All Forum Posts by: Bridgette Delva

@Kweku Ocran I agree with Todd. Stat looking for deals that cash flow with a PM and go for it. 6 months is plenty of time to find a deal so go for it!

Hi @Kweku Ocran welcome! Do you already have a deal identified?  If so then why not pursue it as long as it is cash flowing. How long do you have before you go to training? I assume you're buying a property and looking to rent it out...

Are you able to see the tax transaction record that lists the previous seller (the one who sold it in 2012) and current owner's information?  If it's not online, their real name should be available in person or by phone.

If by "bigger" you mean more expensive than you have been pre-approved for then potentially. I'm not a mortgage broker nor have I done this before so just throwing out some ideas.

If you want to get more house, then you can come up with a larger down payment.  If the house truly has income potential, possibly you could work out a private money loan deal with family/friends/investor to loan you the additional down payment to get the bigger house for the income potential.

If your DTI supports a higher purchase price than your initial pre-approval then talk to the mortgage broker.

The last thought that comes to mind is if you find a home that already has a leased tenant that would help demonstrate that the house is already an income property and cash flowing so the bank may see this as a lower risk of default.

Ultimately the lender is looking to minimize risk so putting you in more house than you can afford isn't going to happen without some other risk mitigation steps like the ones I noted.  Put yourself in the lender's shoes: worst case scenario is that the rental unit is vacant for an extended period of time and the loan still needs to be paid, can you afford it?

Hi @Danual Berkley, great question! The most often guidance I've read about, received or experienced is that, for real estate investments, you would want to be roughly 8-12% (or higher). We usually don't target deals if the ROI is less than 10%, that just our personal preference. ROI is essentially the amount of return you will get on an annual basis and you can use it to determine the amount of time it will take you to recoupe your upfront investment costs. In it's most simplistic form, a COC ROI of 20% means that you will recoupe 20% of your upfront investment costs each year so it will take you ~5 years to recoup 100% of your investment (100%/20% = 5).

The way to think about what would be an acceptable COC ROI in real estate: the stock market, on average, generates a return of 5-7% annually so if you're going to invest the amount of time in resources it takes to be a real estate investor, you want to make it worth your while and generate a better return than the stock market. That's where the 8-12% rule of thumb originates. If you aren't generating at least better than stocks, you might as well invest in stocks. Of course there are many other factors to consider like risk - in my opinion stock market is higher risk than real estate rentals.

There are many, many varying factors in real estate so sometimes a 5% ROI real estate deal can be attractive while a 15% ROI may not. These are not hard and fast rules, more like "rules of thumb" to use as a guide to question and dig deeper when a deal doesn't seem right. Deals in markets like SF or LA can tend to be low on the cash flow, which means the COC ROI will be low or sometimes negative but that doesn't stop thousands of investors from pursuing deals each month. These investors tend to chase appreciation and not cash flow.

Hopefully that helps but happy to explain more if needed.

It's okay, this is worth getting excited about! Good to know that you are still doing due diligence and haven't made an offer yet so you have plenty of room to vet the deal. 15+% COC is wonderful so it sounds like a winner there! Seller motivation plus a market analysis from your renter would be good tools to know where to go in on your offer. I will say if the market it hot, you should go in with your best offer, assuming the analysis warrants the price. Seller financing would be a nice way to get into this property so I wish you luck! You'll have to post an update once you close that deal.

@Scott White we have had the most success with identifying opportunities through Driving for Dollars.  Since you want to stay local, that's a good way to find them. I'm sure there are many other creative ways but this is the one I've used most.

Another thought, is your realtor experienced with multi-family investments? This would be critical to ensuring that they include the proper contingencies.

Hi @Matt Greene congratulations on identifying your first deal.  I'm assuming you've done the analysis but I have several questions that come to mind and a couple comments.

First thing is it's pretty easy to find your deal when you give me the city and asking price so I'd advise that it's probably best not to disclose the deets on your deal until it's done.  The description and financials are enough to get the input you need on the forum but I was able to pull it up on Zillow very easily with the deets you provided. ;-)

I will say that the property is lovely and I see TONS of future potential to build more units or add ADUs in the future. The lost is definitely attractive.

Speaking of the lot, who maintains it?

What is the COC return?

Are you planning to house hack or rent both sides?

Are both sides occupied? If so, do they have a lease? If they do have a lease, have you read it?

Are the rents competitively priced? Would be an easy answer for a PM to provide.

Why do you want to offer full asking price? Is the market competitive? If so I can understand but just probing to see why this warrants full price.

Any idea why the seller wants to sell?

Has the landlord provided the rental cash flow, P&L statement or financial other statements?

I am certainly not an attorney but it sounds like you need to get one involved if you want to complete the deal for this property. Just so that I fully understand your circumstance, you have had a property under contract for sale, with $1,000 earnest money, since 2017, correct? Also sounds like you have a lien on the property for the $1,000 is that correct?

What is it that the daughter wants and who's the current legal owner of the property now, is it her? Also, what's in the contract for cancellation or termination?  Typically there would be an out clause for either party but what are the conditions?

Bottom line is that if you want the property then you'll have to fight so get your attorney; if it's not worth it then you and the buyer need to cut your losses and move on. Hopefully if and when the current owner does sell, you'll get your money back.