Newbie needing potential deal help!

[John Sherron]

Okay, I have been trying to structure this deal the right way the first time. I am a newbie and I'm looking at a 3 property deal and hope to get some good advice from the pros on how to structure it and go about the financing. I just received the comps back from my realtor and I put the rest of the details below. Keep in mind I also live in a completely different state from the properties.

3-SFR Owners moved out of state and looking to liquidate.

C to C- Area

2 of the properties were rehabbed in Jan. 2016.

1 property was bought turnkey in Dec. 2015.

2 of the properties have tenants that have just resigned their leases for another year.

1 of the properties has a tenant that lease ends Aug. 2017.

Purchase Price: $150K

Last Appraised May 2016: $205K. (According to the Owners)

Total needed in repairs and/or updates ($6K). (According to the Owners)

1- 3/1.5 1220 sqft

2- 3/1 1730 sqft

3- 4/2 1670 sqft

Comp Totals on all 3 Properties from my Realtor:

Average Price: $167,700

High End Price: $242,500

Median Price: $164,000

Low End Price: $92,200

NOI- $1896.93

Financing: I was pre-approved for a mortgage here where I live about 6 months ago, but my credit has gone up an additional 20-25 points since that time. I have a private lender that I found online (Kevin McNeill), but have not screened him just yet, but he is interested and wants me to fill out an application. If I go with the private money, I would like to refi after a year and switch it to a convention loan.

(If any of you know about Kevin McNeill @ McNeill Capital Recoveries Incorporated please let me know if he someone that is trustworthy or if he is a reliable Private Lender, thanks.) Also, if anyone has some good Private Lender Screening tips or advice I would be grateful to hear. 

Thanks everyone, I really appreciate it!

[John Leavelle]

Howdy @John Sherron

Many investors (myself included) go into a deal using the 1% and 50% rules of thumb for the initial analysis.  Many times information received from the Seller are overly optimistic, contain inaccurate data, or intentionally incomplete.  They are trying to represent their property in the best light they can.

If it can pass the initial screening using these rules then it deserves a more in depth analysis. Part of this more stringent investigation should include determining the Market Value of the property and the Market Rental rates. Next make a list of all common operating expenses. You can use what the Seller provides, but, you will need documentation proving the accuracy of that information. Ask for T12 report (trailing 12 months Profit and Loss statement), copies of current lease agreements and rent rolls, utility bills, etc. You can contact the local utility companies to find out the average bills for the property. Get your own insurance quotes. Check with Tax assessors office for the property taxes. Use 10% for Vacancy rate until accurate data is available. You must determine your own Rehab needs and CapEx and Maintenance reserves. Use 10% for CapEx until you can have the property inspected to determine the condition and life expectancy of all major components and appliances. Then you can develop a more accurate CapEx reserves requirement. 10% for Property Management.

Much of the information will be developed during your due diligence if you proceed with an offer.