All Forum Posts by: Bruce Clark

@Mark Fedorov I actually do not know what she wants to sell it for. She is asking $50k. Now that you bring that up, I think I may just adjust the numbers. I will offer her the full asking price of $50k paid over 10 years at 4% (instead of 6%). This makes the payment $500 per month, so I will  adjust the rent accordingly. $500 for the unit would be on the higher side, but still would not be unreasonable for the unit. In the end the numbers don't matter.

With regard to her niece, I think she is prepared for her to be evicted, which is why she is selling the house. She just does not want to be the one filing the eviction papers. Regardless, I will give the niece the option to sign a lease and stay. My guess is she either wont want to pay the rent I charge. 

Thanks for the comments. After rethinking it, these adjustments may help in getting a contract. You never know.

I looked at a duplex today in which the owner lives on the first floor and her niece (tenant) lives on the second floor. Prior to her niece she rented to her brother.  The realtor says she is selling because she is tired of being a landlord to her family members and she doesn't want to evict her niece. 

I am considering the following deal.

Purchase price: $40,000 - 100% owner financed.

I will pay the realtor commission of $2,500.

Term of the loan is 10 years at 6%. Payment is $444 per month.

However, I also give her a 10 year lease with a monthly payment of $444, which is about the market rate for the one bedroom unit she lives in. Basically she lives rent free for 10 years.

I have run the numbers using the rental property calculator and this will lead to a cash flow of about $150 per month. It is not much, but I will only have $2,500 total into the property, and it will be free and clear in only 10 years.

I am not sure if the seller will take it but I think it has upside for her. She is an older lady. She will have no rent, property tax, insurance, repairs, maintenance for the next 10 years. She wont have to move. She wont have to evict her niece. She wont have to pay her realtor. 

Now if I can only explain this proposal to the realtor so that she effectively conveys it to the seller...

Thoughts, recommendations, advice welcome!

Update. Yesterday, at around 7:30 the realtor called me and said there was a cash offer of 45K. I told him to tell the sellers to take it. 

Looks like I was not far off with my $40k number.

The ARV is probably around $100k so, I should be fine with $70k total into the deal.

The Sub2 idea would definitely be an option. I don't know what the restoration lien is though. Probably doesn't matter at this point anyway. I think I will just just keep an eye on the property and see if it closes. If not, submit my offer of 40k and see what happens. Regardless, I'm on to the next one.

@Christopher Morin Thanks for the input and advice.

I'm looking at a duplex. Asking price is 62k. This is unrealistic. Property is empty. Sellers used to live in the property - they used both sides. Property has been on the market for 97 days. Sellers now live in Florida to be near grandchildren. Realtor told me that when they first put it on the market, the electric was turned off and the pipes froze, which caused major leaks on one side. They immediately had a restoration company take care of the issue, but then their insurance company denied the claim because the electric was not on. So they now they are on the hook for the restoration companies bill and it hasn't been paid yet (I will of course check for mechanic's liens when the time comes). They also took a loan from a relative to attempt to make other repairs, so now they have an empty property in a different state. They have a mortgage, owe money to a restoration company, and owe money to a family member. Realtor "says" their break even point is $59,000 but seemed to indicate that they would consider any offer.

I haven't walked the property with my contractor yet, but my rough estimate is that it needs about $30k in repairs and upgrades. 

Once the property is rehabbed it will command approximately 1,300 total rent. 

I have ran the numbers (taxes, insurance, cap ex etc.) and I can make it work by simply offering $40,000 and seeing what they say. Given their situation, I am not sure if they will accept or not.

I am wondering if anyone has any creative financing ideas that may work in a situation like this. 

My firm name is Bailey and Wyant and I am out of Wheeling, WV. Message me privately and we can discuss some specifics, or I can at least get you a list of attorney's who you can talk to and see who you feel most comfortable with. 

I have a sfh that rents for $650 per month. Current loan balance is $19,000. Current rate is 5.75. Property value is around $65,000-$70,000. I want to refinance and pull some money out to use for down payments on more units. 

I have talked to one local bank and they offered 3/1 ARM at 4.83% and a 5/1 ARM at 5.08% max term of 15 years. I plan to talk to more banks to compare.

I have never refinanced a property before, so I am wondering what people think of these terms in the current market.

All advice, suggestions, comments, etc. are welcome. Thanks in advance.

@Shawn Ackerman Thanks for your input. I am going to try to find some owner financing deals. Also, I might as well keep looking. Who knows, I may find a deal and it may sit on the market for a while, until I am ready to move on it. If anything, I am getting practice at finding and analyzing deals.

I have a few rental properties, but I recently decided to start actively looking and investing. Last week, I got a triplex under contract for $30k. My estimate is that it will need about $35k in repairs and then it will generate about $2,200 per month. I am scheduled to walk the property with my contractor next week and then I can finalize the numbers on a loan. I plan to finance the purchase price and the repairs with a tradition mortgage. I finance with a local bank, that has historically been extremely easy for me to deal with when I have a property under contract and the numbers work.

On to my question. while I am working on the details of this deal and trying to close within the next 30 days, I am also monitoring the MLS and other sources for potential deals. I am seeing potential deals, and I am also seeing them go from active to pending pretty quickly. There is a part of me that feels like I need to close and get this triplex cash flowing before I make any offers on other properties. First, I do not have the down payment for another deal, so the financing for any potential deal may be difficult. Second, given my experience, I do not want to take on too many projects at one time and get too far ahead of myself. Third, I am concerned that if I start talking to my bank about other properties, and we haven't even closed on the triplex yet, they may question the triplex.

On the other hand, it kills me to think that I am missing out on opportunities while this triplex closes.

Which part of my brain is right? Should I be concentrating on this triplex right now or should I be actively making offers and attempting to get properties under contract regardless of the triplex status?

Thanks in advance.

@Jonathan Kelly yes the contractor is going to come out of pocket for labor and materials. Everything will be in writing of course. I like the idea of setting out some baseline milestones, just to keep the project moving along. I am going to include that as well. 

@Mark Cerminaro I do not have any concerns with the contractor's ability to float the costs until we sell the house. He has in house electrical and plumbing, so I think the only sub he will need is for HVAC. He is typically a builder, and the homes that he finishes would require him to have a lot more out of pocket at any given time than this little project. 

I will let keep you updated as to how this project goes.