All Forum Posts by: Oliver Trojahn

I thought I would share my first deal with the community and give props to bigger pockets for all the great real estate advice that can be found throughout this entire website. I have been reading these forums for 2 years and finally pulled the trigger. It truly is the the best information imaginable. Thanks!

Deal completed on December 1st, 2010:
Townhome (REO) - 3 bed, 1.5 bath, 2 Car Garage
Purchase Price: 38,800, Repairs = 7,000 (This includes a new roof, siding, and a furnace)
Total investment = $45,800
Rented at $850 a month on a 2 year lease.
We financed this conventionally for 30 years @ 4.875
Comparable sales in the area for the same townhome range from 65,000 to 85,000. Majority sell within the 70's range.

50 Percent Rule Breakdown:
P/I = $45,800 @ 4.875 = $243 a month
Expenses = $850/2 = $425
Monthly Cashflow = $182

Note: It took a little time to find this deal as the location is in a very nice suburb of Kansas City where 50 percent rule deals are very hard to come by. I could have bought a rental in the city core and met the 3-4% rule! however, I would like appreciation and manage my investments on my own without fearing for my life (just thought I would throw that in there).

Second Opportunity:
A townhome connected to the one we just purchased just got listed on the HUD website for $44,000. However, it is only available to owner occupants until this Friday. I have private funding lined up to put a cash offer on this townhome as well. It has the same characteristics as the the first townhome we purchased (3 bed, 1.5 bath, 2 Car Garage). However, this one doesn't need much in repairs besides cosmetics. I would like to go in at 35k for this one. I think the listing price of $44,000 from HUD is based on the most recent sale in that community (my purchase right next door) of $38,600 which was a REO Foreclosure. I think they listed it pretty low for the area, there mistake is my benefit! I spoke with the HUD agent and they said they think there was a owner occupant bid on the property so I may not be able to even bid on it. I will keep everyone posted on what happens.

My plan for this property is to fund with private funding and then refinance to a conventional in 6 months.

Thank to all who post on this website and provided me with great insights and information. All feedback to greatly appreciated.

Thanks for the replies. For the record I am not doing this nor planning on it. My mind was wondering on wholesaling today and I though of this. The purpose of the transaction would be to finance repairs on an investment property using conventional financing.

Would it be possible to wholesale a property to yourself or have it wholesaled to you from a close friend or your LLC. Hence, creating a deal where you could get money back at closing in a conventional financed deal? I was just running this through my mind and wanted to know if this was possible?

I am looking for hard money lenders to fund fix and flips in and around Kansas City, MO area (Mainly the Lees Summit and Blue Springs area). I am looking for no down payment, deferred payments and deferred closing costs for six months and the funding of all rehab cost. Is this to much to ask?

My partner and I have Very Strong Credit Score, Financials etc

My end buyer will be having my real estate agent sell the property.

The stock market has been hitting constant lows so people are realizing the buying opportunities. 1200 points seems pretty great but the Dow will be stay pretty much stagnant throughout the rest of the year, hovering around 7k to 8k. I don't see it going any lower or higher. I would take profits after each day the DOW ends on a high note. Then repeat. That is my opinion.

232,000? I thought you said they were asking 200k?

I am curious to know what investors have a 50-50 partner ship with all properties purchased. I want to go into RE investing on my own but I have a friend who is graduated from Grad school come May and is pretty much ready to buy properties with me. What are the pro's and cons of a Partnership?

My thoughts right off the bat would be more cash on hand, more properties to buy, less risk(as far as if things went sour one or the other could cover the mortgage payment/expenses), Two people to feed off each other a motivate each other, half the work load.

CONS: Split all profits down the middle, possible arguments (but what would you expect).

To me it seems that a partnership has more pro's than cons and could be better than going in by myself. Both of us have excellent credit and cash reserves ready for purchases along with solid jobs right out of college. What are your guys thoughts?

Thank you everyone for your insight. The Realtor I talked to was known for her investment experience. Or that is what she claimed, it seems that they had a pretty decent size real estate company in the KC area. I still don't care what she had to say. She said I should buy a 280k duplex, like one of her other clients, and rent it for 2200 a month in a nicer area. I pretty much told her that that property would never cash flow and why she would recommend that type of investment to me.

Anyway, I went to look at the duplex the weekend before Christmas and it wasn't too bad. I was a little shocked by the shape of the interior, however, this is for section 8 tenants. It is not that it needs repairs, I just would never live there, is that common for low income areas? Also, the downstairs is 3 bedrooms and the upstairs is 4 bedrooms, which I did not know (I claimed 3 in my previous posts.)

As it stands right now I am still interested in this property. I told the Realtor to propose back to his owner my original offer and that 5k down is all I am looking for out of this investment. Hopefully, he comes back at 60k, 5k down, @ 8%. Realtor also said they could write in the contract to allow no payment for the first two months till I get the property occupied. A section 8 tenant just moved in to the downstairs at 615 dollars a month. Gov pays 400 of that rent. Does anyone find that section 8 tenants if screened right will always pay their difference ?

I just spoke with a Realtor that someone referred me to and I explained to her this exact property and how I want to get properties at discounts following the 50 percent rule. I told her I am looking at low income areas to get these kinds of cash flows.

This Realtor went on to tell me I am pretty much retarded for using this strategy (50 percent rule). She claims, in the real world this doesn't work and that I will lose big time if I buy in low income areas even if there is great cash flow. I am completely discouraged after talking to this RE agent, she claimed that if it was that easy why aren't all the RE agents buying these properties? By the way, she is referring to this method in general not this particular property or area. She asked me what book I read to think I could get rich trying to invest in rental properties.

I pretty much told her I don't want to get rich, I just want part time investment, wow, what debbie downer.

Anyway, who is right here? I believe everyone on this forum, but sometimes after reading all of these posts I get the feeling the whole forum just might be one big get rich quick book and I am falling for it. (Again, not in this to get rich quick or even rich in general)

It seems to me that if the numbers make sense, and the property is managed right, it can only make money, right?

Absolutely solid information. It goes without saying that the FMV is something I need to research more before I dive in. I have no problem passing up possible deals. I have seen those 15k houses and those aren't in this neighborhood. But, I will not be that person that convinces my own self that is worth more than it is. Those houses in this neighborhood were 3/1 and one was a 4/1 that the average was 70k recent sales, still doesn't convince me but I will be looking into it more.

I am looking at the duplex this weekend, and I will let everyone know how it goes.