A Newbies journey to buy & hold

[Bernard Chouinard]

I really don’t’ know if this is appropriate but I figured what the hell. I’ve seen similar “journey” type posts in other forums figured I’d try it here. Hoping it will help you give me some input/insight as well as keep me accountable. I’m not a writer by any means so please forgive the grammar or possible long windedness to my point.

Today, I'm a REI wanna be much like many others. I'm determined to not be part of the wave that shows up, gets excited and does nothing. My goal is to start with Buy/Hold becoming a landlord, flip for fun and focus on distressed single family acquisitions for resell and possible mortgage wrap. My REI interested started years ago (early 2000's) with the flip shows but nothing came of that. I'm I sell enterprise software to billion dollar corporations and always looking to improve my sales game so I make use my 1.5-2 hr commute and dedicate it to sales audio books and pod casts but managed to have found myself listening to REI podcasts then introduced to bigger pockets and I was like a little kid that couldn't get enough. In total 180 pod casts, 6 books, 7 networking groups and still counting. I've met wonderful investors and keep in constant contact with a few as well as have a go to mentor who started this 1 year ago last month and now has 50 units under them. I picture this my full-time job to the point of being able to put employees to work to help me in my business. But first I must take action besides looking at the MLS and seeing if I can make the numbers work.

I started calling for rent ads on CL asking if they ever thought of selling. Sure enough I found a lovely woman who lives 2.5 hrs from the 4 unit (3br, 2br, 2br, 2br) building she owns in Oxford Massachusetts. She bought it 2 years ago with a partnership that went bad. She’s tired of the management a building so far away and wants to focus on her family. I find myself trying to make the numbers work and would love your input on what you think of the numbers.

Assuming all are 2BR, even though she claims 1 is a 3br and says there’s enough room to make all of them 3br but we need to work with what we have now, not what it could be right? So I would say $925/Unit for 4 unit for Gross Rev of $3700 putting this at 1.42% of the 2% rule. Maybe I can strong arm her down another $10K and there’s the possibility of these being converted to 3br’s But 1.42% is what I have to work with today.

What do you think of this deal?

Next comes the money I would love to find a private lender to avoid going through a bank. My boss offered but I’d like to keep that separate and I’ve reached out to folks in the past who’ve expressed interest but no one as of today. Worst cast I get a conventional loan. So we’re talking 25% down right which is about $65K. I can probably pull that together but it pretty much eats up all my reserves for emergencies and repairs to the units as they are not in need of repair but certainly dated. I’ve sent the following letter to an older co worker of mine who wants to be what he calls an “arm rest” investor. Looking for a very hands off investments but not sure if he would be interested as he has 21 units under him as a private lender/investor and so far, has been burned by the lack of due diligence his partner is putting into these purchases. Here’s the email I sent him feel free to comment. 

• 1. Private lender: I would come to you for any help needed for down payments and repairs if/when needed. You would be paid back plus a predetermined interest rate. You would be kept involved and updated with all projects and purchases but would not have any properties in your name.
• 2.Private Lender/Partial Owner: All properties are placed under an LLC with both us as beneficiaries. Most of the funding would be supplied by you and paid back with a predetermined interest rate. I would handle the day to day, operations, marketing acquisitions etc. Ownership of the LLC would be 50/50, all profits after expenses, (PITI, CapEx, Repairs, property management, payroll etc).