be stuck in a big multi unit, fixing things, or for that matter living there.

What about capital expenditures? Scenario: If I could live off of the $28.65K per year, AND there were no major property disasters, what time would I have to look for other opportunities? One major problem could require a Contractor at the tune of $70/hr plus material costs.

What method of property mgmnt would work here? Anyone see anything that I cannot see? The way it is now is "Too much work for little.

I am seeing approximately a 11.1% ROI for my partner with these figures. If the property manages to increase in value at 2% per year from its current appraised value of $300K and my JV agreement would be for 5 years, then I would need to save up enough to pay partner his initial investment, plus we would split the appreciated value. Am I way off?

Facts about the subject property

1. Motivated Seller

2. Price too high ( I think this answers my own question.) Owner tries to tell me it is worth a lot more, but it is appraised at $300K

3. Low Income housing. Most tenant's on SSI and SSDI. Rents are well below area standards. There are NO security deposits or last months rents to use for a deposit here.

4. Property is heated at the owner's expense. Owner claims the heat gets turned on in Oct and shut off on March 30th. I don't know about him but I would not be a happy tenant if my apt was 50 degrees on Sept 20th or April 3rd.

5. Owner seems to consider a very and unverified "Vacancy Rate" which I don't think sounds normal for those types of tenant's.

6. 19 Units, yet owner claims that he pays $200/Mo for electric. WOW, he trained his tenant's well.

NOTE: I have some cash and a life insurance policy that could have been used for a DP here, but I would not feel comfortable.

NOTE: I have a house now that I want to sell and it cannot qualify for bank financing, which means an Investor. I cannot extract any equity from the home probably because my credit is not great right now. So to use the house as a tool to buy an Income Property is not feasible right now, until it is sold.

My most comfortable idea would be to buy a cheaper home for my primary residence, and use any additional funds to start a "wholesaling real estate business" in my new locale. Somewhere where it is cheaper to live, like Ohio.