All Forum Posts by: Brian Bandas

@Ray Lai who do you recommend instead?

Stephen

Let me preface this by saying that I do not consider myself any sort of expert, at this point, although I do currently have two rentals and am looking at a 3rd and 4th.

A couple thoughts, base solely on my own personal experience.

I personally haven't found much use for the 50% rule yet.

What I do like to look at, at least briefly, are the 1% and 2% rules (monthly rent should be at least 1% of the purchase price) which this property definitely meets. There is no substitute for running the numbers, over and over. Run a worst case scenario version of the numbers and see how you come out. (also, don't guestimate the insurance. you can easily call and get a quote and know exactly.)

My initial thought on this particular deal, though, is that $100 of monthly cash flow is not worth your $15k down payment. If you do a little marketing for motivated sellers, or even just spend a month or two making calls on Craigslist properties and trying to work out seller finance deals, etc, you can probably find more cash-flow for less money down. With $15k you can probably create 2 if not 3 deals with motivated sellers. That's where the cash-on-cash thing comes in, which is my personal favorite perspective. The bottom line is, I have a limited supply of cash (for now, any way) so the question becomes "How much money can I get out of this money?" Can I turn $15k into $1200 a year? Or, can I turn $5k into $2400 a year? etc etc.

If you're like me you're eager to do a deal, get your feet wet, and get this thing going. My $.02 is that I think you can definitely find a stronger deal for your money out there.

Also, keep in mind that you'll need to somehow account for vacancy and repairs. I usually take out 20% of rent as a safeguard, and I do all my own repairs.

Hope this was helpful! Good luck!

i like it! hadn't thought of that. where, and to whom, do you distribute these cards? just in general networking scenarios? or do you target a group somehow?

Brian,

that's how i just got my second rental, although i can't help but feel a bit like it was luck. any tips on how to find sellers willing to finance? or is it simply a numbers game as far as making (intelligent) offers until a seller accepts?

Genus

I actually just closed a seller financed deal on a three-unit rental on dec 31. i don't have a ton of experience but i'll tell you why i think that one worked. it was a FSBO, but not a seller finance offer. i called him and asked him point blank if he'd consider that, because i had a down payment ready to go. i didn't make a formal offer but i did allude to a ball park figure on a down payment i had put together. the two main reasons i think he took the deal are that A) he was a genuinely motivated seller, and B) he liked the thought of having that down payment cash in his hand now, rather than waiting and hoping that something else came through.

at that point, i didn't want to make an offer because i hadn't walked the place and still needed to feel out what kind of deal i could get. i was pretty up front with him about everything. i told him early on that i was looking for a rental so i needed to limit my monthly payment as much as possible. i figured it would be best to save his time and mine if he just flat-out wasn't interested.

i would assume every deal is gonna require a little finesse, every seller and every situation is a little different, but that is what worked for me on this one specific deal. Hope that helps!

I'm in Nashville and have definitely chosen to take between 1% - 1.5% on slightly nicer properties. The quality of tenant and the peace of mind are worth it to me. Financial freedom is wasted if your time is eaten up by tenant drama and property headaches day in and out. Of course it's a matter of personal preference, and ultimately it is up to the landlord to put a quality screening process in place, but that is my personal taste. I like nice properties and lower maintenance tenants. It does, however, take a little longer to acquire properties that cost a bit more.

Final thought: I have a property near Belmont that I do right at 1% on, and I can tell you that that 1% yields significantly higher cash-flow than most low-cost 2% properties, and I don't have to babysit the property or the tenants.

@Dan Walters

I don't have all the specifics on the existing loans yet, except for the fact that they are fixed rate conventional and come to around $1650/month PITI.

The down payment is what I would pay her in addition to taking over the loan via a sub2 contract. Higher than is typical, for sure. But perhaps worth it to get ahold of such a killer property?

The term is how long she will leave the loan in place, at which point I'll either be responsible to pay it off, sell it, or refi. Is it more common for the existing loan to remain for the life of the loan? I've heard both.

The total of $163 is the remaining mortgage balance (147) plus the down pmt (17). I see now that that would be 164, haha. My mistake.

PITI is $1650, condo dues are $300/mo, totaling $1950/mo.

Rented now for $2850. Should rent for $3000 without much trouble whatsoever.

Dan, first off, thanks for chiming in. Much appreciated! There may not be a deal here, but I've resolved to not back away from things that intimidate me. I figure the best way to learn is what I'm doing now: keep asking the questions I need to move forward. So what do you think? Can I pull off a deal here? Either a buy and hold, or a wholesale flip? Or is there any appeal here for an investor?

I will say this. The location is unreal. It would be an anomaly if the property didn't appreciate steadily over the next 3 years, in my opinion.

Hi folks! I'm fairly new to proactive, full-time real estate investing, but I love and I'm actively trying to replace my income and move into this as a business. Like most, I started out looking at wholesaling, although my long-term goal is to put together a strong rental portfolio.

Here is the deal I came across, and I could try and flip it, but I would really like to keep it as a rental! I would greatly appreciate your thoughts on it.

It is a sub 2 deal on a fantastic condo in downtown Nashville, on West End Ave. The location is absolutely incredible.

Retail comp: $380k

Total remaining on 2 mortgages: $347k

Rent: $3k

Cash flow: $1k

Sub 2 term: 3 yrs

Down pmt: $17k

Total purchase price: $163

I simply want to assess the risk of doing a sub 2, the risk of the bank calling the note. Furthermore, what would it look like to try and short the 2nd mortgage. Would that simply draw attention to the deal as far as the bank is concerned?

If I decide not to hold it myself, I can try and wholesale it, although that's a bit high for an investor prop here. Then again, $1k monthly on a property isn't bad. Is there any appeal there as a wholesale deal? I'm wanting to stick with this, be creative and try and create a deal for me or someone else.

Last note: no I do not have $347k if the bank calls. I wish I did. All in due time...

@Account Closed congrats! the first deal is a bear. I'm trying to work mine right now. Can't wait to get over that hump. Very impressive that you're doing it in a city that is not your home town!

@Shaun Reilly really really appreciate your input and advice! i do have a pretty solid relationship with this agent, but nothing solidifies a relationship like that more so than increasing someone's bottom line! furthermore, i think the mindset of being others-oriented--helping out the seller or this agent or any one else, even if it doesn't directly make me money--is a mindset that will result in far greater success in the long run.

again, thanks a ton for offering up your thoughts!