All Forum Posts by: Corey Smith

Mariah,

My typical rule of thumb for expenses for 2-20 Units are 30-40% of income. Anything above 20 I will use the 50% rule. As an investor I would recommend that you use these numbers for conservative investing. Many investors get caught in bad situations when they try to make the numbers fit the property instead of making the property fit the numbers.

If you could purchase a 20 unit building and your expenses are less than 30-40% then thats an advantage to you, but what if you buy the property and the expenses exceed your prediction of 15%(which is just about unheard of) then where's the benefit to you. Bigger property, bigger expenses. Running your numbers with worse case scenerio will keep you away from purchasing future problems.

I guess you learn something new everyday. I've never heard of that strategy but it's good to have it in the knowledge bank for future references.

Thanks Jon for the explanation.

Tia,

This is somewhat of a complicated deal for what seems to be a beginner in the commercial field. Every investor is different in what they will pay for a vacant property.
If I were in your shoes, I would approach an investor at my local REI Club about doing a possible joint venture with the deal or at least develop a mentorship program as you try to tackle the commercial real estate field.

Ariane,

When dealing with commercial properties the NOI(Net Operating Income) is the main evaluation factor. Also, if you want help evaluating a deal you have to be sure to put down the number of units, income minus expenses, any rehab needed to be done to the property and an estimated cost, where the property is located and what the seller wants for it. This information would help to do a quick evaluation and let you know if its worth going deeper into.

1. Its hard to ever say if there is an advantage to using one technique over the other because no two deals are ever the same. A technique that may prove to be more beneficial in one situation may not be the most beneficial in another situation. Not enough information here to make that judgement.
2. Are you sure they said "principal only" or "interest only"? No investor in their right mind would ever accept a "principal only" mortgage. That would mean that they're getting 0% interest on their money.
3.Explained above
4. In my opinion you should begin by doing more research and getting more educated about the field of real estate. Like the saying goes "if you think education is expensive, try ignorance".
5. If I were you I would try to get more educated before I start throwing money around trying to acquire property.

Just my .02 I hope this helps.

Barry,
It's a little bit unclear what you are searching for and/or what direction your trying to go in. Could you rephrase your post and maybe you'll have better luck at getting helpful replies.

Not 100% clear on your questions here, but my suggestion would be to setup an LLC spelling out the partnership specifics and how the profits are suppose to be split.
My .02

I would also add that when you meet with these close friends of yours, you approach them as if this is a business deal that they will get great return on their money, not just them giving you money to get your company off the ground or fulfill your wants. My .02

Not a pro, but if you have the right connections, you may not need any money at all to get these deals done. $500 is a great start-up capital for marketing funds.
I suggest calling the "we buy houses" ads in the classifieds and find out what type of properties they are specifically looking for then, go on a deal hunt. Don't worry about mistakes, it's almost a certainty that they are going to happen. Good Luck!

In my experience it has been very hard to wholesale properties off the MLS. The law lingo that goes along with getting a property that your able to flip to another investor is impossible because banks don't accept it. My suggestion would be to keep marketing and talking to realtors about pocket listings. They may agree to let you bird dog them if you promise to let them have the listing for retail.
You'll never know if you don't ask. Good Luck

Depending on the owners financial situation, you might be able to look into a short sale. Another option may be for you to pull a couple of buddies together and ask them if they are interested in a business opportunity. Pull together to purchase the house and split the profits in a few years after you sell. My .02