All Forum Posts by: Bradley Sriro

@Eric Striegel the answer to your question really depends on what exit strategy or strategies you are considering. Are you considering it as a possible wholesale deal, a whole-tail, fix & flip, acquiring it as a buy/hold rental? You need to have an exit strategy in mind before you can determine how to work with and provide a solution to the homeowner that is interested in selling to you. After all, you are helping them solve a problem. In this case, they want to downsize and don't want to deal with the hassle of making any repairs. When you follow up, dig a little deeper and find out what their other motivations and expectations are. Just like you did before, have a natural conversation with them and see what else you can uncover. You potentially have a great opportunity on your hands. 

Some of the things that you have to know for your negotiations are 1) ARV - after repair value of the home once renovated (if you plan on wholesaling/ rehabbing it/ etc.), 2) Cost of needed repairs, 3) MAO - Maximum allowable offer taking into consideration the ARV, comps, repair costs, etc., 4) How you will fund the deal (your own cash/ hard money/ private money/ creative financing/ etc.), 5) Holding costs if you close on it and don't wholesale it immediately, 6) If you sell, will you go the FSBO (for sale buy owner) route, or use a Realtor, etc.

It's all a learning process so keep educating yourself and networking. If you don't feel 100% comfortable with the lead, maybe you can identify another active local investor in your market that you can partner up with to help walk you through it. You will have to figure out a split for any profit but the education will be worth it. Also, make use of the BP calculators under the Tools tab to play around with some numbers to see what makes sense for different strategies. Best of luck! 

Good stuff @Ryan Planchon... Congrats on this solid addition to your portfolio! 

@Jonathan Mentor welcome to Miami. I think its great that you are looking to start acquiring your first rental properties. What areas and types of properties are you interested in? 

Unfortunately South Florida (Miami-Dade & Broward Counties) will not offer you any single family home options under $100k. You can find condos for under $100k but the HOA fees will generally eat up most if not all of the cash flow. You may have to rely on investing out of your market if you want to stick to that price point. It is very difficult to find a single family home in South Florida right now that will cash flow even with a 20% down payment. The best way to get cash flow in the Miami market at the moment is to purchase small multi-family of 2-4 units. If you ever want to talk about the market, I am always available. Best of luck!

Hey @J.R. Farris you have a lot going on in this post and it isn't very clear. Is the investor here you? Or are you referring to someone else? First you say the investor signed paperwork and then toward the end you say "should we stay the course to buy the property..." 

First off, what "paperwork" was signed? Was a purchase and sales contract executed? Was there a closing on this property with a post closing occupancy agreement? Or did she just receive 1/2 of the money with a personal guarantee that she would move out at some point and be paid the balance of the money? The contract that was signed should hold the key that is ultimately needed to get this problem resolved... In the courts that is. 

If there is an executed contract that specifies all of the terms, then you will need to retain an attorney to force specific performance of the contract. Since the first 1/2 of the money is already allegedly gone, you or the "investor" are pretty much in a position where getting it back so that you or the "investor" can walk away is not a viable option. If you seek an action for specific performance, you may be able to obtain a decree of specific performance and ultimately purchase the house under the original terms of the agreement. Since you or the "investor" here is being harmed for Pat's nonperformance, specific performance would be an equitable remedy.... albeit an extremely long and frustrating one. Best of luck!

See below link:

Specific Performance

Ethically an agent has a responsibility to present all written offers to their client. Realistically however, there are agents who no doubt sit on offers for one reason or another. Keep in mind however that a seller can instruct their agent to only present offers to them that are at or over a certain price. But like others have already mentioned, the seller has the option to 1) accept, 2) reject and counter, 3) reject completely, or 4) not respond at all. 

I agree with Ryan... I would go with a 30 year instead of a 20 year. You should still get very favorable terms on a 30 year refi. Also, don't be afraid to shop with a couple other lenders for rates. I recently shopped a few lenders and ended up going with a 30 year that was 1/2 a point less than the previously best quoted rate. With the 30 year, you can still pay extra toward your principal but you won't be locked into a higher monthly payment that the 20 year would require. And since it is a rental property, the increase in principal balance from the refi will be paid for by your tenant(s). 

Makes sense but keep in mind that if you try to refi the FHA to a conventional, you are going to end up with the same problem. The conventional refi will still require sufficient equity (at least 20% for a 4 unit) to meet the lenders requirements. Maybe just use the FHA first and then save up the 20% or raise capital with partners to make the third purchase as soon as possible. What part of GA are you looking to buy in? I have been looking at GA for a while now to buy a vacation/ second home just to get away from Miami LOL.

Hey @Evangelyn Major, you stated that the purchase price was $375k and the cash invested was also $375k. You also mention purchasing with a VA Loan... Is the home paid off now? Just curious because you said that the cash flow is only $500 per month. The numbers are a little confusing.

Hey @Steve J. why not just leave the FHA in place if you move on to a third property and use another low down payment conventional option for the third property? Otherwise you end up paying unnecessary closing costs for a refi that will take you time to recoup and ultimately eat in to your cashflow. Or conversely, see if you can do a 5% conventional mortgage for the second property and then use an FHA for the third property? I just don't see the benefits of an unnecessary refi. What areas are you planning on buying these multi-family units in?

Hey @Gregg Farrauto I know you posted quite some time ago and wanted to see if you ever got any advice outside of BP regarding Homestead or Florida City? There are certain areas in both Homestead and Florida City where most of the multi-family is concentrated. These areas in Homestead for the most part are C class neighborhoods with almost everyone in the area being renters. I cover these areas and also invest here locally as well. If you have searched for multi-family here, you will find that they do not come on the market very often... and when they do, they go pretty quickly. For example, a nice duplex (2 - 3/2 units built in 2005) just hit the market a couple weeks ago for $325k and it went under contract in about a week. 

I would recommend focusing on Homestead over Florida City without a doubt. Florida City has a lot of violent crime... especially in the areas where the multi-family units are located. There are some decent areas of Florida City but it still has the stigma of a bad area associated with it. This keeps rents and resale values lower than other areas. Have you made any investments in South Florida since posting this?