All Forum Posts by: Steve K.

I usually see the best rates and terms from our local credit union on this property type. Technically you can sometimes put as little as 20% down but lately most MF buildings that I have been underwriting in my area are requiring higher down payments. If the cap rate is lower than the interest rate, you’ll probably need to make a higher down payment. Anything over 5 units is considered commercial so value will be determined on an income-based approach, compared to a comparative sale approach like with residential, but sometimes for small to medium MF banks will use a blended approach (cap rate and comps). Seller financing can be a great option also, if the seller is open to that. 

Quote from @Ned Carey:

I think it is pretty simple, they don't have buyers

 Or the flips are over-priced.

Nobody can advise you accurately without being privy to the details of the contract of course. Generally speaking, since you don't even have a buyer lined up then you are just tying their property up and wasting their time, potentially damaging them financially. They'd probably be better off selling on the open market than working with you. So you should just let them go and move on to your next opportunity in my humble opinion. In order to enforce the contract you may have to sue them to perform on their end of the contract, but if you don't even have a buyer lined up and ready in order to perform on your end, that would just be silly IMO. NEXT. 

What contract? 

I hadn't heard of the guy until a bunch of his followers came on here and spammed the forums with 100's of posts about how great he is (the posts were quickly taken down, thanks mods). So out of curiosity I looked him up and found one of his videos. In the beginning of the video he talked fondly about how he had learned creative financing from his dad as a kid. Very cool! Then about a minute later into the same video, he goes on to say that he wishes he had learned about creative financing earlier in life, so that he might not have wasted so much time doing construction in his 20's... huh? I thought you learned it as a kid though... super blatant self-contradiction. Hard to believe anything he says after that IMO.

Then he commented on one of my posts on here and what he said was BS, and I politely called him out on it by asking him to clarify what he said, and some others called him out on it being BS as well, and he never replied to any of us. He has never posted on here again since then. But probably still teaches the same BS that he got called out on. 

“after 12 months of payments through a third party payment processor, the loan will fall off of the seller’s credit” is pure BS. 

Apparently his followers either don't know BS when they hear it, or are too enamored with him to call him out or something? 

Here is the thread with what I believe was his last comment on here: https://www.biggerpockets.com/forums/921/topics/1139443-due-...

I think he's more comfortable pitching his courses to noobs than he is getting into the finer details of creative financing or answering any hard questions about whether or not what he teaches actually makes any sense. Just my opinion based on our brief interaction and watching part of one video (I couldn't get through the rest of it, my BS meter was going off too loudly). 

Perhaps the seller would consider seller financing? 

A few things: I'm guessing in addition to the small sample size, your two rentals are also in desirable locations and either Class A or Class B properties? Probably SFR's in CO?

We've had a range of different class properties in our portfolio at different times and I can tell you that the experience of managing a Class A or B SFR in the Front Range is nothing compared to managing a Class C or D MF building, or even a SFR in a bad location.

Also if you've been doing it for the past 6 years, the market has been in your favor in a big way. Operating when values and rents are going down and tenants are having a hard time paying their rent is quite a different experience. 

I put it right in the listing description: "12 month lease, ideal applicant can make a soft commitment to stay another 3-4 years". 

Then I ask when I'm showing the property: 

1. What is their job (and is it stable)? How long have they been there? How long do they plan to stay there? 

2. How long have they lived in the area? How long have they lived in their current place?

3. Can they commit to a 12 month lease and make a soft commitment to stay longer (with the understanding that life happens)? 

I don't mind if tenants move due to buying a home and in fact I encourage it. I love helping tenants become home owners. I even have a clause in my lease that if they buy a place and I represent them in the purchase as their agent (or refer them to an agent if they are looking to buy in a location that I don't service), then they can break their lease any time. 

Quote from @James McGovern:

@Steve K. What others are making does require raising more funds and therefore important. You should consider writing a check to others if you have so much abundance 

I find one of the best ways to grow my business is actually making sure that the people who I work with also get paid well. Have you ever heard of negotiating a “win-win”? Being cheap can be expensive. 

 Isn't this fraud? Isn't a contract induced by fraud typically considered voidable, meaning the injured party has the option to cancel or terminate the agreement?