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All Forum Posts by: Chris Seveney

Chris Seveney has started 316 posts and replied 16442 times.

Post: Is this a good deal #2?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746
Add 8% vacancy, 10% maintenance and 10% that's over $250. It's still cash flowing - it sounds like you will also manage yourself so you won't have property management costs. If the roof and HVAC systems are over 10 years old I would pass on the deal as you will be spending some considerable money to fix them. I also assume utilities would be paid by tenant.

Post: Smell coming from water pipes

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746
They can do a smoke test or peppermint test. Smoke test are usually better to determine if there is a break in a vent pipe. $300 does not seem unreasonable

Post: Is it typical for a Contractor to request 20% or more upfront?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746
Don't put any money down. Have the contractor provide an invoice for materials when they arrive and pay him for the materials plus an agreed upon markup worst case.

Post: Owner Financed Deal - is it worth it?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746

@Kevin Siedlecki

You are correct my math above was wrong and its not $90/door.

I agree with all, the utilites would need to get xferred to the tenants in order to make this work.

Post: Owner Financed Deal - is it worth it?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746

@Federico Gutierrez

 & @Mark Brogan

Let me clarify a few things as well. I can get financing for the first 80% and the owner is financing the back end, so I am $0 out of pocket.

The numbers I plugged (which have yet to be confirmed but were done for initial analysis using average numbers are (this is for all 10 units per month)

Total income: $6,125

ASSUMPTIONS:

Vacancy: $490 (8% but can see actuals for past 5 years)

CapEx: $518 ($6k a year or $2k per building)

Management, repairs and other costs are from actuals.

I agree if there is a way to xfer utilities to the renters that is key.

What I was trying to explain earlier was is in a typical situation you would put 20% down (and if I did this would be cash-flowing $450/month but since its 0 down I am paying the 20% over 5 years so its a payment of $600 a month. 

I do not have a good feeling on the deal, so I am gonna most likely pass unless the utilities can get xferred to the renters. But I was more curious to see what peoples thoughts are when putting 0 down and since your not cash out of pocket for initial investment is it ok to have a zero cash flow or low cash flow since you were not originally out of pocket.

Post: condo-risky?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746

@Terry Hoefer

 - I have never heard of an escalation clause before. Thats pretty smart. Has anyone else ever used one? And are they legal in other states?

Post: condo-risky?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746
We were in a similar position. There was a condo I saw (Fannie Mae) listed for $26k. It needed $10k of work and ARV about $55k The day we were going to put a bid in the price dropped to $22k. We put an offer in at 22k. We found out there are three other offers and needed to submit best and final. Since we were originally going to offer 25k we went above asking price and resubmitted at $25k and got the condo. If you feel it's a good price you don't have to negotiate - offer what your comfortable with and confident you will have your expected return.

Post: Looking for cash buyers in the Hampton Roads, Virginia area

Chris Seveney
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Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746

PM sent

Post: Owner Financed Deal - is it worth it?

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746

Here is a 10,000 foot view of a deal that was brought to me. All of the information pertaining to income and expenses needs to be verified. The homeowner wants to sell due to age and health issues as they were also self managing the properties.

Three buildings for a sale price of $165,000 in a northern region of the US

Ten units in total with rental income of $6,125

Expenses are high due to utilities (oil heating) by owner. 

The homeowner will owner finance and hold the second note on the property (20%) for five years (amortized over 5 years) at 4%. So basically there is no out of pocket.

After factoring in utilities, an 8% vacancy, 10% CAPEX, 10% repairs and 10% PM the cash flow is negative $150. The majority of this is due to the $600/monthly payment paying off the second loan and the other big nut is the utilities which are $1500 a month.

The buildings are also all over 80 years old.

Even though this is owner financed and no money in it, I am going back and forth if this ais a good deal because if you figure you want to get $100/key this would equate to $12,000 a year for five years  = $60,000. Subtract to that the 20% down I would have paid which is $33k and it returns a positve $27k.

Based on the owner finance scenario, I would have the $32k paid off minus the $150 I am paying per month which equates to $9,000 so a total of $23k to the good.

While I am not at where I would be with $100/door, it corresponds closer to $90/door.

Thoughts?

Post: Question about partnering with a seller to flip a house.

Chris Seveney
Lender
Pro Member
ModeratorPosted
  • Investor
  • Virginia
  • Posts 17,210
  • Votes 14,746
What if owner decides not to sell or house doesn't sell? Unless you provide some significant upside to the homeowner why would they do it ? Not trying to be a pessimist but I think you will find the legal aspects of it will turn off homeowners as those who sell as-is don't want to deal with the home anymore and just want it sold. Just my 2 cents