All Forum Posts by: Brandon Hicks

Vacancies happen though and it seemed like I had at bought 2 duplexes in Jan 2013 and 3 of the 4 units were vacant at closing.

Meant to say....

Vacancies happen though and it seemed like everything I bought last year had at least 1 at closing. l bought 2 duplexes in Jan 2013 and 3 of the 4 units were vacant at closing.

@Jedd Braunwarth

Im fortunate to live in an area where the demand for decent, clean rentals is very high. I literally get calls nearly every day even when Im not advertising from people looking for a place. Most of the time when Im 100% occupied I let it go to voicemail and then cut a paste a note from my phone into a text to them directing them to my company's facebook page. Time saver IMO.

Vacancies happen though and it seemed like I had at bought 2 duplexes in Jan 2013 and 3 of the 4 units were vacant at closing. I had 30 days to get them ready and rented before the 1st payment was even due and if I remember correctly I got 2 of the 3 rented and 3rd right the payment was due. The feel the key is to offer a better product and service than your competitors. You'll generally attract better quality tenants as well doing this and that makes management easier and income predictable.

Its mostly calculated risk and confidence I guess. I have a full time factory job and VERY rarely take money out of my rental business. Ive preferred to reinvest up to this point. Unless the reno is extensive though I rarely miss more than 2 weeks rent on turnover. Im doing one now that will be about 4 weeks lost rent but the reno will allow $100 a month rent bump.

Hopefully that answered your question.

@Jarrett Harris

Yes everything I've discussed in this thread has pertained to land contract purchases.

@Stephen Collins

Thanks your service and that would be fine.

Best of luck and be safe

The MLS deals were not being marketed for seller financing. We just wrote the offers up and my agent presented to the seller's side. I will say that I always go into looking at/negotiating on a property with the confidence and attitude that I can buy it on contract.

When Im working directly with a seller Im always VERY upfront about how I operate. Usually they are receptive to entertaining the concept. Sometimes it has taken a good period of time to pass before the deal actually comes together. I had a duplex and the 5 unit close over a year after the initial conversation.

I really believe that I can put together bigger deals in much the same manner as these smaller ones. I was real close a couple of years ago only to have the seller's bank balk and threaten calling the note. I may take another shot at that one this year using a different approach.

I also have a out of state owner of a multiple building complex in the 10-20 unit range that seems to like what Im doing and it would fit well with his tax situation. Im not super excited about that deal do to it being a half hour drive from home but its a good performing property from what Ive seen so far. I also have had a few conversations with the owner of a 9 plex that is distressed. Both of these came from my marketing letter.

As I mentioned before I include a list of all the sellers Ive bought from with my offers. I think that works better than a credit report since I have an established track record. In my earlier deals I did give them a credit report.

Im rambling again, so Ill say that the bottom line is that you have to sell "you" to them. You have to get them to believe that you will pay them and take care of the property. They are your lender, so treat them with the same respect you would your banker.

I'm bad about letting tenants do partials and pay late. If they let me know ahead of time I normally don't even charge them late fees. I have 28 units and I get paid. Very rare for me not to have my full rent roll by months end. I have one tenant now that has been paying me $200 a week for months due to getting behind on their $650 payment. They stay between $600 and $1000 behind. It's one of those fine line things where they haven't gotten far enough behind for me to want to deal with eviction, small claims and re-renting their unit. It will need all new paint and flooring on the next turnover so it's a short term decision for sure but so far they're are paying. It's a situation dependent thing for sure but I'd agree with others to keep doing what you're doing until they stop performing.

@Jean Bolger

It really is a great way to get into deals. I'm looking forward to doing my 1st private money note once I refi a couple sellers out. I'm not sure if I'll use it for flipping or as a DP on a bigger deal that I may not have done no cash down! I really like the idea of flipping a few houses over the next 2-3 years so I'm leaning towards that path.

I see me going through different phases and using different techniques as my portfolio/equity grows.

@Lance H.

My 1st 3 LC deals were off the MLS. A 3 unit, a package of 3 duplexes and single duplex. These deals required some cash down.

The 3 unit.....was around $5k cash down....mainly to pay the realtor.

The package of 3 dups.....roughly $4.5-5k....plus a $15k 2nd mortgage note on 3 other properties I already had financed with a bank. Seller paid half of commission at closing (they had to bring a little cash to cover) and paid the balance 6 months later.

The single dup....around $2.5k in cash. The seller had to bring cash to cover commission.

My last 6 deals were all straight with the seller on unlisted properties. A few came from direct mail, the 5 unit was initiated from me sending the seller a facebook message and one of the houses was owned by the lady I bought the package of 3 dups from. That one was $2000 down but $1800 and change was credits.

My last 3 of the last 6 deals were the 5 unit and 2 duplexes owned by 2 different sellers on adjoining lots. All no cash down using the method I explained in earlier posts.

I've certainly grown faster and with better quality properties than I first imagined I would when I set out to expand. I'm not sure what this year will bring. I may hit another spurt the 2nd half!

A tenant........

Here's some details on my process. The 1st quoted paragraph is straight from my letter of intent pertaining to the down payment.

"The down payment is to be made up entirely from credits for prorated property taxes, prorated rent for the month closing takes place and security deposits that you have collected from the current tenant(s). The land contract note amount will be the balance owed after the above credits have been subtracted."

The rest of this was cut from a private message I wrote one night REALLY late so it may be a bit rambling but it lays out the step-by-step for calculating the deal with no money used for the down payment.

"It's one of those things that is really simple yet most people look at it and over-complicate it. Essentially you come to an agreement with the seller that is zero down as far as cash goes. You agree on a amortization period, interest rate and balloon period. Im going to assume you understand how the proration of property taxes works when you purchase a property. You get a credit from the seller up the date of closing for any unpaid taxes and prorated for the current year up to the date of closing. Then if the property is rented and there are tenant security deposits being held by the seller he has to transfer them to you as the new owner. I like to close on the 8th of the month so that all my payments are due on the same day. So by then the seller has already collected rent for the month of closing. They give me a credit for 23 days of that rent. These credit are all on paper. No cash changing hands....just numbers. Add these 3 totals together and you have your down payment. You take that total and subtract it from the purchase price to get your land contract note balance. You take the note balance and stick it in a mortgage calculator with your other agreed upon terms to calculate your payment. Ive done my last 3 deals like this and when I get my land contract from my attorney the down payment, land contract note balance and monthly payment are left blank in the word doc. The lady I deal with at the title company fills it in later once we have an official closing date and figure out the pro-rations. Ive kept her pretty confused over the years since she tends to over-complicate my HUD's but she seems to be catching on. Let me know if you have any questions. Ive been able to do these deals because Ive done what I said I would do on other deals. When I write a LOI on a property I give the seller a list of other sellers Ive bought from on contract with their phone numbers. Its better than any credit report when they call them up and hear that I pay and I take care of the property."