All Forum Posts by: Sarah Ziehr

Tracey, Because of the proximity to the hospital, Woodlawn is excellent for a buy and hold/cash flow property, and you have the comps to prove it.

They both sound dreadful to me, but I grew up in Wisconsin. :) 

As Brie states, both markets would be for cash flow only. 

In this type of partnership, the financing partner would be paid back 100% before the managing partner would see a dime. After the partner that funded the down payment and secured the loan saw his investment back, then you as a manager could see a bonus depending on profitability. 

Sometimes managers get bonuses after a certain IRR or cash multiple is realized. Depending on what kinds of hurdles are agreed to, then when you go to sell the profits would be split 50/50.

If they are facing foreclosure, then they can't make the payments- what makes you think they will pay you back?? 

There are bad lenders at every bank, so I would't discount WF all together, but it does sound like you need to talk to someone else. I always get a kick out of lenders and the advice they sometimes give my buyers. It often seems that they have their own agenda and I wonder how they can be such experts on the market when they sit behind a desk all day. 

Go for a community bank or a company who is a broker, not just a big bank selling their own product lines. 

Mold in a foreclosure and priced at 50% market value- This tells me its bad and often times homeowners just walk away from these situations. 

You need to find out what is the source, is the mold inside the walls? Ductwork? Is the condo on the top floor, garden unit? If its on the top floor, its likely coming from the roof- if its a garden unit it is likely coming from the foundation. When you walked in the property, did your lungs prickle and did the bank make you sign a hold harmless waiver?  Hire a professional for this one. 

What makes you think the market value is $100k? Homes in that area tend to sell for $40k or $140k but not much in between. 

Are the tenants current on the rent? How long have they been there? What is the vacancy rate? 

Your expenses seem awfully low seeing as most property managers take 7% off the top, taxes are likely $2k per year and water bill is likely another $1k. Also have you accounted for snow removal? 

With the numbers you give, that is a 17 cap rate which is outstanding, but like Nick points out, there may be better ways to leverage your $15k. 

As long as the bedrooms have a closet and a window, they should be counted as bedrooms. Since there is no bathroom upstairs, that may bring down the value slightly than other 4 bedroom/2 bath homes with a bathroom upstairs and downstairs. 

I would ask a broker to comp the property.

What kind of repairs did the property require? Is the property currently vacant or occupied?  

The difference is financing. Much easier to get financing on a $100k property than it is on a $5M property.