All Forum Posts by: Brian Cooke

First things first, I plan on making 100% of my payments, have never been late on a payment, etc. I have 0 expectation of being foreclosed on, but the question came to mind and figured I'd ask as a hypothetical.

Say I buy a property with bank financing, then turn around and sell it on land contract. Buyer moves in, makes improvements, enjoys their life... and my bank decides to foreclose. What happens to the buyer? Do they get kicked out of the house because they don't hold title? 

For fear of this, if I were buying on land contract I would want to make payments to the bank directly or see monthly statements from the seller showing it is being paid, but not all buyers think about that.

If you are selling a property with seller financing, how would you determine the interest rate you ask for?

I know it is really subjective, so what are your opinions. Do you prefer refinancing your rentals to follow the BRRR strategy, or aggressively paying down the loans to end up with free and clear properties and maximum cash flow? Why? Or if you do a mix, how do you decide which strategy to follow?

I'd be interested and live in Bellevue myself right now. I wouldn't be owner occupant though. I'd fix it up and sell as a turnkey or keep it long term 

@Robin Boyer I made a number of mistakes that made it a low profit for me, but it was also in an area where it sold all fixed up for 125k. I could have made closer to 20k profit if I had more experience, but as it was my first I wasn't very sad about my 6k profit. It was a good learning experience. I have a couple other properties that I rent and am in the process of buying my 3rd rental.

To answer your question: I have only been investing since december so I don't know if I'm best to answer. But from what I know, I would only change the exit strategy to rent when the original plan was a flip if I thought that the value would continue to increase over time, and I would still make money assuming that the renters would cause damage that I'd have to fix up. I would probably attempt a lease/option first. 

As someone who makes less than that every year in a full time job, I'd love to make that on one house in a year, knowing there were other houses as well. My first flip I did earlier this year got me a whopping $6k profit in 4 months. But I totally understand the perspective of the hassle not being worth it if you normally are able to make a 25%+ ROI on houses in a much shorter timeline with less hassle and stress.

I've used click2mail, although some people think it looks too junk mail-y. 

@Arissa Pedroza I tried uspa.gov and that website doesn't exist?

@David Dachtera The initial attraction was that it seemed pretty turn-key. I could buy it, have a property manager, and be fairly hands-off. That has proved false, so maybe now I'm just struggling against a sunk-cost fallacy, even though the cost has just been paying the inspector.

Landlord paid water and heat...very common in this area and definitely increases the operating expenses. I've heard that nationwide the average operating expenses are around 45%, but around here the average is closer to 55%. I didn't do that market research myself so take it with a grain of salt, but close to 55% is what I frequently get when I run numbers on MLS deals.

4-family under contract for 150k. Comps are a little under that number, but this deal came through MLS and under multiple offers. Inspection showed that there is probably $15k repairs that need made (roof, driveway, water heater, boiler) not including the little things in each unit.

Seller will make no concessions in price.

Gross rents: $29,340

- 8% vacancy =  $26,992

OE: $14,854

NOI: 12,138

with LTV 80%, 5.25% interest 30yr fixed I'd get a cash flow of $4187/yr

Annual cash on cash is around 8% 1st year taking into account closing costs, repairs, and purchase. I'd love for that to be higher but some people would say that is a good number and I know that is personal preference.

So basically, do the numbers seem good? Even if so, put in the repairs on top of the purchase price and I'm paying 17k more than the comp'ed ARV. Would you go for it or try to find another deal? Exit strategy is to hold long term, but was hoping to refi at some point sooner rather than later to get my money out of it.