All Forum Posts by: Brandon Schlichter

We've worked it a few different ways.

Current interest on the property is 6.35% on a 30yr fixed.

Our current expenses are less than 50% , taxes and insurance are quite low (Less than $100/mo for both).

After everything is said and done, after the equity loan on top of everything, we're still looking at $175/mo in income.

I don't post here VERY often but I thought that I would post some information on my brother's first deal (I manage the account).

Anyways, many people here have said in the past that it's impossible or very hard to find good deals on the market that are listed by real estate companies/Realtors.

Anyways, we purchased a little SFD property for $46k (w/ $1700 BCC). Total repairs to date have been around $3,000. Went into it with $3,000 down , so a total of $6,000.

$675 per month in rent currently with pretty good renters. Appraisal came back today at $70k so now we can cash out some equity.

Not too bad for a listed property i couldn't sell to a anyone but my brother (For some reason, no one around here wants rentals).

Wanted to pose a quick question and see what everyone here thinks, and if anyone has expirance with something of this topic.

In my area, the rental market seems to be pretty good, area-wide vacancy rate is around 6%. Several of the apartment complexes are in VERY poor condition, one complex currently has a 40% occupancy rate, they're asking about 20% over fair market rent, for a very poor rental (No updates since it's construction in the early 70s).

Anyways, several of the rental companies that do keep care of rentals, meaning updates every 10 years or so are seeing occupancy in the 97-98% range. I'm not having any problem with renting properties (I work for a real estate office that doesn't handle rentals, yet we get a TON of calls every week for people wanting rentals).

Anyways, i have my eye on a piece of property, total of 9.8ac zoned for apartments. The school district is rated rather high, and we have few multi-family properties in this school district (I think about 3% are duplexes, and no 3+ units).

So, i was thinking about a "Luxury Apartment Complex", i was thinking, is it feasable to have 1br,2br,3br and even 4br units in the same area? There hasn't been a complex built in the town for quite some time, yet our area is growing quite rapidly. The last apartment complex (55+ Community) was built 2 years ago, total of 8 4-unit homes, they were rented out BEFORE the complex was finished, as as of my last checking there was a 30-40 group waiting list for the property.

The land cost isn't too bad, $22.5k/acre , needs some grading work, and the utilities are available. I was talking with a few people that I work with and they thought it was a good idea, the city requires so many square feet of green space per unit, and we were thinking a playground type green space (Only 1 complex has any sort of green space, and it's the one with the 100% occupancy rate).

Any thoughts/ideas ? I'm going to a builder today to get a quote on the construction, i have a modular builder that my company works with, the unit cost from them is only $40k/unit for the 3br homes.

Avg rental rates in my area are $400/1br, 550/2br , $650/3br and $800/4br. These are all for basic units, without garages , one complex has garages, and they see a $100 premium per month for those who want a 1-car garage.

Any insight would be appreciated!

It's the bank's policy.........Something you have to do to get the listings.

I'm not saying EVERY bank does it , but it seems to be the high volume ones do it frequently.

As for evictions, you're the one 90% of the time that has to find out occupancy status, and place the C4k notice, vacancy notice if it's empty and immediately order the oppropiate service. As a agent on any property, it's our duty to work with owners/tennants, it's the same with REOs. Think of it like being a property manager and RE agent at the same time.

First, the question you have to ask yourself is.......... Do you really REALLY want to handle REO properties ? It can take quite a bit of capital to do.

Here are things you may have to do if you want to be an REO agent.

1. Repairs, utilities , and any other carrying costs will be billed to the agent/broker handling the case , this could constitue just utilities, or it could be $10,000 repairs.

2. Eviction of current tennats/owners and the like , this can be messy at times.

3. Wait for payments of said items.......Some banks will re-emburse you within 45 days, some within 30 of the expenses you have. Some banks will only do so after the deal has closed, i think the average is 45 days to be paid back. You MUST Be careful on the company's requirements for doing REO repairs, some require contractors, some don't, and they're very firm on thier policy....Don't take enough pictures of the $2,500 gravel driveway you paid for, and you don't get paid! (This happned to a agent on a deal 3 months ago, She did all the work, company was upset she didn't take enough pictures of the $2,500 gravel job, and gave me the listing).

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Now , if you want REO properties, you'll have to contact the AMs of the various banks, I did this by going through the county records of sherrif sales, found the lenders who owned the properties, and contacted them, for one bank (One I was VERY happy with) It took from May of 06 till march of 07 to get in their system.

You must carefully weigh the outcomes, and remember........Some banks only pay $500,1%,2%, or 2.5% to the selling agent.

Of course my view will be in favor of this but...

FIND A REAL ESTATE AGENT THAT INVESTS IN REAL ESTATE!!!!!!!!!!

I deal with foreclosures, and *try* to work with those who invest in real estate. I need about 3 more investors than i have now to be able to get a larger ammount of inventory sold. I run into ALOT of deals in my area (And i'm fairly rural with a county population of 52,000). Most investors won't move, if you're one that does, there will be agents that will be their worth in gold. They'll also be able to pull the comp reports you want ,and help you along the way.

Depends on your county...

Google "Your County" auditor, or recorder.

Most counties have auditor RE information on them, and many also have the recorder's information as well. Search the previous owner's name, and find out how much the mortgage was for.

I'm sure i'm beating a dead horse here, but i'm still very puzzled.

I have no issue with finding 60-70% ARV properties in my area (I'm a RE Agent) So, i REALLY want to buy some, as i can't find enough real investors to work with me. There's a over-abundance of good properties for renting, and no one wants to deal with it locally.

I've got the available cash on hand to do it , which is good, but here's my issue :

How do I Hold the real estate in the LLC/S-Corp's name? From my understanding , most mortgage companies will use an acceleration clause or something along those lines to call the debt in full and that just won't work. I need to be able to get a mortgage for the properties, and have the LLC/S-Corp distribute the proceeds, as i will have multiple investors with the property.

I want to protect myself and the investors, as well as use it as a tax benefit as well. How do I do this ? From my understanding,there's only one or two banks in the US that will loan outright to LLCs and S-Corps, i don't have a issue with getting mortgages in my name.

Thanks!

Rant Insuing about RT :

I'm a Real estate agent that handles REO properties, I HATE IT when people that subscribe to realty trac call me!

I currently have a property listed, it's a nice little ranch on 1.1ac , as a agent, and one who works with the bank, I know alot of information that most people don't see.

Origional ammount owed on loan (Deliquent ammount) of $139,000
Origional Bank list price for home $131,000
Current Bank list price $119,000.

My estimate is the house is worth $117,900 or something in that area.

I've got MULTIPLE calls from individuals who ask "Will the bank take $85,000". My usual responce is "Why would they take a offer that's $40,000 under what the home is worth, it's not like we're not getting offers on it already". The callers are usually indignant and don't understand why realty trac is giving them a number of $85,000.

Here's why .......Realty trac is STATING on the website that the foreclosed price is $85k , this price is the one that the bank paid for it back at the sherrif sale, no one bid on the property that day. Anyone who's been at the Sherrif sales knows they will bid up to a point where they recover an acceptable part of the mortgage.

Unacceptable figures............Very unacceptable.

Here's what you do if you really want to play the game well.

Go find the mortgage record, amoritize the loan and figure out how much is owed ,then go from there.

These banks aren't out to make money, they're out to RECOVER part of the price they lost.

Realty trac is a very poor tool for finding REO properties...

Multiple offer situations are a GOOD THING :)

See what's legal in your state, but the banks that i've worked with in the past have usually given all interested parties a multiple offer form. The form states something along the lines of "The property is in a multiple offer situation , highest and best bids by XXX".

Hopefully you'll have the parties compete against eachother and get even more out of it. Most of the times i've seen a siutation where there's a issue is with discrimination, and thats why alot of the banks issue forms.