All Forum Posts by: Chris Winterhalter

@Matt Rodak

It is my experience that the insurer won't pay out for replacement cost until after the repairs are complete with invoices and/or paid receipts.

@William Petrisko

I am not a CPA but have been in a similar situation. It is my understanding that any insurance proceeds that are not used will be taxed as income. If you don't do any repairs then the full amount will be taxed. If the property is sold at a loss then you should be able to take the loss based on your current basis. If the insurance claim is 80k and you spend 60k restoring the property per the loss then you will be taxed on the 20k. If you spend 30k then you will be taxed on 50k. You can't lower the basis by the insurance claim amount. This is my understanding....

No tax or legal advice

@Steven VanCauwenbergh

Insurers in the habitional space can vary by area. Your best bet is to find an experienced broker that deals with your property type and size. Ask other investors, your broker, the current owner (if you are buying the 10 unit right now), property managers etc. Some national more well known insurers will underwrite habitional like Farmers. Make sure you understand your policy. When you get into commercial lines you are generally less safe guarded compared to single family. There are several other threads on the topic...

http://www.biggerpockets.com/forums/432/topics/105016-insurance-for-17-unit-class-c-complex

http://www.biggerpockets.com/forums/32/topics/122634-suggestions-for-property-insurance-companies-for-10-unit-building-in-sf

Good luck!

@Andrew Briones

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@Jon H.

Did you bury any money in the yard or hidden in the walls? That would probably be the easiest way to pull money out of the property.

All jokes aside how accurate is your estimated value? You are starting to get to a lower loan amount which is harder to finance (below 50k). Since it's a rental property you can't get a HELOC on the property. Your choices would be confined to a local/regional bank for a commercial loan or a conventional mortgage.

Are you trying to pull cash out to buy another property? Many commercial lenders will allow you to cross collateralize this property for down payment funds on another property.

The thread that @Cal C. linked will give you a lot of useful information. This topic has been discussed many times so spend time going through previous threads. Good luck!

@Account Closed

The appraiser did the site visit last Thursday. We are waiting on a verbal and final write up. It's always fun waiting on an appraisal :). We should hear back by the end of the week.

@Michael Wolffs

Everything you mentioned is essentially true especially when dealing with 50+ units. The hardest part I have found is getting the actual address of the owner (like you mentioned). I've had zero success with mailings over 50 units and a little success with complexes under 50 units (mainly 20 or smaller).

When broker's start in an area they reach out to all of the owners and investors in the region. They generally have contact information from a more experienced broker in the office. They hammer the pavement with meetings and phone calls. It takes years for them to build relationships with these owners.

As investors we need to essentially do the same thing. Stay connected in our market, attend multi-family association meetings, connect with as many brokers in town, and become known. It can takes years to get into the deal flow for buildings with 50+ units. Networking and building credibility are two of the most important things we can do as multi-family investors (and CRE investors).

@Eric Robertson

I understand your situation and I definitely didn't want to suggest that you rush into something if you are not ready.

I think wholesaling is a great business model however my thoughts on the subject are very different from others. I don't think you should get a deal under contract that you don't intend to close. There are always things that come up and that is why you can place contingencies in the contract for inspections and financing. However those clauses shouldn't be used because you can't find a buyer. In my opinion that is unethical. The best wholesalers I've seen are actually very experienced hard money lenders. Both of those business models can be very complimentary (if operated ethically). I don't want to discourage you from getting into the deal however thoroughly think through what you will do if you can't find a buyer.

@Brie Schmidt

As we all know the media can twist around just about anything to come up with a story in their favor. However we are so short sided and fickle as Americans. It just blows my mind how much of a herd mentality we have in this country. For so many types of investment real estate the utility doesn't change overtime. Yes areas change, grow, or decline...buyers change to renters and vice versa however the core of our investments don't change. However the value can wildly change based on the market's perception of risk. Capital markets have a big impact on prices as well however most of that is fueled by market perception as well.

@Eric Robertson

I would be careful using Zillow for comps. It's been several years since I've used it however their comp capabilities were not that great several years back. I know they started to aggregate data from counties to come up with sales comps however I still think your best bet is getting sold comps from the MLS (for single family). Definitely don't use the Zillow estimate value as that can be wildly off. Are you working with an agent or someone with MLS access that can pull comps for you?

It sounds like you could have a deal on your hands though...I would quickly but thoroughly finish up your analysis and get an offer in so you don't lose the deal. Good luck!