All Forum Posts by: Ryan Sanders

rentometer puts it at roughly 1000/month. If your Gross Income is 2000 a month, what are you expenses? if you give me rough numbers for your mortgage payment, insurance, vacancy rate, prop mgt fee, maintenance budget, capex budget, and any other expenses you can think of I'd be happy to run some numbers for you and give a better opinion.

Also, you have your property taxes hitting at 900 a month. that will kill any deal

thanks for the info!

I have about 40k to work with right now and the current financing i have lined up will require my current deal (1st one) to use about 25k at close. I have another going under contract tonight that I would like to flip, but because its purchase is 185k my 15k just isn't enough for me to finance the whole deal so I'm being forced to wholesale it. I'd rather flip it myself because I can make more, but I need a financing method that requires a very low down payment. Also, my credit is only in the mid 600s so its not the best and I would like the lender to worry about the asset rather than my personal credit. Does this type of lender exist or is it a pipe dream?

Less than 10% down

Less than or equal to 12% interest

Less than or equal to 5 points

asset based with no credit check required.

Thanks for any help,

Ryan

thanks for all the replies! I spoke with my local zoning board, flood plane admin, and a couple insurance agents. All are saying the same thing: can't get around it should just look for private insurance instead of govt ins. Gonna go that route I guess. Thanks everyone!

I'm sorry if this is in the wrong forum, I couldn't find a category that fits so I figured I would post in the most popular one.

I have a property under contract that I want to use as a rental. My initial projections showed a 7.1% cap rate, 19% total equity return, and an equity internal rate of return (IRR) of 23%. This also showed cash flow at 4118/year - 343/month. This seemed like a pretty stellar single family rental up front. Unfortunately, I just found out it needs flood insurance and the flood insurance premium is 2700 per year! This changes the numbers to:

cap rate: 5.5%

total equity return: 11%

IRR: 19%

cash flow: 1418/year - 118/month

Now I understand these are still decent numbers, but I want to do everything in my power to get back my original numbers! The flood plane is in two parts on the map: one very very light blue and one a dark blue. The dark blue portion is only over the back yeard, while the light blue portion covers the house and the street in front. I assume the light portion would be cheaper flood insurance because the flood plane is less "severe." I'm thinking of doing some creative landscaping in the back yard to create a 'barrier' between the back yard and possible flooding. This could be a stem wall or, more likely, building up the outer perimeter of the back yard 3-4 feet with retaining walls on both sides and having a two tier back yard. I think this would be attractive and it would also prevent severe flooding of the back yard. I'm in Colorado Springs and this particular flood plane is nowhere near a burn scar or anything to make me think flooding will be bad and I'm not even sure why this flood plane is there.

So my question is this, do you think landscaping measures can eliminate my need to insure for the severe flood plane and allow me to insure for the lesser of the two evils?

I'm also curious if I could legally subdivide the parcel due to its size (pretty big for an urban parcel) and by subdividing, lose the requirement to insure the sever flood plane. Any thoughts?

Thanks!

Ryan

PS - I've attached a picture of the flood plane map so you can see the delineation between planes. The green box is the approximate shape and size of the parcel I'm purchasing.

I definitely will be talking to my CPA soon. Now that my neighbor and I have a couple deals going, he will see that this works and will want to invest that 401k somehow so I want to be sure I'm educated first.

I'm an investor in Colorado Springs. Still new, but have my first rental under contract and am attempted to get funds together for another rental I want to put under contract. Can you add me to your buyer's list? I am interested in fix/flips just as much as rentals. Great to meet you!

Thanks very much everyone! My neighbor has decided to sit on his 401k for right now and see how our first deal or two together go before he risks his entire retirement (can't say i blame him but it is disappointing lol). This will allow me more time to do the necessary research and determine our best course of action going forward.

@Dmitriy Fomichenko Can he act as a private money lender while getting a profit-share return per deal? His contribution to my investing is insistent upon a profit-share instead of a hard rate of return.

@Brian Eastman Thanks so much for the quick and informative response! One situation I have thought about is using my LLC funding to gain financing then use his IRA funds to fill out the remainder of the deal if necessary. Would this provide him the best tax benefit while still allowing us to leverage our deals?

As for the entity structure, so far we have a partnership agreement specifying how much our capital contributions are and how much our profit shares are. These partnership agreements are done for each property we intend to put under contract, and each of those properties would be owned by a single LLC which is, in turn, owned by my primary LLC. This seemed like the best way to have our partnership flexible. Does this seem like a method that should work? Unfortunately, while we've had two properties under contract (one fell through and the other is still UC), we haven't closed on anything yet and I want to be sure my ducks are lined up before one of us gets ourselves in trouble.

Thanks again