All Forum Posts by: Scott Swanson

Hi Philip,

The law is "tighter" than a gnats butt stretched across a 55 gallon drum! BUT, where there's a will, there's a way. If you live near neighboring states, you might want to consider doing those as well as Illinois. Best of luck to you.

 I would like to let all of you know that I just spoke with Robert. He really appreciated your help and advice. It meant a great deal to him! Here's where he's at. He's going to talk to the owner and find out if it's for sale. I told him it's a step by step process and that we'll be following those steps. We went on the LA County assessors website and looked up the information. We found almost everything we needed, however I couldn't find the owners name. Does anyone know where he can "easily" get that information? I'm not familiar with the website what so ever. The counties I work with, all list the owners name. We did find out that the owner of the house next to the empty lot, also owns the lot. There's 2 different "AIN" numbers. So, he's going to talk to the owner tomorrow. Robert is new to the business, but he understood everything I was walking him through. He picked up on it very quickly. The information you all provided, gave him an idea as to where he needed to start. So I thank all of you for your input. He is NOT going to be talking to any realtors! I told him the truth about wholesaling. I told him it's very difficult and takes a great deal of time to learn. I also told him it's not rocket science either. I was happy to help him and I think once he learns the business, he'll be very successful. I'll let all of you know what we find out.  

Robert,

Don't pay attention to Jack Orthman's comments. Having the drive and desire to succeed is what you need in real estate. Yes, there are idiots out there, but Jack's post was uncalled for and  immature. 

However, Jack is correct about raw land. It's difficult to sell and/or develop raw land. The amount of due diligence needed, can be mind boggling. That DOESN'T mean it can't be done. I would suggest you talk to an experienced "reliable" person in your area, who has some experience in selling land. Be careful, because will steal your leads in a nano second! Maybe go to a REIA, (real estate investment association), meeting in your area and learn about the business. These REIA meetings are a place to meet others in the business and help you learn all about it. Starting out with raw land is not something I would suggest. That's a "specialized" business and sometimes deals can take over a year or two. However, if you know of land that could possibly be turned into a development or maybe a shopping mall or whatever, take some time to investigate it.

I would rather encourage someone than degrade them. But don't forget, raw land is not for the new or inexperienced person. Get someone you can trust to help you. Best of luck.

Hi Sharon,

I'm just curious as to why you want to invest in Ohio and not any other states. I don't know if you've looked at Indiana, but it has some low to middle cost properties, that have low taxes and high returns. Also, how much are you expecting your 1031 to be? Best of luck. 

Hi Grant,

You might find that separating utilities could cost you an arm and a leg! Just so you know, water cannot be separated. You can separate electric and gas, but it's expensive. Let's say it's a 4 unit. You need to add 4 more electrical boxes and have them all wired. You need one for each unit and 1 box for the "common" areas. The electrician will have to find out which wires go to what units and it could be a mess. The same goes for gas. How many furnaces do you currently have? Because if you only have one and it runs on gas, you'll need a furnace for each unit, plus additional gas lines. I think you're better off taking the bills from the last 2 years for the electric, gas and water and divide it out per unit, for each utility. Then raise the rents accordingly. Take the "average" cost and use that, when you increase the rents. Be sure to advertise that tenants do not have to pay for utilities, because your prices will most likely be higher than other "separated" units. I hope this helps. Oh, 1 last thing. If you decide to separate everything, I would check with the city to see if they will even allow you to do it. 

Hi Alex. You named a few places where you'd like to invest. Are you open to any cities west of Valparaiso? Also, what is your price range for sfr's, or are you just interested in multi units?

Hi Maximus,

I looked up the property and it says it's in a moderate crime area. I don't know if that makes a difference to you or not. I also noticed that there seems to be roof issues. One of the pictures shows "patch" work on the ceiling and wall. It looks as though it has a flat roof. I don't know what they charge in your area to replace them, but in my opinion, that's not a reason to not purchase the property! However, it looks as though it needs some major updating, which could possibly cost a bundle. How much rent would the entire building bring in per month? Do you have a contractor that could asses the property for you? Best of luck.

David,

Cash flow has to be "calculated." Saying that you HAVE to get a grand a month, in my opinion, is not the best way of purchasing properties. Also, everyone seems to have a different term they use to calculate it, but we use what's called cash on cash return. Some people call it net profit % or cap rate or whatever. We have a spreadsheet set up and we just plug in the numbers and it calculates the return in dollars and percent. I can't speak for the rest of the country, but in Illinois and Indiana, we won't offer investors a property, unless the return is 9% or more. We add the purchase price, rehab costs, maintenance costs, management fee, taxes, vacancy and insurance. We typically use 5% for maintenance and vacancy.  In other words, we take 5% of whatever we're renting the property for and use that number for maintenance and vacancy. Insurance and taxes are basically a fixed cost each month. If you have a mortgage, you just add in the monthly cost. Then you plug in the monthly rent and you get your return in dollars and also percent. The formula has worked very well for us. In places like California or New York, I've heard if investors get 3 or 4%, they're thrilled. So your return depends upon the area you're investing in. I hope this helps. 

Thomas, as others have said, the numbers are tight. However, so is the market! Some investors are willing to buy at a higher price these days. You need to figure out if you're going to sell it so an investor can flip it or rent it out, after the lease is up. Without running all the numbers, I'm thinking that it may not be a good rental, unless the area is appreciating dramatically. But "typically" buying a property for $200k and renting, rarely has a good rate of return. Yes, there are exception but most of the time return is poor. If you let me know the taxes and what the average rent is for that type of home, I can calculate the return. The numbers as you've presented them, don't make it a good flip. The return is far too low. Best of luck.

Dylan,

I have a few questions. Did you give the agent permission to post it on FB? Did you have the property tied up with a contract? If so, where did you get the property from? Did you sign a contract with a broker, who originally had it listed? If so, was it the same person that posted it on FB? I'm trying to figure out who fits where in your scenario. That would help me determine who should get what.