All Forum Posts by: Craig Rismiller

@Kazi R. I am not sure with the legality of rejecting / returning partial rents in Georgia but with Chase Quickpay you need to "accept or "decline" the payment.  If you receive a partial payment you can simply just "decline" and tell the tenant to pay in full (though you may need to think about if this is a good strategy as evictions can be costly and most of the time you should try to work things out with the tenant).

We use Quickpay all the time and love it.

I agree with Wayne Brooks that these are likely separate tax pins and a quick search on the county auditor website will show you quickly. I also agree there is likely more value in being 4 condo's / townhomes vs 1 4-plex. The counter argument to this is that the taxes and insurance for the 4 units is likely higher in aggregate than if you had a multifamily. We have a very similar situation in phoenix where we own 6 of the 7 condos in the complex. We still have an HOA and have to file annual paperwork / collect dues...and we control 85%. Seems crazy but cheaper to keep intact than to make a multifamily and them redo docs back into a condo conversion for sale. On to your question regarding loans. You won't be able to go conventional on these because you would need 4 loans and you run into non-warrantable condo issues (assuming these are condos). Look for a local portfolio lender that will do a blanket mortgage. This may be set up as commercial but you should be able to find a lender that can wrap the 4...though don't expect 30 year fixed terms.

Off topic, but I am not a huge fan of partnerships when buying buy and hold properties. Here are a couple of reasons: - You are both likely going to have to personally sign the loan. Though this may not seem like as issue now, being 50% of a conventional loan still counts against your Fannie / Freddie max loans - Even though it may seem 'less risky' having a partner, you are likely still 100% liable for the debt if things go bad and your partner can't come up with cash. In general, I hate being liable for 100% of something and only getting 50% of the reward - Partnerships are like marriage...so you better know each other's roles or eventually there will be trouble / bad feelings. If you both are bring money, credit and minimal experience - then from the surface I am not sure the value of a partner. It is almost like the blind leading the blind You would think from the above I am not in any buy and hold partnerships but that isn't true. I have two: - Phoenix: We are 50/50 money partners and 50/50 owners. I manage the books / finances / tenant screening and partners do property management / boots on the ground. This works really well as we are both getting something the other doesn't have / do well -Midwest: Again 50/50 partners. I provide 100% of the cash for the deals and partner locates, rehabs, manages free of charge. I would only do 50/50 because the partner is adding so much value during the rehab and we hope to be close to no cash outlays after a portfolio refi. I am not trying to discourage you from real estate but I do encourage you to really think of this will be a good longer-term fit or if you should fly solo.

Bob Bowling You are coming across as a little harsh, especially when the original poster is correct regarding both the '50% rule' and cap rate use. 50% Rule: Total Rents X 50% Expenses (insurance, taxes, maintenance, capital repairs, management, vacancy, etc) = Net Operating Income (NOI). Of course this is just a rule of thumb but it is a quick way to get a rough idea of actual cashflow over the long run. Cap Rate: NOI / Purchase Price = Cap Rate. So if the poster wants a 10% cap rate and they know the NOI, the they can derive the purchase price needed. Now the 10% cap rate is truly set by the market, so finding 10% cap deals in a local 8 cap market is of course difficult.

Over $100k. In just the last year I have done rehab deals with 6 BP members and I am currently building a rental portfolio with another BP member!

We are gearing up to sell a PHX project so we can raise funds to develop the lot right next door. The plan is to sell these off individually to retail buyers starting in Feb. / March but I thought I would throw them up here on BP to see if anyone is looking for a high - end MF property. Here are the details:

Overview:
- Location: Central Phoenix, Zip 85014 between Camelback and Indian School road
- Built: 2007
- Units: 6 units come with this sale, 1 additional unit in complex (7 total), each unit is ~1500 sq ft.
- All units are 3 bedrooms, 2.5 baths, 2 stories with walkout roof top decks
- All units individually platted as condos (allows multi exist strategies)
- You control the HOA board / make all decisions
- Mediterranean style with high end finishes, all appliances and 2 car garages. Gated community

Details:
- All leased with several multi year tenants
- Rents range from $950 to $1198 for total monthly gross rents of $6,661. Thus $80k gross rents / year
- Market rents for 3 bedrooms range from $1100 to $1600 for higher end properties like ours. If you go with $1400, there is room to increase rents $1,700 + per month at renewals (all leases expire 1st half of 2015 so we can vacate for sale if we go retail)
- Our 2014 total expenses were $20,000 being self managed

PRICE: $200k each for a total of $1,200,000. We will likely market for retail around $220k each.

NOTE: This is not a high yield, 2% rule property. It is a higher end property that has produced steady cashflow, attracts great tenants, and is in an area that is rapidly changing for the better. PM with questions!

Here are some questions to ask yourself: -What will be your cost to build psf -What will be your land and improvement cost - What do rental rates look like for similar types of units - Given your rent and projected NOI, do the cap rates make since - Could you get a similar or better cap rate by buying existing inventory - What build several SFH on the lot vs a MF? Check your zoning but multiple SFH might not be allowed with first creating a new sub-division (think new utilities, road, sidewalks...expensive) This list is not inclusive but should get your wheels turning.

@Bob Green What are typical rates right now your 5 year fixed program?  Also does your program have extremely steep pre-payment penalties?

@Brian Snell I am pretty sure you can't legally wholesale HUD properties. I am sure others will know for sure but I thought that was explicit in the contract language.

Originally posted by @Karen Schimpf:

@ Craig Rismiller

Estimated Upfront Diligence Cost are Typically:
-Around $500 per Single Family Residence  for Valuation & Diligence ( V & D cost are different for 2-4 units and multifamily)
-Around $250 per Guarantor
-Around $1,395 for Underwriting Fee

The estimated upfront quote excludes origination fee, title insurance, borrowers legal counsel and other cost customary paid by borrower.

*Quote is subject to change

 Thanks Karen - those fees seem typical.  The big unknown with these types of loans is the one you excluded...the origination fee.  What is typical for a $500k to $1M loan...1% origination?