All Forum Posts by: Todd Dexheimer

As far as the escrow goes on the seller financing this is common place and should not be an issue as long as it is spelled out and a reputable 3rd party title company or attorney is holding the funds. Make sure you spell out specific details on how and when you are able to take draws from the account and how many you can take. I just did one of these so PM me if you would like. My suggestion is to convince the seller to allow you to put around 75% of the capital improvement budget in escrow, so that you have funds to start the renovation with. Then allow you to take 4-5 draws throughout the project. 

Call them. Email is ok, but be sure to frame yourself as an active buyer with a specific criteria. If you sound educated they will take you more serious. 

Be sure you are able to walk the property and bring a contractor or 2 with you. I would also put it in the contract that the seller evicts the tenant since this is your first deal. I would even offer to pay for the eviction. The eviction process should be easy, since the squatter doesn't pay. Have the seller file the eviction based on the renter not paying rent - the whole process, if done right should take under 30 days (contact an attorney that deals with evictions). 

Back to the walk through. Determine the cost or renovation and the value of the property (use a few realtors to give you comps and go with the lower one). Then you can simply take 70% x ((Renovation + closing expenses + holding expenses + lending expenses )- sales price) = purchase price. I personally would be conservative on your first one. 

Good luck!

If you have $500 k to start potentially you could buy a $2M+ building. That is a great start! 

Lots of questions here, but very vague information given. Short answer is base your offer on the numbers and then the market Cap rate. If the area cap rate for a B class is 7 and the actual NOI is $200,000 then you should buy it at or below $2.86 mil.

Deal may or may not attract Institutional - If this is San Antonio, TX it could, but it depends on the pricing. Institutional are typically in the $20Mil + range and big markets (Dallas, Houston, etc)

I agree with Austin - It depends on the market, age of property, etc. 50% is a quick check to see if the numbers work, but the true test is to look at detailed profit/loss statements, rent rolls, tax returns, etc. Pricing will depend on the market, property class (A, B, C, D) and condition of the property itself. This is overly simplified.

There are 50 states that have some good opportunity :)

@Alexander Forrester ask your investor what they want. I'm assuming you are going to people you know and trust. Look at you numbers on the investment and figure out what the ROI is going to be (conservatively). Let's say that is 20% IRR. Then offer them the percentage of that, that will make them happy. Since you're green, you may consider having them as a General partner with you. Even if you get a "bad deal", just do the deal. When I first started I was giving my investors a ton of the profits just to get the deals done. Also, don't listen to the naysayers that say not to raise money. I raised money on my 2nd deal.

I got a bachelors at UW-Stout. Teaching degree in Industrial Technology. I learned a few things I guess, but the mind set and application is completely different. I learned most from books and school of life.

numbers look tight to me at $363k. You don't have maintenance figured in, replacement reserve, accounting, vacancy rate, management fees. In my experience expenses in total will be 50-60% of the gross rent and vacancy should be 8%+ on a small apartment. Using this, you are buying around a 5-5.5 Cap. If it's in a trendy hot neighborhood with raising rents, then go for it. If it is in an area that is not the greatest I would walk away.