All Forum Posts by: Adrian Gonzalez

@Joshua Parr

Thanks Joshua for your advice.

Hi BP, I may have the answers to these but just want to make sure. Here's some context, I have a property in my home state of Texas that I would like to sell with seller finance. I own it free and clear and I pay monthly for HOA maintenance.

In seller financing, who is responsible in paying for property taxes, buyer or seller?

Who’s who will receive and who’s name will the tax bill have, buyer or seller?

If the seller responsible in paying property taxes, how should this be included with the terms?

Is it included with the monthly payment or should this be collected from the buyer when tax is due?

If the buyer is responsible, how do I ensure property taxes are paid to avoid foreclosure?

Same questions for the HOA fees.

I figured this would be my best option in getting me started, is there a better way?

Thank you all for the help.

HI @Dave Peirce

I'm dissatisfied with my current one and they are not local. I've only used them once for tax season and felt uneasy with the way everything was handled. I'm looking for someone to work with who can provide feedback and advise. 

Any suggestions on local Houston CPAs? I currently have one for my business, but would like to work with someone who can help me with both business and set me on the right path for investing.

Any REI meetups in west side of Houston this week? I booked my self for a few next week and July. I have some free time this week in the evening after work. Please share, thanks!

@Amanda G.

Thanks Amanda, for your insight. If refi at $72k, then I guess I won’t be getting back 100% of the cash invested and the private money borrowed, especially if borrowing with interest. Looks like I’ve lost about $8k from this deal to only cash flow a few bucks. Maybe this could work if I held it to build equity and possibly down the road with the heloc strategy I learned from the Kwak brothers. What gets me most is that it’s so close to breakeven that It’s too close to negative equity. My question is how can I make this a better deal?

Hey BP,

I would like to get feedback on this analysis. I'm not buying, the goal here is to understand how the numbers make this work and what will sink this deal. I understand that a bank won’t loan for this type of property and price, these are just estimated numbers. The sale price is what’s currently listed. The goal is cash flow, is this even worth it?

Financing Strategy

Owner Finance – HELOC (down payment 10%) + private lending (Rehab) / Refi at ARV 100k+ / negotiate monthly note or pay in full

The Deal

Purchase Price: $50,362 (25% disc from $67,000)

Loan Interest: 6%

ARV: $97150

*I averaged this from surrounding properties, should rehab cost be added to this? Or should rehab cost raise the current appraised value higher than surrounding comps?

*How is this calculated when comps range from 67k - 145K?

Estimated Repair cost: $30,000

* I'm sure this property needs way more than this, more of a reason to negotiate sales price even lower.

Purchase Loan Details

Owner Finance

Down Payment: $10,072 @ 10%

Loan Interest: 6%

Note Period: 30 years

Refi: after 6 Months or less depending on financing strategy

Estimated Rehab Time: Maybe 6, it’s in a pretty rough shape. It’ll be hard not to cringe at the sight of this.

Refi Loan Details

Loan Amount: $88406

ARV: $126295

*Assuming that it'll appreciate 30% more from initial ARV of $97150. Is this even correct?

Loan Interest: 5.44% (If credit is good)

Refi Closing Costs: $2500

Amortized: 30 years

Income

Gross Monthly Rent: $950

*Could push it up to $1100 range, since comps are a bit weird in this area, low balling it here for worst case scenario

Fixed Land-lord Exp

Mo Insurance: $50

*non flood zone and tenant responsible for utilities 

Vacancy: 3 %

Repairs: 5%

Cap Ex: 5%

Management Fees: 8% (self-managing though)

Results

Monthly cash flow before refi: $300

CoC ROI: 10.30%

*Should I expect more?

Monthly cash flow after refi: $59.68 (pretty low right?)

CoC ROI: Infinite

*Is this even worth refi?

If don’t refi, how could I pull cash out to pay back lenders and myself?

Probably should just flip it or change financing strategy to cash purchase?

Strategy – HELOC (purchase property) + private lending (Rehab) / Refi at ARV 100k+

Any recommendation for good books or detailed literature on the BRRRR process is appreciated, thanks!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

@Andrew Postell to add a couple of questions to this strategy, is debt to income ratio considered on a 203k loan? This may limit the amount able to borrow, right?

@Paul Jurczyk great questions, sorry for hijacking this thread but your question helps many us newbies, myself included. Good luck, please share once you land your deal.

@Austin Smither Langley I will take a look, thank you!

Good evening BP,

What's your great recommendation for a local entity structure planning attorney in Houston Tx?