All Forum Posts by: Brian C.

Best way - Jackhammer it out and replace it, this time with adequate rebar and high pressure concrete.....

Cheaper way - fill the cracks and paint it with deck paint

Compromise - Lay tile on top (if you feel it's done moving) 

It's pretty uneven and separating.  You think I could edge it with timbers or something, lay sand over it, even it out and go over with pavers, assuming it's done moving. 

Hi @Brian C. I am late to this thread but I wanted to know if you ended up pursuing pre-foreclosures in VA. I am trying to find off market deals as well so I was wondering if you had any luck.

I'll answer the last one first. I'd rather have clear title and a simple deal for 30% COC, which isn't that hard to do, even in SFR.

Second, "cash negative" doesn't really mean anything, because you've exchanged that cash for something of value. If I put down $50k on a $250k property, I haven't lost $50k. I've bought 20% of that property (or more) with that money. I still have $50k, just in a different form. Then I start renting it. If I get $5k in profit, I'm not at -$45k, I'm at +$55k.

I'm not an accountant (though I am taking a class in Fundamentals of Accounting right now), but you're doing some financial gymnastics to make this sound like a good deal. 

If I had this fall in my lap, I'd forget the sub-to. They owe $180k and need $15k to live for the next year? Cool, offer $195k as a straight up sale, and tell them to vacate.

@Brian C.

The seller will have a $1200 hit on their DTI ratio a month until you take it. If they want to buy a house, car, motorcycle or anything else that tracks their credit, they are going to be told "Um no, you have too much debt". When asking "Huh What". The answer is going to be "You have a $1200 a month mortgage on 123 Main street". "No $100 a month 4 Wheeler for you." (Even while still living there)

They will challenge the lender and show you have title. The lender will take about 4 minutes to send you a demand for payment or they are foreclosing on their loan. 

If you feel it is a good plan, I am by no means saying don't do it. I honestly hope it works out, but as a devils advocate I have to at least point out my thoughts. 

Good Luck!

@Brian C. Your statement was that almost every investment will be negative cash flow in the first year! Completely inaccurate, but you said that because it helps you feel better about your deal. And your last post said it was fair to assume most real estate deals don’t recoup their money in the first year. Again, inaccurate. Quit using broad statements. We have closed a dozen multi-family deals this year and all were 0 cash in and all refinanced in 6-8 months pulling cash out.

Your a brick wall man and you got it all figured out! I say that out of love. But until, you open your ears and truly listen and hear things without your pride lens on, you will never reach your maximum potential.

If your an expert, post advice, but if your not post questions like you did. If you post questions have an open mind to the feedback.

Good luck to you man, I’m going to hop off this thread

@Brian C.

What I am missing (and I assume others) is what are you starting with?

A house with 40K in equity.. OK great

The bank still is owed a monthly mortgage or they will own the right to foreclose (ignoring Due on sale for this discussion). The seller can't pay their mortgage payment, so you are "assuming that debt".

Someone owes the bank monthly, if they can't afford the bank note and are looking not to get kicked out, you are taking over the monthly debt. Lets say you are now paying $1200 a month to keep them from getting kicked out. They can't afford to move or even sell a property with 40K equity today. Is their position going to be increased in 12 months or are you now picking up the responsibility to foreclose? 

Assuming they leave in 12 months and say "Thanks!" The bank is still owed 180K. If they walk, they aren't keeping their name on the mortgage, are you refinancing? 

@Brian C. Sounds like you already had it figured it out and didn’t need to post. If your numbers work they work, do the deal.

However, your justification paragraph shows how much you have to learn in real estate and unless your ready to be a sponge and soak up the knowledge that so many experts have on here, these forums won’t help you. I don’t claim to be an expert, but I have pretty good experience. With that said, let me explain to you how your statement on cash on cash return in your latest post was wrong..........a few examples

Many investors use creative financing including owner financing. Often times we get into owner financing with no cash down thus making the CoC return infinite so long as the property is cash flowing

Then let's use rehab example....I get HML for purchase and rehab, but need 10% gap and holding funding. I use a passive investor to fund that gap. I again have 0 cash in the deal and my cocr is infinite

Now let’s do a recent deal we did. We purchased 21 unit at 295k at 90% leverage. Needed 31k to close so we used a passive investor to fund the gap. Property already cash flowed. Raised rents, repaired and refinanced at 6 months with appraisal of 650k. Cocr was infinite because we had 0 cash in the deal after taking out first and investor we pocketed roughly 100k.

So your comment that almost all real estate deals are negative cash flow the first year is inaccurate. Actually the typical investor tries to brrrr in some fashion so they have 0 cash in at 6 months. We don’t want to leave cash in more than 6 months. Sometimes we do, but that’s not the goal.

Not trying to beat you up Brian, but you keep making inaccurate statements attempting to justify your deal.