All Forum Posts by: Chris Winterhalter

@Chad Meyer

What are you trying to get done and what did the quote come back at?

Chris

@Jeff Greenberg

Congrats on the deal and thanks for sharing the process. It's always great to hear from other investors how larger transactions are not always as fun and glamorous as some people think they are.

Also I'm shocked you tied up the deal with only 3k in earnest money....nice job!

@Jassem A.

Thanks for your comment...I am not willing to self insure the building for flood insurance. Too many crazy weather patterns in this world for me to be comfortable with that. I will just factor in the cost when I underwrite the property like the buyer after me will end up doing.

I'm looking at a 61 unit building in a flood zone in St. Louis. I like the property, area, and price point however I am trying to gauge if the property will be harder to dispose of after our planned holding period (5-7 years).

Are there any multi-family investors/brokers that have had experience with complexes in flood zones? I understand the additional cost for flood insurance needs to be added in however should I discount the property beyond that? I have requested all of the current insurance information, information on claims, signed affidavit stating any current or past issues etc etc. The property doesn't sit near the river but rather on a dry basin near a small creek. Any help would be appreciated!

@Gunnar Teltow

Be very careful buying in North County as the long term trend in many North County sub-markets doesn't look good. You are probably safe with this property however the further NE you get, the worse it can be. You have the right idea jumping up in price point because many of the lower cost rentals are in very challenging areas.

Door issues and door locks...and pest control issues

@Ben Gibson

I flipped a few dozen properties in St Louis from 2009 to 2011. In my opinion you are going to have a very hard time finding owner occupants under 50k. If he is targeting investors that seems like a large spread. The cheapest house we flipped was priced around 80k and I think it was the lowest margin as well (margin & dollar profit). Financing is harder below 50k and the buyer pool rapidly vanishes. Honestly you are better off going to that 150-250k range where you are able to get a better profit with a larger pool of buyers. 1st time home buyers can be tough especially if you are competing with a lot of other properties. Profits can be smaller and deals can go south faster on those deals.

If the person you are speaking with actually buys houses for 10k and only puts 5-10k into them and then sells them for 40-70k then that is a fantastic business model. I'm just not sure you are getting the full story. There are some bad areas in St. Louis where owner occupant buyers don't exist. But then again he could mainly be flipping to investors. That spread just seems very high for investors. Does he have a turn key operation where he is selling to out of state or out of country buyers? I would ask him if he is selling through an agent to owner occupant buyers or directly to investors. See if he will give you details on the last few deals that he flipped. Do you know the areas that he targets?

@Brandon Turner

I haven't dabbled in conventional mortgages recently however I have to believe you can get a cash out 30 year mortgage on your duplex. Have you talked to enough bankers? Maybe the local or regional banks that have underwriting departments in house could give you a good idea if it was possible for a conventional mortgage. Maybe you have already tried this however that would be my route.

I would try to pull the cash out however wouldn't do it at the cost of a 5-1 ARM. With that being said it's a rather small loan so it wouldn't kill you in the future.

@Michael Eastland

You've received a lot of good information.

A good point to take away from @CK Hwang is that the nicer the property and the nicer the location the easy it will be for you to manage from 200 miles away.

A good point to take away from @Bill S. is that smaller communities and certain cities don't have the amount of property managers that larger cities have. It might take you longer to find someone qualified to properly manage the property.

A good point to take away from @Colleen F. is that depending on the type of deal and age of property you might need to spend a chunk of time there occasionally handling larger capital improvement projects. PM's are generally great with maintenance however not the most equipped to get you the best price on a large project etc. They might have the ability to get those items completed however it will come at a price.

@Kimberly T. & @Stephen Masek also make some good points about having a solid PM in place.

It can definitely be done but make sure you have access to a solid PM, possibly buy in nicer areas (those high returns in the marginal areas are more difficult to manage), and allocate time for larger projects or a disaster. Good luck!

@Andrew N.

This is a really cool concept. I knew of a few people that were doing this for disaster relief situations (single container ready for plumbing connections and generator). I think it's being utilized more and more when areas have short term housing crisis' (North Dakota). I haven't seen any finished products in person but it seems like a good idea.

I hadn't seen it used for finished housing like this....it looks great though. It makes me want to go back to flipping houses! I'll stay to multi-family for now though.

I'm not sure the savings would be that great because of the unfamiliarity to the design. I see high end contractors charging a lot to put these projects together and a lot of contractors not touching the projects (unless they cover themselves). If you were the builder or an experienced contractor you might be able to make it your niche for new builds.