All Forum Posts by: Abdul Azeez

Apo

Apologies. I just realized copy and paste does not render as well as images. Image of my analysis below.

Folks - I am a beginner real estate investor in NJ and one of my subject properties is a foreclosure. I used Frank Gallinelli's book What Every Real Estate Investor Needs to know about Cash flow on one of my subject properties. I constructed an APOD (Annual Property Operating Data) and then derived cash flow before taxes as well as what would be my before tax sales proceeds if I sold the property at the end of 1 year, 2 year, 3 year etc. until 10 years. From here I plugged the numbers into an IRR calulator to see what my overall return would be based on the different holding periods above.

The subject property is a foreclosure which I believe could be obtained around $145k. At end of first year based on comparables, I believe it can be sold for $180k. One key item I engineered here for the calculation is that the initial $5k or so that I would need to put in to get the property to a rentable situation is not accounted for as either 1st year repair or 1st year cap cost. Instead, I used this as an addition to my initial investment so that my denominator on the cash on cash return becomes Downpayment + Closing cost + Cost to get property to rental condition. 

The following is my analysis. If you skip over until you reach the IRR, what this tells me is that my overall return will go down the longer I hold the property and the best recommended time frame to sell it is after 1 year. Discounting the fact that you have higher capital gains tax for property sold in a year, then the next best time to sell it is after 2 years. Is this telling me a true story that the longer I hold the property, the lesser my overall return is going to be? Is this typical of foreclosure properties? I am a bit confused by what this analysis is telling me. I would appreciat some help or guidance.

Hello - I am looking for a good home inspector in and around Mercer county NJ. Kindly PM me any references.

John - I am asking what if the buyer has tried to do it and agent just provides lockbox code.

Is it normal for agent to give lockbox code to enable a potential buyer to take a look at vacant listed foreclosure properties? Is there any liability for prospective buyer to use the code provided by Agent and look at the property before submitting an offer?

Also, you can't depend on just one person to be your mentor. You are constantly learning and relearning things based on your interactions with different people.  So you get multiple perspectives from different channels based on their respective experience. So, each of these could be considered a mentor. 

how much extra expense will i incur in getting my own title company?

Folks - I am starting to bid on hudhomestore properties and if a bid is accepted I have 24 hours to do an inspection before submitting paperwork. If you are an investor, kindly PM me good references to home inspectors that I could talk to, line up and have on my speed dial so that I can reach out to them to do the inspection within the necessary 24 hours.

Brian - Thanks. Regarding "once you submit that paperwork", I am being told by the agent that it is really 24 hours and not 48 hours as HUD required you to overnight the documents which needs one day, so it's really just 1 day to do the inspections. Is it usually easy to find an inspector who can do this within a day? Or should I line someone up and have them on my speed dial in the hope that a deal becomes realistic. I currently have a Bid out to HUD. They countered but the counter is at a price point above what I want to pay. So, I am waiting to see if the property price will come down. About title, thanks for confirming the clean title. I will await more tips from you via email. From both your replies to my post regarding Hubzu vs. Hudhomestore, I am of the opinion that doing business on Hudhomestore is preferable to Hubzu.

Brian - I PMed you my email. The agent did arrange a showing of the property. What I am concerned about is he is saying "You can get a contingency for financing but nothing more because these are all as is sales." How does this protect me?