All Forum Posts by: Andrew Christie

Thanks Barry. It's refreshing to have someone actually answer my original question. And yes, James, I concur. When someone tells me that 9.4% cash on cash is retail and I can't find anything close to that in my area, I have to give the benefit of doubt and assume it due to regional variance.

Really? 9.4% cash on cash on a stable, appreciating asset is retail? So you think that's average? You think you can just go on to the MLS and buy apartment buildings that will pay 9.4% cash on cash any day of the week?

I can't find a deal that comes anywhere close to these numbers for $260k on the MLS. The closest thing I can find is listed for $355k. I realize investors rarely pay the listing price, but I also know they almost never negotiate a $95k discount.

So if $260k is retail, everyone buying off of the MLS is overpaying?

What do you consider a "good" deal then? And how are you finding these "good" deals? PLEASE pass just ONE off to me!!!

Anyway, I tell you're going to shoot this down no matter what I say, but...

Rents = $750 for section 8 in this area.

Cash reserves is also a return on your cash unless you spend it, so why not just say 15% repairs if you think you're going to spend it?

Taxes on this building are only $4300.

So now we're at 10.15 cash on cash with your capital reserves. 11.9 without.

Why the 10% capital reserves when you have 5% for repairs?

I have not ruled out the option of buying it myself. I am very tempted to do just that. However, I have a pretty fat wholesale fee on it that I think I can get. I have people interested in it at the price I've offered it at and, as long as there's interest, I think I'm going to opt for the fast cash. If that doesn't pan out, then there's a good chance I'll buy it myself.

The point of my post was to ask advice on the situation and how to best deal with the seller. However, if you want to know about the deal, here it is:

6 unit, all 2/1. Each about 650 sqft. Total building size is 4600 sqft. All brick, built in 1971. Nothing has been updated, but it's in decent, certainly rent-able condition.

NOI for the last 2 years is just under $30k per year. That includes property management, water, sewage, common area utilities, etc. Average cap rate in this area is 7 to 8%. That would put the value at $375k. I'm asking $260k, which gives this an 11.5% cap rate. So imagine what the cap rate is at MY price!

My property manager is extremely interested with the deal, but she is already tapped out on financing. Like you said, Mark, apartments take time to sell and I definitely underestimated that.

Other than that, I don't see anything with the picture.

Hey Bryan:

I have always been honest with the seller. However, if you tell a seller that you're not actually interested in buying their property and, instead, you just want to market it for them (much like a licensed agent would), but that you're not a licensed agent (although I actually am) so that you can make a quick buck, how successful do you think you'd be as a wholesaler? Oh, and the reason why you do this is because you can make more money that way than you can as a licensed agent. If there are any wholesalers on this site that's dedicated to wholesaling that tells their sellers this and they are successful, please tell me who you are! LOL Most, if not all, sellers would tell you, "no thanks... in that case, I'll just list with an agent!" Everything is in my contract. They agree to the contract. I don't lie to anybody.

And people actually ARE interested in this deal. It's a GOOD deal. I appreciate you wanting to provide input on the deal, but I don't need that. I know it's a good deal by the reaction I'm getting, especially when I presented it to the Director of Commercial Sales at our brokerage. He actually urged me to increase my selling price! LOL

BUT... just because it's a good deal doesn't mean it's a quick, easy sale. Just look at the million dollar mansion market! I'm realizing that this is a niche market. I'm not selling something where someone can make a quick buck. I'm selling something that #1) requires a lot of capital and #2) makes a slow buck. Although it's a great return, it's a slow return. And therefore, I'm realizing that I'm going to have to be more patient with this thing than I realized. And because of that, I need to come up with a way to deal with the seller to let her know she will be getting her money, but it just might not be as quickly as she had hoped.

Hey Eric:

I have an unlimited inspection period. So although I have a decent deposit, it's protected by the inspection clause.

I'm a licensed agent and think that if I don't get any hot interest soon, I will go ahead and list it as a contract owner. That will give it a lot more exposure. I've also been advertising it as cash only. I think I can drop that. As long as I have a qualified buyer, then what difference does it make? The seller wants cash, but her main priority is to sell. She's getting her cash either way.

If I have to stall for time, I can simply tell her that my partner doesn't approve due to the current condition. And then I can tell her that I'm still working on him, trying to change his mind. I can let her know that I also have other people interested and I think I can get her what she wants for it. What can she say? Her only other option is to back out of the contract and start all over. She might as well hold off and try getting the money while she can.

So... I've got this apartment building under contract. I've advertised it to the two local REIA groups we have here and I have it posted on Craigslist. I've called several people in my network to let them know. I've had some interest, but people aren't currently breaking down the door to get it. I'm realizing that this might not be as quick and easy as I initially thought.

I've told the seller it's a cash deal. I didn't volunteer the fact that I plan to assign the deal, so she thinks I'm buying it. I put March 15th as the closing date... so it might be rough to find a cash buyer who can close by then.

So my question is, what are some strategies to sting this out. She has already told me that she would like to close by the end of the month because she's going out of the country. What can I say to her so that she won't be upset. I guess I have to give her some excuses.

I was thinking about telling her that my "partner" is out of state. He hasn't seen it yet and he has to approve it. But then that will only last for so long. I don't want to lie, but then I don't want her to get upset either. I'm wondering if it would be best to be completely upfront and tell her that I'm looking for an investor to assign the deal to and explain that I have a lot of networking connections.

I'm sure others have been in this situation. What have you done?

Thanks Rick! Good stuff!

Thanks Dev! That's very helpful!

Just out of curiosity, how many probate letters would you say you're mailing each week?