All Forum Posts by: Alexander Zurn

@Eric Mauricio in the loan process, you likely wouldn't be asked to provide statements for 4-6 months prior but possibly up to 3. Say, however, they do ask for that 6 months and find the large deposit. You would have to sign something say you won't pay him back like you did before so... it'll come down to how comfortable you feel "avoiding the truth" on a mortgage app. I don't think I would do that but I bet many people have before - maybe/maybe not. Judgement call!

@Alyssa Kruger that sounds exciting! Continue educating yourself in the time you have prior to departure.

Quickly reviewing the mentioned options, AirBnb may be tough overbroad. Simply put, you just need a really good property manager, probably one that specifically deals with AirBnb rentals. This may cost a premium.

If you won't be in the U.S. at all and have no ties to a specific location here, I would suggest investing a growing market. Research which markets are growing (i.e. demographics, job/population growth, etc.). Once you find 3-4 markets you think are growing or will grow in the future, start getting to know the market. Watch it every day (i.e. what are rents, what are properties going for, what is price per sq/ft., what seems feasible for your buying power, etc.) these are all things you'll learn while watching the market.

I would also suggest closing a few months before you leave (or trying to at least) so you can systematize your operation. You'll of course need a property manager so factor 10% of income towards that along with everything else (re: Rental property Calculator). You'll want to have a good idea of the routine you'll have while being overseas.

Good luck!

@Will Eagles you'd have to find a good deal that cash flows enough for you to pay back your family with part of the cash flow (i.e. after ALL expenses are paid each month) and then the rest would be profit.

Consider it a loan, with an interest rate and term that you have to pay back. Borrowing from friends/family is good to start out because it can give you a track record to bring to private lenders in the future.

So say you find your property for 100k and you want to put down 5% but you don't have 5k laying around. You will obtain a mortgage for $95,000 at 30 years and 4%. Then you'll borrower the down payment from a family/friend to a similar agreement. The benefit is that you get to set/agree to the terms. They will probably want their $5,000 (5% of 100k) back in 1, 2, 3.. let's say 5 years and they want to make 7% interest on their loan to you. So you'll make 60 payments (12 months x 5 years) towards the principal and then calculate 7% interest on the payment. Below is what your payment schedule would look like.

So in order for YOU to profit while paying off the down payment loan, you'll need at least $99.02 in cash flow on the deal because the total payment to your family/friend will be $99.01. BUT once that is paid off in 5 years, you'll be making that extra $99.01!

That dragged on there but just trying to make it clear. All in all, just think of it as another expense on your monthly payments then see if you still cash flow after ALL expenses are consider.

Good luck

@Raymond Hill in general I think the State of RI is not necessarily "in a bubble" but is certainly experiencing inflated prices - along with most of the country. Properties (most - not all) are going for the most they've ever gone and state tax laws are not enticing new businesses to bring new jobs - i.e. more employees, more tenants/buyers.

Certainly down in my area, Newport County, deals are hard to come by (but they are out there!). Recently, I've seen many properties coming on market way over priced, only to drastically reduce the price within the first 2 weeks of it being there if they haven't seen the offers. This tells me buyers are becoming aware of the inflation. They're (very) slowly starting to hold out and wait.

I for one am under contract with a MF in Newport at a reasonable price. If I were to not have this under contract, I would strongly consider holding out for a move to a different, less volatile market at this time. I'd also reevaluate my criteria to expand "my" market to include more suitable conditions if necessary.

Places like Warwick, Providence, and potentially Mass. (though I don't have as much of a watch on that market) are better suited for deals but I'm sure an expert from those areas will chime in soon.

@Maugno M. I believe 72 hours is the timeline but I don't think there is a "legal" amount of days they have to get back to you. They are either reviewing offers or have forgotten to update you. Your agent needs to reach out.

Are there likely multiple offers on the property? I would imagine in this market right now. Regardless, you should have been updated by now.

Something like: "I need to hear back or the offer is off the table" might help.

Good luck!

@Cameron Eaton my advice would be to get into the game whenever you can. Yes, you could wait for the next correction to get a better deal but no one knows when that will be. If you can afford it, the numbers work, the experience you learn with this one will come in handy at the next down turn and hopefully you'll have $ set aside.

If you want to buy and hold this investment, the next few market trends/corrections in the near future (10 years) will not be important to your investment in 30-40 years.

Your strategy comes into play here. Consider it!

Good luck!

@Chris H. a quick method to evaluate what the price should be is to take the net operating income (NOI) divided by cap rate (CR) equals value (V).

For NOI, take the monthly rent and multiply by 12 (months) then subtract 50% (conservative rule of thumb). Cap rate is location based so you'd have to determine that based on recent sales in your area (i.e. comps). Then divide NOI by CR.

For example, let's take a MF with 2 units, each with $1,000 in rent per month in a 10 cap location (tough to come by these days in a sellers market but makes an easy example).

Monthly income = $2,000

Yearly income = $2,000 x 12 = $24,000

NOI = $12,000

Cap Rate = 10%

Value = $12,000/10% = $120,000

As I said, in a sellers markets it's tough to find deals where you can offer a price that is justified solely by the numbers, conservative numbers at that. But this should give you a basic idea of where a price should be.

Don't forget that MF's are supposed to be priced by the numbers! So always consider that before your offer.

Good luck!

@Hubert Sarfo awesome decision! You can learn so much from books, articles, forums, podcasts, etc. but eventually you need to jump in and learn as you go.

I would recommend to you looking into the New Jersey First Time Homebuyer Program. Take a look at their Fact Sheet. It looks like their Smart Start programs offers a 0% interest Downpayment Assistance and Closing Costs. This gives you a great opportunity to save, save, save and then finance all of your mortgage (down payment, closing costs, & PI). That way all you save can be used on the house and the payment instead of the mortgage. Especially in NJ's market this could be a good opportunity.

Good luck!

@Francis Rusnak determine earliest time to get inside of property. Why can't you get in? Tenant? Seller won't allow?

Regardless, whenever that time is get in there immediately with GC's to get quotes. That means scheduling ahead and even having 1 GC show up immediately after another GC (get them competitive), which means figuring out how long it will take to provide a quote, etc.

If you are using the GC for everything, you'll be looking for a fast competitive quote. Communicate that. Say: "I am having 3 GC's come by today in hopes of getting a quote and estimated start date as soon as possible - both of these will factor into who I chose - will this be a problem?" Something along those lines.

They want the work as bad as you want it to be done. Don't short quality for price and time though. Make the smartest, efficient decision by running by colleagues and even BP!

Good luck!

@Kevin Clark a strategy I once read about, I am blanking on the book, is taking a picture of the property and sending a post-card type of letter to the owner occupied address (the one 2 hours away). As this is a very direct circumstance, you could take the time to personalize the post-card and perhaps attach a note saying who you are and that you are interested in purchasing his property.

Keep in mind that he has probably received many direct mail campaigns so really take the time to research how you can make it different and stand out as genuine but also seeking investment. Perhaps give him your phone number and ask that he calls when he receives to discuss what is best option for HIM.

Good luck!