All Forum Posts by: Joel Owens

The congratulations! You are ready to move onto the next deal........

Over time you won't even think twice about passing on a property.

There are too many deals out there to settle for a marginal deal.

Every property has problems.You just have to find the one that pays the returns you want for issues you will be ok to accept.

National,regional,and local banks aren't the only game in town.

If we are talking only in that context and you have 20% to 25% to put down and can document everything to the umpteenth degree than you may get a loan.

Many of the investors I come across love commercial loans because they can find putting say 5% or 10% down for a slightly higher rate and then you get the seller to carry the other 10% to 15% at below market interest rates.

Also with vanilla type loans some will take a very long time to close.For some investors a slightly higher rate and a fast closing is what they are after. If you have to drop 25% into every deal soon you will not have very much cash.

At that point you have to start forming groups for buying different properties to get the money down which can be a headache to keep up with and cause a big mess with equity interests in the future.

So I have had investors tell me they would rather put less down and have the seller carry some and be able to leverage themselves into purchasing many more deals.

It just depends on the individual investor with what will work best for them and their A,B,and C exit strategy they will employ later down the road.

YES you will need more than one exit strategy in case plan A goes south.

I am by no means a loan expert but this is just the feedback I get on the investors that call.

There are up to 100% commercial loans out there and they are not hard money rates.

For this small of a deal with 2 tri-plexes a local bank might be the best bet to try first.

Most auctions are overrated. You would do much better associating with power REO brokers and making low offers on properties with clean titles already that you can close quick.

You also have to look at wholesaling differently for residential and commercial transactions.

Federal and state laws have conditions applied to residential that do not apply to commercial transactions.

So you have to know what you are targeting and what the rules are.

Matt,

What the sellers mean is the past buyer either found something on inspection,the bank took too long to reply to the short sale,or the buyers offer was too low and they didn't like the banks counter.

So short sale approved means the bank has ordered evaluations of the property and came to the conclusion this is what they would accept. Generally the sellers have no money in these situations.So the costs associated with the seller side the bank might balk at paying and you will have to come up with those funds.

The separate deed issue is a biggie as well.

Residential loans are single family properties,duplexes,tri's,and quad's.

Anything 5 units and above goes into commercial financing.Commercial financing the underwriting is much easier to qualify for as it's not regulated like the residential.

If the properties are separate legal description than most lenders will count them separately and not together.This will force you into a residential type lender. If it's one legal description you can count as 5 units or above.

They are some commercial lenders who will do if separate legal descriptions but the properties have to be together and the lenders are few and far between.

As gar as tenant inspections.Many times buyers just say insurance inspectors to take pictures so it doesn't spook them.If the seller has been a crappy landlord they won't mind new blood.

If the current landlord is awesome and their impression of you is not stellar they might high tail it out the door.

If the landlord has been self-managing it will make more of a difference.If property was managed by a company and you keep that company not much will change for the tenants.

Ann the Florida market is highly fractured meaning depending on the county and even the city they all use different MLS's.

I have another broker friend in Naples,Florida that list many REO's.So you would need to know the specific area of Florida first you want to buy in.

Mehran you could go that way.What is the average sales price there?? If you are buying FHA for 300k that would be only 10,500 needed with 3.5% down.

If you go conventional they will want more down.

Why not put a little down as possible with the fixed low interest rates and then leave money for immediate investment??

There are many options.

Jack you would do well to take a seasoned investor in your area to lunch and pay for it.Ask questions and for an opinion on the property.

My thoughts are being from 1900 are there any additions that weren't permitted or up to code??

Is this use as a 4 unit grandfathered in for just the current owner compared to the land use map and zoning??

How many problems or capital expenditures will you incur if the property has mold,venting problems,radon,asbestos,lead paint,roof problems (too many layers),structural problems,galvanized pipes,knob and tube wiring etc.

It seems from what you posted that repairs are really eating them up.You would need an inspection of how old the mechanicals and the updates are.

You then from the property inspection need an estimate of what it would take to do all the replacements and repairs to make it like new.This way you aren't dumping huge money into year after year.

You also could contest the tax values to get those reduced to improve cash flow.

Do you have bad tenants and low rents because the property is run down and in a good location OR if you even do the updates and repairs will you still be in a bad location with low rents and bad tenants??

So many things to consider which is why you need some eyes on the ground to help you with this.

good luck

If the seller rejects the winning bid or counters and you won't accept you will get your deposit back.

The reason for non-refundable is so if you back out once being the winner and approved by the seller they want to make it painful for you. It also weeds out people doing hair brained schemes.

If that is the buyers only 2k or they have little reserves they will make sure all their ducks are in a row before bidding.

Williams is on of the auction houses but there are about 5 to 6 big ones such as them.The bidding takes place in a huge meeting area,at the subject property,or online only or both on location and online.

My experience is the prices get bid way up over a good deal to a bad deal.If the deals were that great they wouldn't need to mail me out glossy expensive magazines because the prices would sell the properties.

Many time as an REO listing broker a listing might get pulled and put up for auction as the asset manager is praying some idiot will overpay and be the winning bidder.

Once that doesn't happen they assign back to the listing broker and do a price reduction.

Some properties sell auctions but not the hype Williams and other claim.

Auctions many times are a waste.The awesome deals are when you have little competition and can whittle down the price.

I think the biggest point missed here is the CONDITION of properties for sale.

Many investors are looking for just carpet and paint and a few outdated fixtures.Guess what so are home buyers and they will OUTBID you everyday of the week.

If you are a rehabber your goal is to resale a property or hold long term for rent depending on your local market or the market you choose to invest in.

So to make the numbers work you have to buy really low.For a home buyer if they get 10k to 15k equity after new paint and carpet they are happy so they will bid close to asking price or over if the listing price is low for the market.

In the property you posted on that is definitely going to be a cash buyer.Make your offer and see if they come down.

If you are making a low offer just submit a one page letter of intent until you get your price and then go full contract with all the amendments etc.

Saves a lot of time and money on paper.

Yes start off small and build that is the key.

Are you buying for cash flow or appreciation??

I noticed you are in California.Many investors are not purchasing there that live there.They are looking at Florida,Georgia,etc. where you can buy multiple properties cheap that cash flow well.

California tends to be more of a speculative market where the markets can swing wildly and many take a gamble on appreciation.

You just need to define what you want your plan to be.

About what range do you have to put down??