All Forum Posts by: Paul Thompson

Why and Where in Arkansas?

Hey thanks for following up with numbers. I love running the numbers...

To run the numbers need a little more info...

For lack of more details I'll assume a 50% rule expense estimate.  But previous owner should be able to show you what the actual expenses were on this property so you can run the number with less assumptions. 

Conservately assuming a 10% vacancy factor and the 50% rule you should be able to make some pretty good ball park figures on the property. So show us your calculations...

What is your ROI, CoC, and Free Cash Flow? What are the terms of the PM and the loan. Even before any rehab and rent increases is this a good deal as is??

Without doing much figuring at all the place cash flows. But at what cost. This is likely a C neighborhood and will you be able to find a property manager that can do it properly. I'm not familiar with the companies in Memphis that do MF management.  This will likely be one of your biggest variables once you line up your funding.

Lay it all out there. Let the community help you defend your valuation to see if this is a deal that lines up with your goals. There's money here at your price. People pay $55K for a 3/1.5 SFR for $55K that rents for $800 in similar markets.

@Jimmy Warr

Centennial Bank is another one you mind consider looking into. I've used them for SFR with commercials loans. Some banks offer a "bridge loan" for rehabs. You could get a 75-85% LTV loan plus borrow some money for rehab in the same loan. Some banks will lend upto 85% of the planned repairs. The terms will likely be interest only for 1 year. Good technique for maximizing your borrowed amount and minimizing cash in the deal. Depending on the other parameters of the deal you could actually get a check at closing to start planned repairs. If the deal is good you will be able to find funding.

Regarding finding using a bank, my advise is shop, shop, shop, and shop some more.... local/regional banks. Be aware they will pull your personal credit. Doing so will slightly decrease your personal credit for a few months. But worth it get a good interest rate and terms. 

Once you have the deal under contract and BEFORE you actually close share you numbers with us (not the address) so the community can comment. You don't want to make a bad assumption or small mistake in your numbers that could cost you big time. Challenge every assumption you're making and every figure you have before actually closing. I believe as an investor your greatest risk is taking on institutional debt. So do it with your eyes wide open to the risks.

Happy Hunting!

Hey make sure to check out the local REIA group. The website is www.carreia.com. Our next meeting is this coming Thursday.

The local REIA's website is www.carreia.com. We meet this coming Thursday. Details are on the website. There are several wholesalers in the group.

I concur it was very considerate of the tenant to ask. The only rule that I know the tenant should be aware of is he is supposed to get a business license if he's living in and/or conducting business in Little Rock. Here is the link:

 http://www.littlerock.org/citydepartments/finance/...

The application asks about the nature of the business and he must state if he is using any explosive or hazardous material. He could be fined if he is found to be running a business without a business license. I do not know whether or not as a Landlord you would have any culpability or not. I would think not but I am not certain.

Cheers

Hello welcome to the community. Make sure to check out our local REIA. Our website is www.carreia.com

I cannot speak to VA loans or the ins and outs military service. But listening to your situation you could relocate and rent or rent-to-own a place. This way you can learn the market and give yourself time to shop around. You don't have to buy the place you move into. I work with people who need to move out and they lease a place with an option to buy (rent to own) while they rent or lease/option their old place. Once they sell or have tenant/buyer cash out their old place they are then free to qualify for a loan on their new place. Just something to consider.

@Eric Metz can provide more detailed advice. He's a wholesaler in Little Rock.

For what it's worth I don't know of any specific details required in the contract in Arkansas that's unique or special. Just ensure you have a clause that the contract is assignable. It's probably also worth putting a disclaimer in there you are not a licensed agent and are acting as a principle only.

From an Arkansas Real Estate Commission perspective ensure when you advertise "the property" fully disclose that you are actually advertising your equitable interest in the title to the property. You are selling your contract and not actually the property itself.

@William Porterfield really could not have said it better. You're buying cash flow, very little potential for appreciation, and high maintenance tenants. Also factor in these homes tend to be fairly old and good degree of wear and tear. So your 25% ROI may not actually be that high when you factor in high turnovers rates, high property management costs, and unexpected capital improvements. Ask me how I know... ;)

But there is still money to be made if you're willing to deal with the above. Just know the market for what it is.

I'm not sure how experienced you are so I'll just say invest where you know and in what you know, wherever or whatever that may be. Someone is making money in real estate in your backyard. Why can't you? Be wary of chasing the perceived higher ROIs from another market with its unique dynamics.