All Forum Posts by: BB Liu

Hi, I would value the advice of the BP community on this: 

I am looking at a potential flip property that has tenants in it.  The tenants have NO lease, so under NY law, they are month-to-month tenants by default. 

The property is a terrific buy (lots of profits on a flip), but seller will only agree to deliver with tenants inside.  I do NOT want to buy with tenants inside, as I am using hard money, so if tenants drag out an eviction procedure, it would cost me waaay too much.  My point is, I want to only buy the property if it is vacant.

My question is:  I was thinking of knocking on their door, BEFORE I buy the property, and seeing if I can convince the tenants to move out before I close.  I would offer to pay moving fees, or offer cash.  What do you think?  Good / bad idea?  Other suggestions?

Again, I can not buy and hold -- want to flip it only.

Thank you!!

Just in case you don't know this - have you considered an FHA loan? Only 3.5% down for owner-occupant and a portion of prospective rents in the subject property can be counted as your income.

@Cortney Jones -- Thank you!  It's funny, I network a lot professionally (I'm a lawyer) and do constantly ask people to introduce me to others.  But, I never thought of doing that in real estate until you said it.  I just downloaded your audio about private lending, by the way.

@Ritch Bonisa -- Thanks :)

Thanks everyone for replying to me.  BP people are awesome.

@Nick C. and @Adam Abdel-Hafez -- I had thought of talking to contractors directly, but I feel hesitant to call them without first having a property under contract first.  So your comments encouraging me to do this are helpful.  You're right, I should start to screen them and form those relationships now.

@John Cushing -- I was focused on southern Westchester county, NY because my mother and I already co-own a multi family there, and because I have access to the Hudson Gateway MLS. But as I talk to people, I am thinking of shifting my focus to northern New Jersey, as the properties don't seem nearly as overpriced as Westchester ....

@Cortney Jones -- Your advice was SUPER helpful, thank you. You really gave me great ideas of how to productively use the hours when I am at my desk anyway.   

I just have one question, please.  You had advised that I email potential contractors, title companies, home inspectors, etc. Other than introducing myself, what else would be the content of these conversations?  Is this where I start to screen professionals to ask about their experience, prices, etc.?  Again, I get the idea of "building relationships" with them, but I feel like they will quickly realize that I have no immediate job to offer them and lose interest in the conversation, no?

Thank you!! 

I am new at this. But wait! Before you read my title, and reply by saying, "No one can learn rehabbing from a desk!!" -- Let me first say, I know this. Really, I do! Rehabbing, and real estate investing in general, can only be understood by DOING it, and no amount of desk work will teach me rehabbing.

What I mean is, I have some extra time during the day, at my desk (e.g. lunchtimes), and am using this time to work on real estate. Part of that time I spend looking for a rehab-flip, but part of that time I am using to teach myself about rehabbing. What I am doing is studying J Scott's The Book on Estimating Rehab Costs, and also watching videos from This Old House that correspond to what I am reading.

Do you have any other advice for me about what I can do to teach myself rehab, during the time I am at my desk?

I am 100% determined to do my first flip in the next few months (I already have pre-approval from a hard money lender), so I would gladly welcome advice.

Thank you!!

Hi, I know this thread of out of date, but in case this helps anyone, I wanted to share my experience with the content of direct mail:

Over the past few months, I sent out about 700 first-time letters to expired MLS listings in Westchester county, NY. Westchester is the suburb north of NYC, and it includes some very high-income areas (eg. Chappaqua, where the Clintons live), but also many lower-income areas where a sizable portion of the population rents.

There were two main letter templates I tried, and one got a much, much, much better response rate than the other. I am going to share both templates below.

**** I want to preface this by saying, however, that I am a new investor and I did not close one single deal out of 700 letters, so I am so obviously NOT an expert (!!) But, since I get so much out of the BP community, I wanted to contribute in some small way ...

********************************

The template where I got a very low response rate (around 5%. not counting undelivered letters) was this one:

Dear __,

I am looking to buy a property in southern Westchester, and your property at __ is one in which I am very interested.

• No delays: I would be able to make an ALL CASH offer on your property in 48 hours or less, and can close very quickly
• No repairs: I buy properties in as-is condition, and you don’t need to fix a thing
• No need to remove liens: I will buy the property with lien(s) still attached
• No commission fees: You would save a lot of $$ selling your house yourself
• No obligation: There is absolutely no obligation, and your information is kept completely confidential

To reach me directly [my contact ifnomration].

If I don’t pick up the phone when you call, leave a message and I promise to call you back very soon.

* All cash offer guaranteed in 48 hours or less *

Warm regards,

********************************

In contrast, the letter where I got a pretty high response rate (around 20% not including undelivered letters) was:

Dear __,

I am looking to buy a property in southern Westchester, and your property at __ is one in which I am very interested. I can offer a quick closing because I don’t need bank financing, and I always deal fairly and honestly with everyone.

If you are open to selling, please contact me. Thank you so very much.

Warm regards,

********************************

My personal guess is that the first template was clearly a business solicitation letter, whereas the second template felt much more personal. One drawback to the second template, though, was that although a lot of people called me. many expressed disappointment that I was an investor, as they had thought I was a buyer occupant who fell in love with their house.

Again, I don't have any advice for anyone, but I just wanted to share my experience with the BP community.

(Finally, on a personal note, I had originally started sending these letters in the hopes of landing a deal I could wholesale to rehabbers. But now, I am thinking instead of trying to do a light-moderate rehab myself, and I have already gotten pre-approval from a hard money lender in my area. I am also slowly studying "The Book on Estimating Rehab Costs" by J. Scott, and watching online videos about rehabbing. If anyone has any advice for me, I would be most grateful.)

Thank you!

BB

@Scott Steffek:  Hi Scott, thanks for the detailed feedback.  I appreciate it. I also realized from reading your response that I should clarify something:  I had written that with respect to their "cash in" program, Morris told me that for NO additional fee, they would rehab the property, place a tenant, and get a property manager in place.  I want to add now, that once the property manager begins work, I would need to pay a monthly fee equal to 8% of gross rent.  (The same 8% fee would also apply in Morris' "self-directed" program.)  The expected net returns of approx $200-$300 per month were after taking into account expenses that would include the property management fee.  

Hi everyone,

I know this thread is no longer active, but in case this is helpful for anyone:

I had an intake call yesterday with Morris Invest and spoke to someone named "Haley."  This call was pre-scheduled and was specifically designed for the company to tell me more about what they offer and whether I would invest with them. 

in sum, they currently offer two investment programs:  The first is a "cash in" program where an investor pays approximately 44-48K in cash to purchase one of the properties owned by Morris in Indiana.  After the closing, for NO additional fee, Morris would rehab the property, place a tenant, and get a property manager in place.  These types of properties were expected to cash flow about $200 a month after expenses.

The second program was a "self-directed" program where an investor would need a currently-existing self-directed IRA, or Morris would work with the investor to roll over funds from a 401k into such an IRA. Then, the IRA would purchase an 80K property from Morris for 35K down (to be paid by the IRA) and 45K non-recourse mortgage, to be arranged by Morris. The property would already have been rehabbed, have a tenant and property manager, and be cash-flowing before the investor closed. These types of properties were expected to cash flow about $300 a month after expenses.

Haley was pleasant, but frankly knew very little about how the investments would work.  Some of the questions she was unable to answer included:

What fee, if any, does Morris take from all this?

Are there points charged on the non-recourse loan that Morris would arrange for me?

After closing, would there be a contract me and the property manager?  Could I switch to a different property manger?

etc.

I also tried to understand why my IRA, which has more than 44-48K in it, could not buy the cash-in properties in Indiana, and she kept on replying, "Your IRA can't buy the cash-in properties in Indiana because there is no non-recourse funding for those properties" -- which means she clearly was confusing ownership structure (i.e. whether title is taken by me or by my IRA) and financing (i.e., whether a mortgage is placed on the property).

I did not end up investing with them and would not feel comfortable putting my money in a company where its employees don't know some of these very basic things.

Hope this helps!

BB Liu from NYC /Westchester County