All Forum Posts by: Account Closed

No I'm not because of where it is at. I only invest in MF in my area. But there are lenders that I work with that can do 90% loans on purchase and rehab as long as the total amount loaned is 70% of ARV or less. I'm sure they will loan you the money in your area, as long as you personally qualify. Do you want me to give you that info?

I am working the expired listings, vacant houses, pre-tax deed auctions, owners of houses for more than 7 years and live out of state, and I'm doing direct mail and emails to them.

I work on expired listings. I either email or mail the owners. I tell them I am willing to pay full market price on their properties. 

If they don't respond to either I call them 2 weeks later. I tell them I am a buyer and not calling to try to list their property. 

Anyway I talk to them about what they are going to do with the funds they are going to get when we close. They typically tell me they will want to invest the money. Then I ask them what type of investments are they going to do? Then I ask them what kind of returns are they going to get? Is the investment safe? Is the investment 100% guaranteed? Of course they typically tell me what I want to hear. Their investment strategy is not going to give them much return or piece of mind in its safety. 

Then I ask they how would you like to invest that money in a great investment that you already know and it will be completely safe and secured? Then they ask what is that. Then I explain how they becoming the bank on financing the property for my purchase will give them the returns they want and completely secure.  Then I negotiate a deal where I can sell it on a lease option for more money than I have to pay.

Here is an example: I have a contract on a house for $260,000, with $60,000 down and $895 a month. I am in the process of marketing it to sell for full market price at $295,000 under a lease option agreement. Also I am requiring a minimum of $75,000 down and monthly payment of $2,000 for 5 years. They must buy the house within the 5 years or lose their $75,000. 

I drive for dollars when ever I can. I get as many as I can in one trip. Right now I subscribe to a service that gives me address of vacant house and I check them out. Many of them are actually vacant and others are not. But every time I go to look at them I find other vacant houses that is not on the list. 

I currently use a mobile app called MileIQ and it keeps track of my trips for me. All I have to do at the end of the day is catagorize them to whether they are business or personal. 

Contact a local RE Agent to give you a list of all the houses in that neighborhood that have sold in the last 5 years with all cash. This typically is investors. Then again go to the assessors website and find their name and mailing address. Then look for these buyers by name to see what else they bought. The ones that buy multiple properties are obviously investors. 

Once you get this list of potential buyers, then immediately contact all the cash buyers you just found that buy properties in that neighborhood and tell them about the house and would they be interested in buying it.

Once you have done all that with that neighborhood, go to the next one and 'rinse and repeat.'

I hope this helps.

Steve Anderson

First ask for a rent roll. This is a listing of the units, the tenants names, rental start date, length of the rental, deposit paid, if behind on any payments. Then their financials for the past 12 months. But typically on these small of units the owner does not keep very good records. Then ask to see their check book register and you will have to compute their income and expenses. 

You said it currently is occupied at 60%. This should induce some investors. Talk to them about the price per door to buy this property compared to the price per door that has sold. Also tell them current rents are below market. After the rehab is completed then they should be able to generate $750 month X 20 units at 90% occupancy = $162,000 NET Income - expenses (45%) = $89,100 dollars a year in income at market rates.  This computes to a 12 cap. But if you want to make some money you have to sell it for more than the $750,000 which lowers the cap rate. 

Let's recap your current situation: Current income is $700 month X 12 units X 12 months = $100,800 - expenses (@ 45%) $45,360 = NOI $55,440.

This purchase puts it at a an 8 cap. Not a good investment in my book especially if the market is selling at a 10 Cap. But you may be buying it for cash flow. 

How much of a down payment are you putting down? Where are you getting the rest of the fund to buy it?

When I'm negotiating with a seller that wants full price, I get owners financing and structure the deal with 0% financing then I structure the financing where there is plenty of room to sell the house on a lease option. I always offer some cash up front, monthly payment for 5 years and then the balance paid at the end of 5 years. Then I sell the house on a lease option where I get more than I have to put down to buy the house, more than I have to pay in monthly payments, and more than I have to pay at the end of 5 years. 

It works quite well. 

Yes you can as long as the owners are the same and you have 1 contract for all of them. 

I think you mean occupancy rate is 92-95% right? 

What is the area cap rate for this type of asset? What class is it?  

So the purchase price is $750,000 for 20 units? that equals $37,500 per door. What is the area market selling for on similiar properties on a per door price? The income is an average of $750 X 20 units x 12 months = $180,000 - 45% expenses = $99,000 / 20 units = $4,950 per door if all units are rented. That makes this a 14% return on investment if you look at it from a per door basis if you pay all cash.