All Forum Posts by: Shane H.

@Bobby Whitehead

I used 2% for Cap Ex and 2% for repairs.  Maybe a little low - however since we are building and I know the quality of materials we are using I have a good handle on how long they will last/cost to replace etc.

If they are new builds I think most of what you would put there depends on the quality of materials used, quality of construction and the types of things that will start to wear out first based on your weather etc.

Roofing, siding/windows, water heaters, appliances, exterior paint, etc are what I would foresee needing attention and the largest expenditures as time moves on (and for those of us in hail prone areas  - the random damaging hail storm)

If I follow the new construction route for an extended period of time I'd plan on selling around the 10-15 year mark so I avoid the maintenance issues that will likely start popping up around then.

We will use SmartSiding which has a 50 yr warranty, Smart trim and if my partner can get a hookup on some discount or odd lot Class IV impact resistant shingles we'll be using those on the roof.  Water Heaters, I'll go basic 6yr warranty models, how long they last I think is more a symptom of how good or bad the local water supply is vs anything else.

If it were me I'd pay close attention to the level of materials used to accurately determine your cap ex/repair costs.  Smart Siding or cement siding instead of basic hardboard, Cheap Vinyl windows or a higher grade window, if you're building in Texas - Class IV shingle or a cheap 3 tab that will need replacement the first golf ball sized hail storm that rolls through, thoughtfulness that went into rain runoff/drainage etc then use your judgement.

Are the interior doors cheap hollow core synthetic materials with an engineered wood frame or did they use solid wood frames and MDF for the trim or did they use a quality hardwood less prone to damage like Oak/Ash etc.

I'm probably going into too much detail, however I pay attention to small things like that as in this new construction build I want to idiot proof as much as I can.

Was able to meet for lunch with the potential seller today and see part of the properties.  Im a little surprised.  Was a little better than I thought.

Saw 2 of the parcels.  One had a mix of office and restaurant space - somewhat run down but location wise not too bad.  It touches and shares property lines with one of our hospitals (we only have 3) and has frontage on a main arterial road.  It's in an older part of town, lots of money has been pumped into properties across the street and up and down the arterial with plenty of national restaurant tenants nearby.  Household wise plenty of people around, however not in the highest income area.  This one needs plenty of work or could be scraped for something else and depending on what you'd do with it would be a candidate for a public/private partnership with the city or state.

2nd property is an office property but is an A to A+ property in an A++ location.  I didnt get to go inside but am very familiar with the area.  If he put it on the open market he'd have lots of people likely wanting to buy it.  Steady tenants inside.

We ran out of time and should see the remaining properties next visit.  He seems concerned as i had alluded to about taxes and his legacy - as I think when he passes he'd like to donate everything to charity.  Supposed to possibly have lunch again in a month or so.  Still could be something here and the mention of forming a general partnership, a possible master lease, or him forming some sort of charitable trust have been touched on lightly.

@Timothy Aughinbaugh @Account Closed

Thanks for the reply  @Jay Hinrichs

I could probably put some rough #'s without giving away the location.   Estate Lot - 2 car garage - 3 beds 2 1/2 bath upstairs + office/great room -- Rambling Ranch -- Full Brick.  Appx 2400 sq ft on the main floor and probably around 1900-2000 in the basement.  So when you refinish the basement you'd have appx 3900-4k finished sq ft depending on how you do it. 

I'd like to spend appx $100 to 120 on the first floor only along with adding another large garage and a fence around the property.  Could finish the basement later.  Replacing windows would be the largest single expense - still has the original 1975 casement windows.

So if I'm it this were to hypothetically work out ---

$50k               Note purchase and legal fees to foreclose  (Hoping if they sell note for 10-20 cents on dollar it would
                                                                                            be 35-40k for this part - spitballing $10k in legal fees)  

$120k           Rehab  (would need maybe another $20 for the basement later)  

-------------------------------------------------

$170           Total invested      

At a min ARV would be $220-250k if not higher depending on what I do outside- but dont see it going above $275k or so -- New/redevelopment is taking place very close by this neighborhood - homes hardly sell if ever since people live here for 20-30+ years or have so far in this little pocket of houses.

I'm waiting on calls back from local atty's I know am familiar and have foreclosed on property before to get an appx ballpark cost on their expense then will attempt to track down who I need to speak with at the lender to make something happen.

And as you said - the second exit is wholesale it later, or someone bids above what is owed at the sheriff's auction and wants to hold out on the redemption period themselves.

Hello all - 

I'm a relative Note greenhorn but not a greenhorn to REI. I've read up and studied enough on notes to be dangerous...ha.

I cant provide every single detail - post will get a bit long, and I may give away the property I'm after as there are plenty of other local investors here.

However there is a house my wife and I would love to get ahold of and make it our personal residence.  Long story short, home built in the mid 70's -- built VERY WELL -- same owner since around 85 or so -- this owner kept cash out refi'ng over the years to supplement their lifestyle - last mortgage they took out was around 2007, then I'm guessing based on conversations with the neighbors stopped paying the mortgage around 2012 or so if I had to guess.  

The mortgage was then transferred/sold by the major/national lender to a sub prime lender -- house has been for sale 2 now going on 3 years I believe.  Home is full of mold and no one has lived in it for 2-3 + years.  It would require a total gut job which I have already roughly bid - major unknown would be truly how bad is the mold? -- story I got was that around 8-10 years ago the homeowner was replacing the roof themselves and a tremendous storm/downpour soaked the inside of the house/all the interior walls and mold started to grow.  My nose never ran and I did not notice it but I could see it in places.  I'd be prepared to strip it to the studs.

So my thought process was that instead of offering the bank $100k less than what is presently being asked for the house, go direct to the bank - see if I could purchase the note at a discount, then go ahead with the foreclosure process myself.  I'm not an expert on KS foreclosures however am not  a stranger to how it works and all the steps.  One of my rehabs involved redeeming a property out of foreclosure.

So if I could purchase the note for 10-20cents on the dollar for what is presently owed, then foreclose - wait out the redemption period, then assign title to myself and begin rehab?

Am I crazy?  Is this doable?  Have I hit all the hi-lights? I pretty sure the sub prime lender does not want to foreclose due to the mold -- they have to be aware of the issue as per my knowledge 2-3 people have had it under contract then backed out last minute when they found out it was inside the walls.  It makes no sense why they've left it on the market this long except for that one simple reason.  

We have enough patience to wait out the foreclosure process -- once the sheriff sale happened the owner would only have 90 days to redeem due to the state statute which determines the length of redemption based on how much principal has been paid off -- the owner would get the min amount of time.

@Jake Hartman

I've been working with @Jeff Schnell and we will be closing a deal in the next 2 weeks.  Give him a ring - He's been great to work with.

Welcome @Jake Hartman

Fellow Wichitan here - if you're ever up for coffee/lunch or a drink let me know.

@Jeff Gates

I'll have to look into - however the $5 rate includes as many signers as you want.  I'd be willing to pay extra to have everything integrated into one spot as well.

@Daniel Chang

You should check out Buildium -- I'm a big fan.  They keep adding new features.  Just this week they launched an e-signing service -- so for $5 per lease you can have all your tenants Electronically sign the docs.

Online payments, accounting etc - takes a while to set up and a bit of a learning curve for all of the features but I've been sold since 2010 for my small business and plan to have it grow with me.

Welcome @Stephen Pile

This is reason #9,998 that Intuit sucks