All Forum Posts by: Brian Goodling

I personally wouldn't pick either with those price points and the type of asset you're pursuing. You'll have a very difficult time pulling positive on either of these. St. Pete (excluding along a beach or adjacent from a beach) will have rents of about $2500/mo for a pretty nice 3/2. Way under what you would need after you move out. In your St. Pete scenario you also claim an HOA of $400/mo. Thats insane. Absolutely insane. Sure, they might cover the roof and exterior maintenance but you're still paying for AC, water heater, etc. HOA's in my opinion are something that I like to stay away from unless they are much lower, almost like the Tampa example at $100/mo. Either way, townhomes typically dont appreciate as well as single family places. For 650k you could get a very nice house that will appreciate better and have the chance to rent for more due to property type. For 650k in Tampa you could easily get a 4+ BR or something similar.

I also agree with Elise above, St. Pete at this moment is a better play for what your described, as you have be to pretty careful where you buy in Tampa. Again, St. Pete has some worse off areas, but not to the extent Tampa does. In either scenario I dont think you'll be able to rent it out to even breakeven at either of these. For the most bang for your buck I would look at the outskirts of Tampa (Lutz, Wesley Chapel, Town & Country, out towards Plant City, or down on the peninsula by Macdill Air Force Base) as these places are often cheaper but still command decent rent. You could get 2 very nice 300k SFH if you wish or go towards the MF route if thats in the cards.

I'm not a fan of paying 600k+ for anything in Tampa or St. Pete unless its multifamily. Even a place thats a rundown 3/1 bought for 70k with 50k in renovations would rent for $1500+ in Tampa. Just because you're paying a higher price doesnt always mean more rent. Rents cap out for pristine long term rentals between $2800-3000/mo in this area. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $160,000
Cash invested: $8,000

Duplex in Lakeland FL. 2/1 each unit at about 850sf per unit. ntent to fix up each side during tenant turnover and increase rent. Current rents are $600/mo for a month to month and $750 for a year long lease. Current cash flow of $550/mo. Market rents without any renovations are $850-900/mo.

What made you interested in investing in this type of deal?

I started out doing two single family homes. I wanted to start reaching into the multifamily side of things. When I was in the market looking for properties (during COVID) the inventory was quite scarce and low quality. I wanted to start gaining more doors and working with economies of scale.

How did you find this deal and how did you negotiate it?

While looking through the MLS I found a property that looked promising. My agent ended up knowing the listing agent and ended up finding out that the listing agent had another duplex coming on the market in the coming days. Sent an offer sight unseen and negotiated from there. Offered full asking at 155k to secure the contract. After walktrhoughs and inspections we renegotiated to 160k and the seller would fix the electrical panel and install a new AC unit with 2.5% seller concessions.

How did you finance this deal?

I used a combination of money from myself and from a parent to help finance. The parent who supplied some of the money will be living in half of the duplex.

How did you add value to the deal?

I am going to do some light renovation work and raise rents to be more consistent/slightly higher than market rent for a better product than what is around that area.

What was the outcome?

Work in progress.

Lessons learned? Challenges?

When it rains it pours. The day after closing a had a call from a tenant that their AC wasnt working. After 3 service calls and quite a few hours later everything is good to go.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. My agent Bryce Wade who is also a BP member was my agent on the deal and is always a pleasure to work with.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $160,000
Cash invested: $8,000

Duplex in Lakeland FL. 2/1 each unit at about 850sf per unit. Bought for 160k with the intent to fix up each side during tenant turnover and increase rent. Current rents are $600/mo for a month to month and $750 for a year long lease. Current cash flow of $550/mo. Market rents without any renovations are $850-900/mo. With light reno rents should be $900+. The location is interesting on this one, being that it is in a low C class to high D class neighborhood. However, this area of Lakeland is right on the border of incoming gentrification so in the next 10-15 years the values of these properties should rise dramatically. After tenant turnover and raising rents to $850/mo per unit this property will cash flow $900/mo.

What made you interested in investing in this type of deal?

I started out doing two single family homes. I wanted to start reaching into the multifamily side of things. When I was in the market looking for properties (during COVID) the inventory was quite scarce and low quality. I wanted to start gaining more doors and working with economies of scale.

How did you find this deal and how did you negotiate it?

While looking through the MLS I found a property that looked promising. My agent ended up knowing the listing agent and ended up finding out that the listing agent had another duplex coming on the market in the coming days. Sent an offer sight unseen and negotiated from there. Offered full asking at 155k to secure the contract. After walktrhoughs and inspections we renegotiated to 160k and the seller would fix the electrical panel and install a new AC unit with 2.5% seller concessions.

How did you finance this deal?

I used a combination of money from myself and from a parent to help finance. The parent who supplied some of the money will be living in half of the duplex.

How did you add value to the deal?

I am going to do some light renovation work and raise rents to be more consistent/slightly higher than market rent for a better product than what is around that area.

What was the outcome?

Work in progress.

Lessons learned? Challenges?

When it rains it pours. The day after closing a had a call from a tenant that their AC wasnt working. After 3 service calls and quite a few hours later everything is good to go.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. My agent Bryce Wade who is also a BP member was my agent on the deal and is always a pleasure to work with.

Civil Engineer here from Tampa, FL. I think engineers are the most business like field aside from well... actual business or finance. To be a successful engineer you are an engineer, accountant, finance person, salesperson, etc. We are a field that encompasses a wide variety of other fields under our umbrella. At the same time, engineers are problems solvers and we (for the most part) tend to be paid on the higher side of the scale. I think RE as a whole speaks to a lot of engineers because of the way we think. 

@JJ Wright @Mary K.

I found the deal through a co-effort with my agent (who is also a BP member). We started looking at the MLS to see who owen their home free and clear and then created a list/map that showed these people all over Florida. Then started to narrow down by areas of interest in terms of what would be the best investment. My strategy is long term buy and hold with an emphasis on cash flow. So with this in mind we started calling the sellers and/or their agents and just started asking about seller financing. Once we found someone who was at least interested my agent and I started looking more closely at the property and what the terms needed to be in order to have it make sense. I had about 7k in cash ready to go for a deal for I needed someone who was willing to go no or low money down knowing that I could make it up on the back end to the seller in regards to price or interest payment. Once we determined what we needed to get in terms of financing then we could contact the seller and propose to them our offer (sight unseen at this point) if they were at least willing to work with us we would move forward, but if they negotiated terms that were vastly different than what we needed to get we just passed them by. With this property once we originally offered $0 down with a 20 yr note at 5% interest. The seller countered with $5k down, 20yr note at 5% interest. We knew we were close to a deal so at this point we decided to drive 2 hours away and check out the property. After returning from the visit, the same night, we reached out to the seller letting them know we were interested but we had a final offer they could accept. Take it or leave it kind of deal. We offered $0 down, 20yr note at 5% interest however I would pay all closing costs. We knew that the seller (through conversations) didnt really need the cash up front, they just wanted passive income and to be able to move without having to pay for anything. Essentially it turned into a win-win where the seller could move back to AR (from FL) and be able to sell their place without having to pay anything. I won becuase I got the financing terms I needed to feel comfortable with the property. All in all I paid about $5500 in closing costs (including agents commissions) for the deal. The mortage payment is $340 and I have it rented out currently for $800/mo or roughly $350/mo cash flow after taxes, insurance, CapEx, Repairs, Etc. The forecasted yearly return for Cash on Cash is about 75%. ($4200/$5500) which is pretty good in my book.

I think overall finding these sellers is more just about putting in the time and making phone calls and just seeing who is interested. Theres a TON of people who own their home free and clear who may not of even heard of seller financing. My favorite part about the process is that I was able to work with an attorney and write up the financial terms and mortgage to benefit my situation on some of the minor details. I am also trying my hand at being the PM for the property as well instead of hiring it out. Seems like a lot of the PM's in Ocala have very undesirable rates and are often overpriced. I didnt think using one was worth it on this property. 

If anyone has other other questions about the process I went through for this one, please feel free to let me know and Ill be happy to answer the best I can. 

@Jake Silverman I actually just closed on a property about 25 minutes NE of Ocala in Fort McCoy. From first glance you would think that a smaller rural town wouldnt have much in terms of return. But the majority of the demographic is blue collar workers and older people. I bought a property for 52k in Fort McCoy using seller financing for $0 down on a 20yr note with 5% interest. My monthly payment including taxes & insurance is about $400/mo. I just rented it out for $800/mo. I listed the property on Facebook & Craigslist for a week prior to having the place ready to show and I had over 40 people wanting to come see a single wide with a full length addition (the unit was a 2/2 on 0.7 AC). I was amazed at how much interest there was. My thoughts were "who wants to live this far out from anything"? The town literally has 12 blinking red light. Thats it. 

I think Ocala is a stable market where you arent necessarily going to hit a 'home run' but if you want something consistent and, relatively speaking, safe then this area may suite your needs. It's also cheaper which can be nice for a newer investor or something without much cash at the moment. Thats was my position. I had about 6k to spend on a new investment and when I found the seller finance deal I went for it since they were open to negotiating terms. I got what I needed in the $0 down and longer term, and the seller got what they wanted in a long term passive income stream. 

My personal opinion is that Tampa is in a bubble right now. It's growing, and growing FAST. Rents are obnoxious for terrible properties. Prices are insane for terrible properties. Granted this is not CA levels of insane, but a SFH that needs 50k worth of repairs selling for 200k+ is pretty bad for this area.

But I think it also depends on what youre going for. If you want appreciation I would look more around Tampa, but if you want a safer play I would go into Ocala. 

I'd be happy to answer any other question you have about the either of these two areas as well. 

Cheers!

@Julian Garlington non-amortized meaning that I am keeping the same interest to principle payment over the course of the loan. With amortized you start out with higher interest and lower principle and end with less interest and higher principle. In my case im paying the same ratio of the course of the loan. If I start 80% principle and 20% interest then I will end 80% principle and 20% interest. Does that answer your question?

@Ryan Allison This was on the MLS but my agent did some digging and actually started the conversation with the sellers agent. My agent knew I needed something with low money down since I had just dropped 35k in Feb I didnt have much left over. It was on the market for about 90 days before we engaged the seller with negotiations and going to see the place.

Let me just say, this property has been super interesting so far. I wanted to try my hand at being the PM for the property so the day I closed I threw it up on Craigslist and Facebook marketplace and within 24 hours I had over 30 people wanting to come see it. This place is literally in the middle of no where. But you know what? Because of the terms we settled on my monthly payment is $350 but I'm asking for $800/mo for the unit. With this much traction it makes me think I could have maybe pushed to $850 or so. Either way, I'm happy with $800 because the people in this area are mostly blue collar and usually dont make all that much. You also can't find a 2/2 within 30 minutes that rents for that cheap AND has some land where no one is going to bother you. So I should be cash flowing about $400/mo before setting money aside for repairs. Not many plans for any CapEx here any time soon unless something breaks, but even then I wouldnt need the nicest appliances since its always a 60 yr old mobile home with an addition. These people dont need a palace but still trying to keep it nice enough. The only thing that I'm anxious about is that it's on septic and a well and I've never dealt with either of these before. So we'll see how that goes. But overall, can't say I'm disappointed with the deal it's just been a lot of work talking to prospective tenants and setting everything up.

Investment Info:

Mobile home buy & hold investment in Fort Mc Coy.

Purchase price: $51,900
Cash invested: $5,500

A quiet and rural 2/2 manufactured home sitting on 0.7 AC. Bought using seller financing and $0 down! Negotiated a 20yr note @ 5% non-amortized interest. Manufactured home is a single wide with a full length addition and a 400 Sq Ft covered porch. Sits about 25 minutes from the closest town.

What made you interested in investing in this type of deal?

The openness of the seller to be willing to accept a $0 down payment and a longer term.

How did you find this deal and how did you negotiate it?

Brought to my attention by my agent. He found the place was owned free and clear then we started off negotiating rough terms of the seller financing. Our plan was to see how willing the seller was to negotiate and if they would even come close to what I needed the terms to be for the deal to make sense. After we got rough terms outlined we went to check out the property and then gave a final offer with the terms we settled on. 20yr note @ 5% interest and $0 down. I pay all closing costs.

How did you finance this deal?

Cash

How did you add value to the deal?

The lot is quite big (0.7AC) and there is the ability to subdivide the lot into two additional lots that can each hold another manufactured home. There is potential that over time I would subdivide the lots and purchase more homes to place on the lots and increase cash flow significantly.

What was the outcome?

Currently trying to rent it out and will be looking into subdividing the lots once everything settles in maybe 2-3 years.

Lessons learned? Challenges?

Seller financing shouldnt be this easy.. i mean it was by far the easiest way to get a property. Maybe I got lucky with a very motivated seller, but everything from the negotiations to the attorney writing the promisory note and mortgage to closing was super super easy. The biggest challenge was all the coordination required on my end to get everything in line all while working a full time job from home. There were a lot of moving pieces.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Real estate agent I worked with has been awesome and is also a fellow BP member (Bryce Wade). I worked with a local real estate attorney in the Tampa area that also had a title company attached to it. I would recommend them as well as they were very responsive and easy to work with.

@Connor Wentling

Nice job finding that the the home is owned free and clear and even bringing up seller financing. However, there are a few red flags right away that jump out after reading your post.

Seller financing deals in general are not always great cash flow, in many cases they break even or have slight cash flow. Think of it from the sellers point of view, why would I want to wait 10, 20, or 30 years to get the money for my property? It's in the sellers best interest to get all their money as quickly as possible, and often in terms that doesnt allow much room for you to cash flow.

This also, is not always the case. I'm actually currently under contract and closing in 2 weeks for a seller finance deal where I got a 20 year term at 5% interest and paid $0 down on it. The seller wanted the mortgage as an inheritance to their daughter so in my case a longer term wasnt the worst case scenario for him. This should cash flow for me about $300/mo or so. Sometimes you just get lucky.

In your case, the seller wants a 24 month balloon? Thats uh.. going to be pretty hard for you to come up with unless you know how you're going to get 200k in cash after 2 years. Make sure you understand what the balloon mortgage is. Personally, a 2 year balloon is incredibly greedy from the seller and would make me want to walk away right then and there. As that is very unfavorable terms to a newer investor that may not have that much cash right now.

The detatched garage will more than likely cost way more than 10k to fix up. Might cost a bit less if you're going to do all the work yourself, but may still need electricity, plumbing, etc. 10k seems like a very low estimate on that front. I am a big fan of ADU's but they are often not worth it financially unless you have the cash for it or can incorporate it into a hard money rehab with the existing property and you know it'll appraise properly.

Remember with seller financing you'll need to find a lawyer to write up a financial contract as well as find your own title company, those are additional costs to keep in mind. For mine, a financial contract was $750 and closing with titel company will be about $1500.

If the numbers really do work out and you've done your analysis, I would look into something more like a conventional loan for this one since its so turn key. The terms the seller wants for this are absurd. If you want the place for cash flow you need to get a longer term. Maybe 15 years or so. See whats important to the seller and play on that. Give them what they want but tell them they have to help you win as well. These sorts of things need to be a win-win for each player and cannot be strictly one sided.

If you're stuck on finding seller financing deals, as a newer investor, I would look at things a bit cheaper and maybe a touch more rural if possible. You can get the same cash flow with a cheaper property with better terms. Say you found a place for 50k that you could do seller financing and you get a 15 year term at 5% interest. Your payments are like $400/mo. Assuming you could rent it for $800/mo youd get $200/mo or so in cash flow. Higher price doesn't always mean better cash flow unless we're talking MF. Id rather have 20 units worth 1mil cash flowing $300/door than 5 units worth 1 mil cash flowing $50/door.

Unless you're looking for more of a BRRRR or value-add or something. Then take everything I said and throw it out the window. But if you're looking for more seller finance deals and wanting cash flow this deal with the current terms, in my opinion, is not the right one.