All Forum Posts by: Bobby Nilsen

@Account Closed You are correct the property is under rent control. Buying them out would not make it eligible to bring rents to market. I think I remember seeing something in the ordinance about coercion to give notice or something along those lines. In addition as you probably know there is a new and more stringent ordinance that came out last month, so San Jose is getting very close to San Francisco. So we just got lucky with the timing and everything. If you are ever looking for a partner or someone to wholesale a property to please keep us in mind, we are always looking. In addition, we currently have a few properties closing in the next couple months if you are interested. 

@John Knisely We funded this deal with hard money. Nothing crazy, we came in with 20% and had to fund the rehab cost as well. We've done a few other deals and a few other wholesales so those helped with some of the money that went into it. Other than that we used our own money. And thanks for the compliments

@Audrey Ezeh @Christopher Salazar  @Sterling FieldsThank you for the comment, much appreciated.

@Harrison Liu We definitely thought about keeping it and that was one question we got asked a lot. At the end of the day though if we were to refinance it we would have been refinancing it at $1.8m vs the $2m we sold it for, so it may not have made sense for us. Comping this at $2m would have never happened, no comps would have justified it as we set the record in the area for the highest sale. Also it's the height or close to the height of the market so cash was better than the property in our minds as we could use the cash for our next projects, we have about 4 properties closing in the next couple months. 

@Robin Boyer If you haven't set up searches I would do that so anytime a property gets listed you get an email immediately. Are you looking to use all that for a couple properties or one. If it's one you shouldn't have to hard of a time finding something that'll work, especially if you get one that needs a little work with both the property and rents. Biggest thing I would recommend is set something up to ensure you get those properties sent to you immediately when they get listed. Agents can set you up with searches but I have found that if you use Redfin, Redfin emails the newly listed properties to you quicker, from my experience at least. Thanks for your comments.

First off, as I always get interested with pictures here are a few before and after pictures. I have also put a few links to all our marketing at the bottom.

The Swiss Cheese model is a model used for determining how accidents are caused. I am going to flip that model and use it for real estate and how each layer of cheese lining up with the next makes the deal that much better and when they all line up it's a home run. For this deal all the holes in the Swiss cheese block lined up perfectly and the outcome was not an accident.

The way we found this deal was through the good 'ol MLS. It wasn't listed for more than a few minutes before we saw it, and of course we knew a 4-plex with 2bd 1ba units at $1.2m it was a smoking deal. Many may gasp at that but in the heart of San Jose a few blocks from the university no one would blink twice at paying that. We didn't and immediately contacted the real estate agent and made a full asking offer. By the next afternoon it was in contract. That was the hardest part. Getting this property in contract was lucky but behind that luck was a lot of hard work and energy. Like they say luck favors the prepared and we were through the first layer of cheese.

We now had the property in contract and realized what we were up against. Well we kind of already knew. But we had super low rents and tenants that had lived there for many years. Total rents for the building were about $4,400. Once we closed we quickly worked with the tenants and they gave us notice and all of them were moving out within the next 2 months. That part could not have gone smoother and with any other tenants it may have not worked out the way it did. Another slice of cheese in line.

Once the first tenant left we started getting bids for work. We haven't done too many deals, about 8, so we don't have a solid team. We figured this was going to be the property that we build that team. We interviewed and got quotes from about 10-20 subs to do all the different pieces of work and about 5-10 GC's to do the project as a whole. We ended up choosing one of the GC's and got that next slice of cheese lined up. We got quotes anywhere from $30k-$50k a unit. we ended up paying a total of about $30k per unit and the total work took 1 month for all four units. This team was in and out and every day we stopped by the property looked completely different. I think we can give them two slices as they were exceptional.

During the time we were looking for contractors we were also looking to sell it for a quick $400k profit. We didn't really get any bites, a few tire kickers telling us we were crazy thinking this will sell for close to $2m with rents above $2,600. In addition during this time we started reaching out to multifamily agents that had sold a lot of properties in the Silicon Valley and were getting their opinions on rents and resale value. All said getting over $2m would probably not happen as it would be breaking a lot of records and getting rents at $2,700 or above would be tough. This kind of gave us the kick in the but to see what we could do.

After the rehab was done we started advertising the units for rent. It was quite slow at first but after a week or so we started getting way too many inquiries and had three of the four units rented. Two at $2,700 and one at $2,800. The holes in the cheese just kept lining up for us, we were anticipating when they would stop. We left the best unit vacant and staged for showings. We created a marketing package, link to view is below, and blasted it to our inner network at $1,988,888 with a commission for an off market sale at 3.5%. We had a few people interested at the $1.9m mark but figured with the little exposure we got we weren't going to need to go below our asking off market. We got it listed and the phone started to ring. We got two offers over asking and ended up taking the offer at $2.018m. This was the last and best piece that was right on point, the offer we accepted was cash with a 7 day close and non contingent.

After rehab and holding costs we were into the property for just under $1.4m and walked away with over $600k. All our slices of Swiss cheese lined up ever so perfectly for our first multi family flip. After all was said and done a few of the agents who wanted the listing didn't believe we sold it for over $2m. With this sale set a few records for a 4-plex sale in San Jose.

Any questions ask away.

Marketing Package

https://drive.google.com/open?id=0B-UqmCuMV9cwZFFY...

Flyer

https://drive.google.com/open?id=0B-UqmCuMV9cwS2Fu...

Before and After

https://drive.google.com/open?id=0B-UqmCuMV9cwZmVt...

First off, as I always get interested with pictures here are a few before and after pictures. I have also put a few links to all our marketing at the bottom. 

The Swiss Cheese model is a model used for determining how accidents are caused. I am going to flip that model and use it for real estate and how each layer of cheese lining up with the next makes the deal that much better and when they all line up it's a home run. For this deal all the holes in the Swiss cheese block lined up perfectly and the outcome was not an accident.

The way we found this deal was through the good 'ol MLS. It wasn't listed for more than a few minutes before we saw it, and of course we knew a 4-plex with 2bd 1ba units at $1.2m it was a smoking deal. Many may gasp at that but in the heart of San Jose a few blocks from the university no one would blink twice at paying that. We didn't and immediately contacted the real estate agent and made a full asking offer. By the next afternoon it was in contract. That was the hardest part. Getting this property in contract was lucky but behind that luck was a lot of hard work and energy. Like they say luck favors the prepared and we were through the first layer of cheese.

We now had the property in contract and realized what we were up against. Well we kind of already knew. But we had super low rents and tenants that had lived there for many years. Total rents for the building were about $4,400. Once we closed we quickly worked with the tenants and they gave us notice and all of them were moving out within the next 2 months. That part could not have gone smoother and with any other tenants it may have not worked out the way it did. Another slice of cheese in line.  

Once the first tenant left we started getting bids for work. We haven't done too many deals, about 8, so we don't have a solid team. We figured this was going to be the property that we build that team. We interviewed and got quotes from about 10-20 subs to do all the different pieces of work and about 5-10 GC's to do the project as a whole. We ended up choosing one of the GC's and got that next slice of cheese lined up. We got quotes anywhere from $30k-$50k a unit. we ended up paying a total of about $30k per unit and the total work took 1 month for all four units. This team was in and out and every day we stopped by the property looked completely different. I think we can give them two slices as they were exceptional. 

During the time we were looking for contractors we were also looking to sell it for a quick $400k profit. We didn't really get any bites, a few tire kickers telling us we were crazy thinking this will sell for close to $2m with rents above $2,600. In addition during this time we started reaching out to multifamily agents that had sold a lot of properties in the Silicon Valley and were getting their opinions on rents and resale value. All said getting over $2m would probably not happen as it would be breaking a lot of records and getting rents at $2,700 or above would be tough. This kind of gave us the kick in the but to see what we could do. 

After the rehab was done we started advertising the units for rent. It was quite slow  at first but after a week or so we started getting way too many inquiries and had three of the four units rented. Two at $2,700 and one at $2,800. The holes in the cheese just kept lining up for us, we were anticipating when they would stop. We left the best unit vacant and staged for showings. We created a marketing package, link to view is below, and blasted it to our inner network at $1,988,888 with a commission for an off market sale at 3.5%. We had a few people interested at the $1.9m mark but figured with the little exposure we got we weren't going to need to go below our asking off market. We got it listed and the phone started to ring. We got two offers over asking and ended up taking the offer at $2.018m. This was the last and best piece that was right on point, the offer we accepted was cash with a 7 day close and non contingent. 

After rehab and holding costs we were into the property for just under $1.4m and walked away with over $600k. All our slices of Swiss cheese lined up ever so perfectly for our first multi family flip. After all was said and done a few of the agents who wanted the listing didn't believe we sold it for over $2m. With this sale set a few records for a 4-plex sale in San Jose. 

Any questions ask away. 

Marketing Package

https://drive.google.com/open?id=0B-UqmCuMV9cwZFFY...

Flyer

https://drive.google.com/open?id=0B-UqmCuMV9cwS2Fu...

Before and After

https://drive.google.com/open?id=0B-UqmCuMV9cwZmVt...

Danny if you have not found a way to do this as of yet I'd be more than happy to chat with you. 

@Shayne Cocotis @Account Closed We use craigslist and networking to find buyers and advertised the open house on craigslist. It's tough to get deals in the bay area, tons of competition. Craigslist was the winner for this one.

Biggest thing is network and stay consistent and something will come through. Persistence will pay off. Don't give up and take the deals that don't come to fruition as learning lessons. Probably about 90% of properties I look at don't make sense.

If the deal makes sense financing will be no issue. There are plenty of people in the Bay Area who will partner up if the deal makes sense. You just need the contacts, please add me to your list. Getting started you may have to give up more of the deal but if it comes down to making something vs nothing I'd take the something. If you ever need help or are in the South Bay and want to meet up and chat let me know. Always interested in speaking with like minded people. Best of luck.

@Sean Walton Good to know. We just did a deal out in Crockett. 

We recently put a deal together in a very interesting way to get around a few wholesaling blocks. Of course as most people know most agents don't like the and/or assignee verbiage and I believe the new CAR contract doesn't allow you to assign. We typically use our own contract when we buy without an agent but for this deal it was an off market listing and we had a buyers agent and a sellers agent involved. We got the property into contract with the intentions of rehabbing, raising rents, re-renting, and selling. Of course when we inspected the property there were too many issues and the price was too high for us to take on that risk, so we started on our buyers list to see if we could get this off to someone else who may be interested. Sure enough we found someone and wanted to close this deal quick and easy with no one feeling uneasy or questioning what is going on.

We had just heard of this idea to add the buyer to the contract and close with them rather than assigning it. So we added the new buyers name on the contract and we both closed on the deal with us taking a stake in the property equal to our wholesale fee and deposit. As we added the new buyers name on the contract we also wrote up a new contract to sell our share to the buyer immediately once the sale closed and we would be bought out. 

It worked seamlessly, but I know there may have been some things we didn't think about or other workarounds that may have been better. Please if you have any other creative ways to do this or tips for this type of transaction please let us know. 

@Sean Walton The agent had the listing for some time and wasn't able to sell due to the seller not giving access to the property and being hard to work with. Since the seller was making it hard to show/sell once the agent got the feeling that he was going to be allowed to finally sell the property he showed it to a hand full of people and took the offer that he felt was going to close as this may have been his only chance to sell it. There was another offer that was higher but it had the an/or assignee clause in it and then the other offer around ours the agent felt he was going to have to put a lot more work into the process than he already had. Could he have gotten more, definitely. But that would have required going on the MLS and having open houses, which the seller didn't want. Where do you work out of Sean? Always looking to get in touch with other people in the industry.

We were emailed a list of properties from my partners mentor. He had too many projects on his plate and forwarded us this email from an agent he was in touch with, who he had sent finished projects to for some time. There were a few properties but only one made sense, and it made a lot of sense. The property was about 40 miles away, but that is a couple hours in the SF Bay Area, but we needed to act quick and get so we got in touch with the agent and scheduled a showing the same day. That evening we wrote a clean quick close offer at $315k and it was accepted in a couple days.

Our plan as was with all of our properties was A. try to wholesale/tale, B. flip it, C. hold and rent. The numbers on this one were so good that we had no problem wholetaling it. Comps for this property were $500k on the conservative side. We cleaned out the trash, as there was a lot, and then held a couple open houses and had about 50 people through, all kinds of lowball offers but only a few got to our number. While we were holding the open houses we started getting contractor bids to move to the rehab process if we weren't able to get our number.

We ended up wholetailing it for $370k. After closing costs, cleaning, and other miscellaneous costs we grossed $50k. From that we gave the real estate agent a $5k bonus and then my partners mentor roughly $5k for the lead. After all was said and done we walked with $40k. There was still plenty left for the flipper, he ended up selling it for somewhere around $580k. You may ask why didn't we just do the rehab, we would have tied a lot of time and money up and probably wouldn't have been able to rehab the 4-plex that we are almost done with now. We would have had to wholesale/tail the 4-plex or partner and would not have gotten the full profits which will be our biggest win to date.

Key takeaway with this property was we acted quick and made a clean professional offer. The agent had a few other offers at the same price or even better. But we showed we "knew what we were doing," as his other offers were asking basic questions to him about the title report. He figured he was going to have to hold their hand throughout the process and went with us instead. We definitely did't know what we were doing and are still learning a ton. The only thing we are good at is running comps and pulling the trigger. Here's a couple pictures, they dont show much other than what a clean fixer looks like, but I figured people would like them. Should have taken the before pictures from this, it was awesome.