All Forum Posts by: Steven E.

Hi BP Community - we have a chain of custody question and need an attorney to review how property was deeded from one party to the next in a few transactions.

Can anyone recommend a good RE firm for this in Orange County or Riverside County CA?

1. We have land with a nursery on it, which we want to subdivide (then develop).  We recently ran a preliminary title report.

2. Evidently there is a Land Conservation Contract on the land dating back to 1970.  In an initial consult with a RE attorney, we were told we need to draft a letter to have it cancelled.  Of course, our attorney offered to do it at his rate.

3. Is this something which a non-legal person (me) could do?  How would I learn more about how to have it cancelled ourselves?

4. (For detail, this Land Conservation Contract was executed pursuant to Section 51200 et seq. California Government Code.)

My wife and I are subdividing a single, 5-acre plot of land in Riverside, CA into 19 individual lots.  The goal is to eventually build residential housing on them.  We have been working with a civil engineering firm to prepare the soils reports, assess zoning, etc, etc and a RE attorney. Both are in preparation for the first value-add step of subdividing the land.

We are told that, once subdivided and recorded with the city, the total value of the 19 lots will be much greater than the value of the single, undivided lot.  It will also allow us to sell off one or more lots if desired, to finance the next steps of engineering in prep for construction.

There is a cost to subdividing, so we are trying to think about the return on our money.  How does one go about estimating the difference in lot value, pre and post subdividing?

For the single lot - presumably an appraiser would value the land using comps?  How much would an appraisal cost and who would we reach out to?  Are offers to purchase the land (we have a few) also a way to think about value?

For the subdivided property (19 lots) - similar process as for single lot, i.e work with an appraiser who will use comps of similar lot size in the area?

Hi folks, my wife and I own an undeveloped parcel of land upon which we plan to build 4 single-family homes. Assume we make it through the process of subdividing, permitting, water/sewer/electrical hookups, environmental assessments, etc. and the parcels are ready to build on...

Where can I find a soup-to-nuts explanation of how new home construction financing works?

My goal is to back into the amount of cash and/or income we will need to show to finance the build of the SFHs on the land.  We want to build the 4 SFHs, then rent them out such that the rent more than covers the mortgages we have on the homes (or the builders loans? not sure)

@Bryan H.

Hi Bryan. Only thing I can add about Goldsboro is that Seymour Johnston Air Force Base is there. If you take a drive through the area close to the base, you'll find quite a few haircut shops and car dealerships (typical for young military families who live on base- as their housing expenses are low/covered by the Air Force, a lot tend to put their money into their cars).

I don't know too much about real estate as it relates to being affected by military personnel close by, so perhaps somebody else can chime in. But having grown up in a military family, I can say that we consistently rented homes until we finally settled down in one place (we moved roughly every 2-3 years, so it never made sense for us to buy a home). From that perspective, I'd think rent demand would be higher than other places; just be sure to consider that many of the young families live on the actual Air Force base, so that may strip some of the demand.

-Steve

Hi Kerry,

Always good to have another NC investor on Bigger Pockets! Welcome to the site.

I have a few contacts in the greater Raleigh / Wake County area if you are looking there for property. I'm still searching for my first single-family home (the up front 20% down has been my initial roadblock), as it's quite difficult to find a purchase that seems profitable given sale prices, rent estimates, and the fact that I'm investing from a distance (I live in new york city now). I'd be curious how your Sanford property is doing; are you cash flowing on a monthly basis?

I'm hoping to make my first purchase in the next year, and I'm definitely open to areas outside of Raleigh. Would be good to connect with you on the distance-investing and North Carolina fronts!

All the best,

Steve

@Tom S. Yep, I was thinking the line-of-credit would be an issue. What about the 401k loan? (given that I technically own the money in my 401k)

@Scott W. Understood, but my strategy is to buy and hold (not sell in 2-5 years). I do see the value in home appreciation, especially from a rabbit investing perspective where you could do a cash-out refi on an appreciated property to generate capital to finance another investment... That said, lots of research should be done on the area to ensure (as best as you can) that the property will see considerable appreciation, i.e that the area is a growth area.

Thanks @Bryan H. Good to know most of my assumptions are fairly spot on, and I'll update my initial repairs estimate to be more conservative.

I think saving more to cover worst-case scenarios is probably a good idea. I know plenty of investors purchase single-family homes without ever having visited the property, but at this early stage in my RE investing career, I feel more comfortable with a property in an area I know (plus I have a good contacts in a real estate agent and mgmt company that are both reliable).

What sort of things do you consider when looking at different towns/cities within NC from a growth perspective? I would imagine things like population growth, commercial growth to nearby areas, annual change in average home purchase and rent prices, area school population and ratings, etc. Is this information available online / where could I find it?

@Bryan H. @Jassem A.

Thanks for the analysis and ideas, guys. With regards to the location questions, I do live in NYC, but I have family in NC. I am looking at the Raleigh area because I am familiar with the area, I can travel to and from when needed, and I could even deduct my travel from taxes as visiting my family would include a trip to check out my property (and thus be a business expense). That said, I would be using a management company, and I've already got quotes on pricing and fees with the management company.

I am familiar with the 50% rule, but I've built in some more complex assumptions based on research I've seen and knowledge shared by other real estate investors in the area that factors in:

1) The time until the property is rented after I purchase it (set at 1 month)

2) Annual vacancy rate (set at 1 month per year)

3) Mgmt company fee as % of monthly rent (8% unless monthly rent is below a threshold)

4) New tenant fee = 1 months rent, with 1 new tenant per year

5) Monthly repair cost (set at $100 a month)

6) Initial repair cost after purchasing home ($2000)

7) Annual rent increase (set at 5% per year)

8) Mortgage rate on a 70-90k mortgage, gathered from lender (set at 4.125% fixed for 30 yr- this may have gone up)

Given these, I still get to about where you are, Bryan, where I am either just slightly negative, slightly positive, or net flat. With so many assumptions, there is certainly risk involved, but I believe most of my estimates are either 1) well-informed based on info I've gathered or 2) conservative, i.e one new tenant per year and one month vacancy per year.

You could see that if one of my assumptions was aggressively violated, I could be cash flow + instead of negative. If I had 0 months of vacancy instead of 1 per year, that would be an additional $1150 I'm collecting for that year.

Let me know your thoughts.