All Forum Posts by: Derek W.

If I hear my respected elders clearly, I understand that the three most important things in this market are, in order of importance:
1. Relashionships
2. Relashionships
3. Relashionships
We established in a previous thread that relationships are built one at a time, over a period of time. So, would you agree that for new investors with no relationhips, writing offers and following up, or having REO buyer or listing agents write offers for you is the primary way that relationships are built? I am getting most of my deals in this market though relationships as agents are calling me with deals that were established from previous deals, but I continue to have new agents write my offers so I can make new relationships. Is that how you would advise people to start?

The agent will be excited for the relationship, and stoked when you bring repeat business. I try to get at least 1 offer per day out. I was given this advise from an investor whom I admire very much, Mike Cantu. He once said "it is like playing the lottery for free." That really sank in when he said that. It is exactly like that. Send one offer a day and something is bound to get accepted. When it does, it is like hitting the 20k prize money scratcher!

Fear is a natural reaction of your sub conscious trying to make sense out of a new situation. I have been a full time investor for years. I just put a 4-plex under contract and am trying to get the 4-plex next door under contract so I can own the entire corner of 8 units. I don't have long term financing in order yet for after I get them rehabbed and rented. I have slept very restlesly the last few nights because I am venturing into territory I haven't been in for years. So I think as long as you are pushing new bounderies, fear never truly subsides. You just learn to act inspite of it, huh?

I just had Wells Fargo send me an addendum for all parties to sign that stated there were NO other transactions of any kind happening except for this sale and there were no other buyers waiting to purchase the property, and the home owner in no way or arrangement will be allowed to stay in the property.

I take about 5 minutes to walk a house before putting an offer in. With a little practice you find yourself simply adding as you walk. It sounds something like this:
“5k for kitchen upgrade, 2,500 for bathrooms, 1,500 for missing condenser, needs flooring that’s 2,500 and 2,500 for paint in the entire house, so around 15k rehab.†Lock up and then on to the next house. A friend of mine does reverse math. He assumes the house needs to be gutted to the studs and starts at 40k. He then subtracts from there for anything that is salvageable until he arrives at a fix-it budget.
After you get an acceptance on your offer I go back with a check list and spend around an hour making sure I can really do it within my allotted budget based on my ARV. Because of the type of crap houses I buy, that same day or the next day I have my septic guy and termite guy come to give me the good or bad news. Then I head to building and safety to talk to code enforcement about the code violations they have and what they want me to do. When I am satisfied there are no major surprises I wire the entire purchase price to escrow as my earnest money. Like Chris said, you can write an offer saying you have NO contingencies or inspections, but you always get 3 or 4 days which is plenty to see if you need to back out based on surprises you might not have noticed. It would be during this time you have your contractor come take a look with you, not before acceptance of the offer.

The identical unit next door just hit the market. They want 150k for it, but if I can set the comp quickly at 100k I hope to get both. Then I could control the corner and be well on my way to being the next slum lord of Hemet! haha
An 8-plex for 200k or under! The funny thing is, in this crazy market, in a year I bet I still feel I over paid.

That was what was puzzling me. The fully rented units in the comparable area seem to start at 165k for a pretty run down but occupied plex. Mine is an REO thayt has been boarded up by the City. The City wants a rehab permit pulled, but doesn't have anything on the property that freaks me out. That seemed like a not so great return at 165k or more.

There are seperate meters for all utilities/all units.
These are exactly the type of answers I was asking for. Thank you guys. One vote for each of you! I need to sharpen my rental calculation skills if I am going to mess with multi's. I just had an agent bring me this one and even I felt it was a pretty good deal. Now, I am primarily a rehab guy, so it is hard not to ask the next question. If I fixed it up and got it fully rented, based on returns and cap rates, etc. What do you think a buy/hold investor would pay for the property?
(I think I will keep it, I have other rentals in the area, but just looking at all options.)
Thanks,
Derek

I have a 4-plex in Hemet, CA. under contract for 100k. It needs around 10k of rehab to really make sparkle. It will rent conservatively for $550 per unit for each of the 1 bed 1 bath units. I am not a great numbers cruncher, cap rate or ROI type guy, so I would love to see this deal put through the BP ringer.
Thank you,
Derek

Huh? Did you read the documents? This seemes like it is suspending the 90 FHA hold for investor's to resell a "flip" property. It states that for the next year an investor can sell prior to the 90 days. But if you read it deeper it may only apply to investors who are purchasing homes under the NSP program, and not to all investors in general. I was just seing if others agree with my interpretation of the read. You can find the waiver of requirements at http://www.hud.gov/offices/hsg/sfh/waivpropflip.pdf