New member - Investor friendly agent, ready to invest. advice

[Kelsey Marshall]

Hi BP,

My name is Kelsey. I am a Realtor located in Philadelphia who is ready to start investing in my own deals. For the past three years I have been working part-time as an agent while also a student at Temple studying real estate finance. I came across BP a while back but just recently started listening to all of the podcast and finally decided to join the site.

After taking a re investment finance course at school this past semester, my eyes were opened to the potential of investing. As a final project we were all tasked with putting together a sample commercial investment deal then presenting it to the class. My partner and i had to do a market analysis from international to local level, predict the value of our property (a mixed-use building) using noi, and cap rates derived from several methods, calculate before and after-tax cash flows, npv,  irr, rules of thumb etc. then decide to accept or reject the project. 

Working on this project, listening to bigger pockets podcast 24/7, combined with the experience I have as an agent has finally given me the confidence to jump into one my own deals. 

I am currently speaking with the owner of a 5-unit in Mt. Airy who has expressed interest in selling and told me to"make him an offer". I decided to put together a small version of what I did for my project (just numbers) to present to my potential lenders and money partners since I don't have a track record to show for investing at the moment, just brokered deals.  Thoughts on this? Should I tie up the property before i know I will be able to finance the deal? Based on everything I've learned from the bp podcast the answer is yes (lol), but I am still unsure for some reason. Especially because I am licensed. As far as I know disclosure is king, but you never know there may be a hidden rule out there. Can anyone provide any insight?

Thanks,

[Account Closed]

@Kelsey Marshall I've been to Philly, in fact I was stuck at the airport in a blizzard one year. ;-)

Always start with owner financing. Save the bank for projects you love that you can't find owner financing for. I would use Subject To if there is current financing and Owner Carry if it is free and clear. Suggest his tax bite is less, if he does owner financing because things are spread out over time. Keep in mind that numbers can be "fudged". Ask for documents for each of the rent rolls, utilities, etc. Don't go with a Proforma. I can sell you the Brooklyn Bridge and convince you it would be profitable by Proforma.

Congrats on finding a project you like and are moving forward on.