All Forum Posts by: Alexander Reda

Thanks for the reply Brandon. I was thinking the same thing. $500k is way to much but my thought process was if i can keep my monthly payment low and consistant then it might be ok since I don't plan to sell. Ill have minimum upfront money in the deal and cash flow 3-5  hundred a door. which will then leave me with money to bring the units up to 2021 standards sand increase rents. The only opportunity I could see with a big lot is to be able to build another unit on it. The seller told me he tried to build a 3 unit over 40 years ago but got denied the permits to do so. with the housing supply being so limited, there might be an opportunity there to get approved to build another building on that lot in the future which would be a HUGE opportunity.  

Hey everyone,

So I have a deal in the pipeline. The seller wants no less than $500k for his duplex. He owns it out right so there is no debt on the property.

A little detail about the property.

its a 2 unit. Built in 1900. Both units have 2 beds with living room and kitchen. 8 rooms total. total sqft 1476 and is sitting on a 14,810sqft lot. he is recieving  $2400 a month total for rent but told me he has never increased the rents on his tenants. Hes owned the property for 48 years. He also stated that he added new siding and a roof recently. Inside the units sound like they could be updated but he said they are clean with no problems. 

The comps I have ran are no where near the $500k hes asking. the closest one sold for $380k back in dec 2020. the other 3 comps were selling around $255-$300 with the earliest sell date at Sept 2020. The $380k comp was built in 1888 and has 100sqt more. 8 rooms as well But the lost size is only 9000ish sqft compared to the 14,810sqft . 

The seller wants to do seller finance but is strong on the $500k. I was thinking about giving a 3 option of intent to purchase scenarios with 2 options being lower then what hes asking with a lower monthly payment but with interest which would bring the total payout more than $500k hes asking. My last option would be to pay him the $500k with equal payments a month towards principle with a higher monthly payment but with no interest and a longer term with no balloon payment. (these are just ideas that I am thinking about on how I should structure it)

Giving the high demand in the market and all time low interest rates, should I try and make this deal happen? or should I pass?

If you think I should offer a better seller finance option please share.

I should state that this property is located in CT which is booming in rent growth since the pandemic. 

Thank you in adavnce for your feedback! Can't wait to read the replys! 

just responding to thread to be updated on the next meetup.

Hey @Gavin Lish welcome to biggerpockets! Your best bet is to might be to contact an estate attorney to help guide you through the legal process. Also, I would search to see if there are any meetups in your area. Connecting with investors/wholesalers and learning from them is the best education you could recieve.

To find some examples of wholesaling contracts, you can visit the file place. 

https://www.biggerpockets.com/files/user/Grennie_Jr/file/wholesale-purchase-and-sale-contract

this should be a direct link to some examples that may benefit you. 

I suggest learning and understanding the process of wholesaling before jumping in. There are some good wholesalers out there but mostly bad. You don't want to do anything half fast. Your reputation can help your progression or break it! Good luck with your journey! I wish I could provide more for you. 

@Natisha Phouphayly After all expenses, I was going to cash flow $140 conservatively. Not high but my ROI was around 15% (this is going off my original estimations) and the property was in a really good area so my intentions were to hold for a long time. I have 2 private investors who are willing to lend to me. I also located a Bank out there that says they do 80% LTV on cash out refis with buy and holds. I am actually in the process of giving them the information they need. One less obstacle to cross for when I DO find the right deal!

@Greg CarrierYeah if i lose my earnest so be it. It would of cashed flowed but again, not enough contingency money built in. Rather lose that then the 100 plus thousand!!

Hey @Theresa Harris I did have money in contingency but not enough. I made some rookie mistakes but thankfully the investors in this thread stopped me from making a bad move. The house needs a new roof and HVac. the rest is mostly cosmetic. It needs to be rehabbed to get any type of Rent out of it. Unfortunately, I wouldn't be able to do any of the work myself. Knowing your figured 15k and it cost 25k,  cements what the other investors have been stating in this thread.... my contingency is way to low.  

Hey @Kris L. the property is located in TN

Thank you everyone for you input. I am taking everyone's advice here. There is not enough meat on the bone especially a first go around with PM and GC. Even if 35k-40k rehab would work at a way lower purchase price, I should just pass up on this deal. Seems to be way to risky. You guys made me see it from your angles.... All I gotta say is thankkkkkkkk Godddd I decided to post this deal on these Forums. seems like I just dodged a potential money pit. 

@Josh Norell I spoke with a bank out there and their refi is 80%.

@Steve K.  If I were to account for 50% over budget and total 6 months rehab, I would be at 75K but I am still leaving in around 12k in the deal. I would have to come in significantly lower it seems since this strategy is way more risky for a beginner like me like @Mike Dymski stated. Maybe I am being to bullish and risky. @Darius Ogloza Thanks for your input. I sent out earnest money already. I will have to find a realistic reason why I am backing out of the deal after inspection. Maybe state that rehab costs is projected to reach around 38k after contingencies are placed.

@Diane G. You might be right but this location is sooooo nice! My plans are to build a rental portfolio out in this market. not just a one and done deal. I want to have at least 3-5 buy and holds before I branch out to other markets. 

Where I live does not make sense to invest in rental properties which is why I am investing out of state. I am doing my best to put the right people in place to make it work. I spent over 2 months just building a team out there. I will not let Risk defy me but I have to make sure it's the right decision and deal for me. Should I just be focusing on deals that meet the 70% rule? the market is so hot that I'll be waiting forever for that property to meet that criteria.