All Forum Posts by: Tony Tomasek

I agree with Michael, get your $100 per door or move on. Too many deals that make sense out there. Try making an offer and let the owner it will stand if he changes his mind. My father and I have gotten great deals in this manner. Good luck

It really all depends on what happens. The 50% rule has served me well on properties in Chicago. However 40% may work if you manage them yourself. The breakdown is never the same twice. I had one property that the renter stayed for the entire 5 years I owned it, so I netted more money overall. I have seen some breakdowns of the 50% rule on past threads, but I cant say that they followed my experiences very well,

The prices on some (really, most) of these are eye-popping. There's just no way the buyer can be making any cash flow on them.

One explanation is the rise of "value added" investments about 2 years back. From what I understand many large institutional investors have basically overpaid for projects where they could rehab and then raise rents and occupancy. This allowed them to use more expensive financing on a short term basis, add value and then refinance out. (Sound familiar?) These same institutions have moved from major markets into submarkets looking for better opportunities. This means that the competition for these deals drove up prices and made it almost impossible to cashflow on current condition. When you look at comparables you see an artificial market that is on the tail end due to the lack of funds now. Of course no experienced investor would pay that much but that is how the comparables got skewed

Yes offer what makes financial sense if it gets rejected move on. Get it to cashflow or dont do the deal. Equity is not a realized gain until sold, so cashflow is what most seasoned investors look for. There are various ways that you can get a property with none of you own money in it. Most require a great deal at 70% or 65%of ARV

Do NOT, I repeat Do NOT sign on for a deal with a hard money lender that has a pre payment penalty. This is ridiculous and many are out there that don't charge this fee. Prices for hard money are going up it seems. I am seeing 18% per annum and 8 points up front at present. Also I have found several really good deals from forclosed loans , so that is true.

No one has said that this property is in NJ. There are lots of places that 30k a unit is the norm. Regarding the utilities being paid by the owner one small piece of advice. I have drastically lowered my bills on several smaller properties by installing low flow toilets and showerheads. Get utility bills to verify expense. Only pay for current condition minus improvements, and then move to affect NOI. Also is there a RUBS program where you can charge the utilities back?

Sorry for omitting rent-- Rent will be $550 a month. Exit strategy is rent and hold to resell in 5+ years. I get the point though. Go with the resale price in the area. I appreciate the input. The flip in this area would be a bit hard due to forclosures. Though not impossible. I think based on comps I need to get it at 18-19K. I am thinking of an initial offer of 16K. Thanks for the help

How much of a discount should I expect to get off of listing price for a cash offer? Scenario is as follows:

Asking price: 24,900
Rehab: 3,000
ARV: 50,000

Where should I start for an offer and what should I expect to end up paying realistically?

Yup good job on the analysis. You have to be careful with these brokers pro forma numbers or in other words a "pack of lies".

Ok you still have to take into account that situations change, holding the property may not be possible in 2 years for some reason. Overpaying or coming in at market price for owner financing is not a great idea as you would be upside down at this point. Especially taking into account the market right now. Make a reasonable offer and realize that in most markets it takes at least 10% to 15% off of market price just to generate interest in a rehabbed property. Buy right to give yourself a fighting chance