All Forum Posts by: Jason Krick

I have very minimal experience, so take this with a grain of salt.

Everyone has had fantastic advice, but for me, it boils down to one simple fact.  Your contract states that the seller delivers the property with the unit vacant.  I'd hold the seller to that.  How does he/she get the tenant to vacate?  Not your problem.  It's the seller's responsibility to perform their part in the contract.  If he/she doesn't perform, I would think there are legal remedies you could pursue towards the seller.

I don't think that waiting six months is worst-case scenario.  There are many stories on here about situations that took much much longer to evict.  Sure, you may eventually be entitled to the relocation escrow.  But, what if the current tenants cause six figure damages to the property?  What if all the nice mechanical systems that were replaced in the last five years are destroyed?  What if their behavior makes life miserable for the other tenants, so that they move out too, and nobody is willing to move in?  

I understanf that the process should eventually allow you to take up residency in the main unit, but I'd be very hesitant to assume that the property will be in the same condition as you see it now.  So, the simple solution, in my mind, is to stick to the clause that states the seller will deliver it vacant.  Let the seller handle it.

@CJ Witmer

Sounds like you are on the right path.  His reasoning for selling makes more sense now.  He's in a better place financially, and isn't looking to continue the landlord lifestyle.  Without that info, I was worried it was just a typical non-owner occupied that he was looking to fire sale, which sent up flags to myself and others.

That being said, you did an excellent job receiving everyone's concerns and answering them.  Many tend to get defensive.  Your head certainly seems to be in the right place and you are taking the appropriate steps.  Best of luck!

Do you mind me asking where this is located?  We are relatively close.  I live in Berks County, so I'm curious if this is in Chambersburg, or a surrounding town.

@CJ Witmer

I'm glad you already thought through the part of the physical structure.  Do you know his "why"?  While not necessary for the deal, it could provide insight into difficulty with tenants, difficulty placing tenants, high maintenance, etc.  He is apparently leaving a ton on the table if he has sufficient equity to sell to you for $60, when it's listed for $90.  So, the numbers would work better for him today, than for you post-purchase.  Whatever the reason, if you are prepared for everything and the numbers are legit, than the deal would pass most investors criteria, I think.  The numbers are great.  

Good luck to you and keep us posted!

I can certainly see you are excited, and it looks good on the surface. There are two things I will suggest for you. The first is to VERIFY everything. He is a friend, so I understand the desire to take his word on everything. If landlord pays heat, ask to see the bills from the precious year. Look for any signs of deferred maintenance, that can increase acquisition cost quickly. Things like appliances, condition windows, carpeting, painting, etc. Also, do you know his historic vacancy rate, and can that be verified? The second is to ask yourself what his motivation is and why it's so strong. If this deal is that amazing, why isn't he sitting on it and reaping the rewards? Are there issues with tenants rent payment history? He wants away from tenants, you said. Are you prepared to deal with the problems that an experienced landlord decided he no longer wants to deal with? Why do you think he is basically giving you a $30,000 gift? I have friends I will go through the fire with, but I don't think they would give me $30,000 just for the sake of getting out of a property. I'm not trying to discourage all the enthusiasm, but this is business, with real money at stake. You need to treat this as such. The friendship makes it more complicated, in my opinion than easier. What if you buy it, and then find structural and plumbing issues to the tune of $20-30,000 that he didn't disclose? Will you ask him if he knew about it? Accuse him? Are you prepared for how that can affect a friendship? Just remember to take all things into consideration and assume that things may turn into worst-case scenario. Then you will be prepared.

@Jill H.

I'm new, so I'm confused and could use some clarification.  I did a search and found the property.  I found the listing on multiple sites for $775,000, and they all say it is active.  I also found the Hindu listing, which is also active bidding, with the highest bid being $659,000 and two days left.  I can't find a listing for this property at $700,000.  I'm guessing the price may have just been dropped, and the online sites are lagging behind?  I was looking to see any info I could gather about the neighborhood, from the limited amount you can find on the online sites.

On another note, is it common to have a property listed on the mls as well as Hubzu, simultaneously? I never knew that.

I picked up this house for $17,500. After repairs I am all-in for just over $100,000. Original mortgage was $125,000 and the judgement amount was $120k-ish. http://www.remax.com/realestatehomesforsale/5626-old-route-ste-22-shartlesville-pa-19554-gid400037463090.html

I have a tendency to overthink things, so please bear with me. I hope I describe my thoughts clearly. As I continue my investment journey, I've thought about opening up a business account with Lowe's or Home Depot. I have an LLC, with an EIN number. When I look at the application, it asks for my SSN, and to sign a personal guarantee. The personal guarantee I don't have a problem with. My concern is giving my SSN. I'm re-building my and fiercely protective of inquiries and my score. Will they run an inquiry?

Second is my efforts to keep my personal finances and business expenses separate.  If I am using my personal financial standing and credit history to obtain credit for my business, could that be seen as co-mingling funds, and thus, put me at risk for "piercing the corporate veil"?

Any thoughts would be appreciated.

@Tyler Huntington

I will assume your pro-forma on the expenses is accurate, and there are no common areas where you might need to pay for electric to a light or two; tenants pay for water, sewer, trash, etc.

My suggestion is to look hard at your acquisition costs. First, when are property taxes due? While it's accounted for in your on-going numbers, if taxes are due 10/1 and you settle 10/31, you will have to come out of pocket for 11 months of it immediately, which is about $4600. Is the $8-9k in renovations confirmed by a contractor? In my area, transfer taxes run 1%. So, if this were in my county, that would only leave $1,500 for title search, title insurance, appraisals, inspections, loan fees, commissions, etc. If the acquisition costs are higher, it will lower your COC.

Remember, you can make just about anything "Cashflow", if you put enough money down and reduce your payment, but you reach a point where the return doesn't make sense.  In quickly looking at this, I'd be careful that I wasn't sub-consciously massaging numbers on the front end in order to make sure I hit $100/door per month (Because I caught myself doing that numerous times when doing analysis).

@Account Closed contributing. Bill, who literally knows everything regarding finance and compliance. Jay, who has done it all (timber, lending, rentals, development, etc) and ran an HML, so he's been on the other side of the flipping business. And J Scott, who has literally written the book on flipping.

Some of these guys have literally made millions, lost millions, and made millions again.  Here's my point:  while I commend you for what you have accomplished since August 2015, realize that it is far too short of a time to take that experience and make blanket statements on what does and doesn't work.  It's not always this rosy.  Interest rates change the economy changes, availability of loans change.  These commenters are speaking from experiences that neither you, nor I have.  I don't think you meant anything negative, and were just stating what had worked in your short time in this business.  I just hope you keep an open mind when some members suggest that you may need to tweak how you view certain aspects of the business.

DISCLAIMER--I am a complete newbie myself and have just completed my first deal.  So, my post is not coming from my personal experience, just from what I've read through on the forums.

By the way, do a simple search here in BP for Renatus. There is a thread that had (what felt like) thousands of posts on the company.