All Forum Posts by: Cassidy Klundt

I think I’m hung up on the choice of words here… but appreciate the wisdom— novation is in not in a strength position when you’re not the owner, in the court of law. Got it - and I can align to that. Better make sure the agreements are solid then ;) 

Forced to sell? Phew - if you're at a position where the owner no longer wants to sell and you've spent money on the novation... there's some real steps and assumptions missing. Is there a scenario that requires a forced sale via novation that I might not be thinking about correctly? 

I'd agree though in spirit - if you're at a point of needing to enforce a sale or enforce reimbursement of expenses, a novation will drag out and if you don't have check-balances in your process and communication with owner, don't do novations. 

Candidly I've been wholesaling off and on this year, mainly as my W2 has a tendency to receive priority - but I do see where a Novation has it's place. However, much like the caution from a few in the earlier comments there's alot to consider, and risk is definitely associated. 

Here's what I'd recommend if you really don't want to let a deal go because of disagreement on purchase price, and you've done the math, know the market, and believe a novation (leaving room for commissions/closing costs) can get the deal done with profit left in it. 

1) Transparency with owner is key. Let them know how the whole scenario works. We can't make a private cash deal happen, but if you don't mind if we list on your behalf and go through that rollercoaster for you - so you don't have to deal with it - we can aim to put XX$ in your pocket all said and done. Timeline needs to be flexible, Owner needs to be able to provide access to the house. 

2) You HAVE to get a 1% listing agreement with a broker if you're not one currently. You need to save every bit of margin on these deals to ensure profit. 

3) Do not put anything into the house, of nominal value until you've tested the market first to know the reaction and the need. List with concessions first if you know you have some ugly truths in the house. Then react when you get feedback. From there decide if you want to play the small renovation game... see point 4. 

4) If you're at a cross-roads where the owner doesnt want to lower price to get deal done either through cash buyer or on a novation because you know the market won't bite at the listing price (less commissions/closing).... it's time to push them on true motivation --OR-- propose creative finance. 

5) Haven't pulled this off yet, but I'm close on an existing novation. Property's in a prime MLS area but needs too much work for a retail buyer and is priced too high for a private investor. With $10k in renovations, it could list and net $40k profit on a $400k house. $10k for $40k profit isn't terrible.

That said, the earlier point still stands: never put nominal money into a property you don’t own. Structure it as seller financing with $0 down for 3–6 months, low interest, and a balloon at 6–12 months. Renovate, sell well before the balloon, and ensure the seller gets the originally agreed payout. If they want profit share, you can offer it, but remember you’re carrying all the risk. I wouldnt offer more than 10-20% of profit -- assuming you have the room for that. 

Cheers! Hope that helps. Curious if anyone has done that. I believe it's called a slow flip ... but could be confusing a concept.  

Hello BP Community, I have a large property in Winlock WA under contract. It's a 7 bedroom 4 bathroom property, 4500 square feet and I think it has a large potential for being converted to a pad-split with 7 rooms and would require cosmetic renovation to get there. Assuming that the county enables the property zoning/licensing to do the conversion, what math would you run on a Padsplit conversion to include revenue potential, including total investment, and ROI? Anyone have experience with this type of investment and can provide some clarity or a nifty sheet to plug assumptions into? I have the deal at 330k, thinking the ARV is 650k (but no comps close to it, thus the conversion), and so there's large upside.

If considering a 4-Plex in Las Vegas, I see several come onto market, and seemingly 4-5 at a time - however they all tend to be C and D Class properties with renovations needed. Many times in C neighborhoods as well. Depends on your strategy. Are you looking for something that's a bit more turnkey or are you wanting to buy something with value add potential? You can always reach me here - or message me individually and we can exchange contact info. Happy to share more information. 

@Doug McVinua that's a fantastic way to bridge all perspectives shared. The condition of the pool could absolutely be the game changing decision. Great call out.    

Hey Joanna - I think the recommendation from Mike on making sure you have proper coverage is very sound advice. I think it depends on your rental strategy. I have a mid-term in Las Vegas, and it does exceptionally well. 2-3k profit each month. I rent for 30 days to 90 days at a time. It has a pool, and for properties similiar that don't have pools it brings down the monthly by as much as 2k/month in revenue. So it's a sizeable difference. I would venture to say it has everything to do with the draw of renting a house, in the heat, and not having a pool to cool-off. 

All really comes down to your rental strategy. If it's an LTR I could see where the rent difference might not be worth it, but then again insurance isn't that expensive either by comparison to rental revenue. 

Hey Abhishek - I have the same goals and target markets. Happy to share a bit of what I've uncovered if it helps. 

Rent to price ratio in NV particularly LV and Reno are pretty solid (20+). Depending on the area though, you can see YoY rent decrease, which seems to be a bit concerning. Need to take that into account. That said if you're looking for the Tier 1 cities like PHX or LV, you're likely going to face steeper pricing and/or more competition. With a strong network of brokers, a sponsor, nothing you can't crack into -- and per some feedback I've received on BP from veteran investors, they'd always suggest to look at logistics and proximity first. Hope that helps. If you are wanting individual cities in NV - I could probably shed more light on recent discoveries. Happy to share notes. Let me know what cities and areas you're considering as you dial things in. Take a look at Tier 2 markets as a part of your research. I'm finding some value in doing that. 

Hello BP Community. Looking for advice on what to consider for my top 3 MF markets. On paper, things like higher rent to price ratio, average cap rates, and high rental %'s in the area seem to be the best data points to atleast steer me in the right direction. Is there a best top 3-5 data points to consider, when trying to narrow in on a market? I know it's a bit of a loaded question, but curious what the best practices and experienced investors say. 

As it stands, I've narrowed down my interest to Las Vegas NV (primary, I live here), Albuquerque NM, and considering Dallas, TX. On paper Dallas seems like a surefire winner, and I know its experienced tons of growth. But do I then worry about hedge funds and large investment type companies as my competition in a market like that? Same for a market like Phoenix? 

Fill me in on what you think! 

Thanks @Dmitriy Fomichenko I'm certainly someone who likes to dive right in. Happy to share - can't wait for the next steps this year!