All Forum Posts by: Angelo Behar

@Joe Villeneuve awesome advice. thanks. I will proceed with the deal using that approach. Thanks!

@Ebony Harris Hello! I normally avoid this topics since they can get pretty heated, but I will share with you my thoughts on the topic. The comparison of REIT's vs land-lording depends on the level of involvement you would like. The REIT that I hold from Vanguard has an extremely low expense ratio, 0.10%. and a return since inception (2001) of 11.83% for VGSLX. Add a 4% dividend, capital gains and your returns are quite nice. And you're quite diversified with a REIT, 138 different companies holding $43.1 billion dollars in assets. You're 100k can get hedged and averaged into $43.1 billion dollars.

For the opposing side, you can buy 100,000 worth of property for $20k, rent it out and after expenses you should be cash flowing quite well if you do your due diligence. So you can leverage your $20k and hold property worth 100k, or use 100k to be a partial owner of a fund worth 43.1 billion dollars.

If you prefer not to be bothered with the possibility of, say, bed bugs, being sued, evictions, hurricanes (florida), natural disasters, etc, I would recommend a REIT. But be warned, a REIT is a roller coaster of volatility. VGSLX may be yielding 11+% since 2001, but you know that means years of massive losses and gains, but in the end you always own the same amount of shares. 100 shares worth 100 dollars may go down in value temporarily, say, to 100 shares worth $50 dollars, but you still own 100 shares. As the stock market has historically proven, in time, it always goes up, but so does real estate.

Decide the level of involvement you would like to have with your investment. There's also Turn-Key investing, which in my opinion falls in between, active landlord management, and a REIT. There's no right answer, it just depends on your investment style.

@John Thedford Despite everything we've done so far, the seller thinks we are trying to pull a fast one. She's skeptical about a side deal even after everything has been completely explained, that, in the end, she gets what she wants, just in a different form. 

@Joe Villeneuve Thanks for the analysis of each option. I agree with your number one choice, but, like you said, it's a big risk to leave it to the fate of the next prospective buyer to pass on this deal. Would you make an offer that expires in 30 days in order to add pressure?

Hello BP, I hoping for the valued opinions of the BP community for my current predicament.

A purchase agreement was signed by both parties for the price of $152,500 for a 3/2 owner occupied, with two 1/1’s attached rented month to month without a lease. The breakdown for monthly cash flow is as follows:

$1300 main unit 3/2 (rent that it will yield)

$500 1/1

$600 1/1

$2400 total monthly in rent

-550 Mortgage @4% for 30 years

-250 insurance (yay South Florida)

-183 tax

-240 repairs

-240 vacancy

$937 monthly cash flow

$937x12 months= $11,244/$40,000 cash out pocket = 28.11% cash on cash

$1487 NOI x 12 months = $17,844/$152,500 purchase price = 11.7 % cap rate

Looks like a good deal, right? Here is the fun part. I paid $1500 out of pocket to get rid of termites and to get the electrical to pass the 4 point inspection for insurance. An addendum was made to reimburse the repairs I paid for since the seller did not have the cash to pay to get the cleared 4 point inspection.

And the appraisal came back at $136,000….the appraiser stated that the house was filed at the court house as a single family home and paying taxes as such, therefore, the two efficiency attachments were not allowed to be included into the value of the home since they are additions made recently. The additions were in legal zoning compliance on the appraisal, but added as a line item, not adding the true value of the attached 1/1's.

152,500 – 136,000 = $16,500 difference and the seller is not willing to budge one cent. And so far she is not willing to do a side deal. There were not any other offers made when the property went under contract.

The three options I believe I have at the moment are;

• 1.Walk…but what do I do about the $1500?
• 2.Offer cash on the side close to 16k, so far she's not listening to side deals (but why should I since no one else will be willing to pay more than 136k) ((would this deal still be worth it if I paid 16k on the side?))
• 3.Offer 145k or less and allow her to shop the deal for 30 days.

Any other options the more experienced have to offer would be greatly appreciated, thanks!

Hi there Jeff, if you'd like, you can call my brother. My brother is a real estate agent in South Florida, I can ask him to find out any info you need, I'm sure he would love to help out a former Marine! His number is 561-373-5569. I'm overseas too, so I totally understand how difficult things can be. My Brother's name is George by the way.

@Barry Vonderau Welcome fellow Floridian! I'm quite new around here as well. I was stationed in NAS Jacksonville back in the day for training when I was in the Marines.

Just curious, why was the house vacant for 18 months?

@David Paul  The loan is through Navy Federal credit union, I have a decent sum of cash, job that pays well and a high credit score, so, my credit union was eager to assist with my first mortgage loan. Although, they said my next loan I would have to put 25% down, which is understandable. 

@AJ P. Thanks for the welcome! Yes, there is a lot of info here, I'm excited to absorb as much information possible from BP.

@David Paul Wow! Congrats on closing two deals, and in one week no less, very cool. My brother is a real estate agent in Florida, but he is planning on moving soon, so my brother is out searching for a home run. For the first property I'm not going to put anything down, and I'm hoping to keep it a while. I'm getting the feeling things are getting a little too hot in South Florida, but time will tell. 

I would like to get a couple rentals and hold on to them for the cash flow. Are the properties you closed on going to be rentals or do you have other plans for them? 

Thanks for the welcome! Do you have properties in Palm Beach county?

Greetings Everyone!

Well, I’m quite new to the real estate game, but I am quite eager to dive in! I downloaded the Ultimate Beginners Guide from BG, and trying to learn as much as I can from Investing in Real Estate by Gary Eldred. That book has been wonderful so far, especially for a person starting from ground zero. I would have never found myself here without the brilliant guidance of a financial blogger, who I won’t name so it doesn’t appear that I’m trying to plug their website. Alas, that blogger has mentioned BiggerPockets, and here I am.

I was born in South Florida and joined the U.S. Marine Corps in 2003. While I was in the Marines, I graduated with my B.A. in psychology, and I’m currently planning to attend FSU online for my MBA. I spent six years traveling the world which lead to my current occupation as a security contractor. As of now, I am in Belgium which is the 32nd country I have been afforded the opportunity of visiting. For the moment, the most I've been involved in real estate is my REIT index, also known as the lazy man's landlord. But things are about to change for the reason that I have just been approved for my first mortgage loan!

And now, I must thoroughly plan before I attack, which is what has lead me to this website. Such a wealth of knowledge and experience is truly wonderful, and I cannot thank you enough for the opportunity to be here. I also read chapter two of the BG’s guide, and don’t want to get analysis paralysis, but don’t worry, the book, The Magic of Thinking Big, turned my fear into action. I greatly look forward to being a part of this tremendous community!

Kind Regards,

Angelo Behar