All Forum Posts by: Chris Lofstrand

Hi Stephen, im doing a similar campaign and was wondering if you ever found a script?

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $340,000

Purchased 8 unit converted motel on an owner hold in February 2019. Pro forma looks like it should be an 8 cap but that is yet to be determined since the largest most valuable unit was previously owner occupied, along with some vacancies. Hired a professional property management company to oversee leasing up vacant units and maximizing cash flow. Property is on two acres of land, so currently investigating additional ways to boost cash flow such as solar energy, separate garage lease, etc..

What made you interested in investing in this type of deal?

Was not very interested in investing in such a small rural market (Alden, NY), but a 10 year owner hold at 5.25% was attractive enough to pursue the deal.

How did you finance this deal?

Had an upcoming cash out refi for a previous investment property, so was able to borrow the 15% down payment from private investors who trusted that they would get their cash back once the refi closed. Remaining 85% was held by owner.

How did you add value to the deal?

Working towards 100% occupancy

What was the outcome?

tbd

Lessons learned? Challenges?

If the seller does not provide any of the information you are asking for in due diligence, assume the worst. I continually asked for a rent roll and proof of payments and neither were provided. This led to an eviction being needed within the first two months of owning the property.

I ran into a similar problem the last time I made an offer, where 25% of the capital was in my own bank account, 25% of the money was in my partner's bank account, and the remaining 50% was coming from a 3rd party investor. Since we werent going to take investor funds before the deal was under contract, I wasnt sure where the proof of funds was supposed to come from to be presented with the offer? in that case it was a small offer and we were able to show the investor's bank statement.

But what about when you use hard money?? if you dont even present the HML the deal until it is under contract, how do you get proof of funds?

You definitely have a point. No doubt the number I came up with is way off the 2% rule at current rent levels. But rents are a little low for the area, could probably get another $100/month across both the units once current leases are up. The part I don't agree with is how easily they could unload this property if motivated. He was doing a lease option with the prior tenant at $112k and had it fall through after it was already in motion. 

There are hardly any comps for duplexes in the area (all SFR's and some nearby 4-plexes renting for around $800 for a 2br) but looking at the neighborhood Im thinking full market value is around $95k. I came up with the $87,500 number because the property is already rented so there is no rush to sell, I believe he would only do a deal if he could walk away with a little cash.

Hi All,

Wanted to get some peoples thoughts on a potential deal in the Niagara Falls/North Tonawanda area of Western NY.

1300 sq foot duplex currently rented and both tenants under lease

$550 upper , $700 lower

Seller is an investor looking to divest of the property. Currently owes $64k on the property and is looking to get ~$100k for it. Here are the numbers

Gross Rents $1,250

Property Taxes - $300/month (slight overestimate to be conservative)

Vacancy - 8% - $100/month

CapEx 8% - $100/month

Landscaping & General R/M - $75/month

H20 - $65/month

Insurance - $75 month (estimated)

i already know at current rent levels the numbers arent very good. But Seller said he may be willing to hold 2nd mortgage if down pmt is sufficient. So could i do something like this?

Assessed value is ~95,000

Offer $87,500

75% LTV investment property mortgage for $70,000 - $400/month pmt

Owner Holds $15,000 2nd mortgage 15 yr amort. with 5 year balloon - $135/month pmt (total interest pd 4,800 in 5 yrs)

I kick in $2,500 or so of my own cash so the owner ends up with around $7,500 cash after his note is paid off

my numbers would be awful for 5 years but i could stash away as much as i could during that time and after the seller 2nd was paid off I would have ~ $25k in equity that barely cost me $10k out of pocket...

thoughts?

Sorry for the slow response, I havent been on the forums much lately. I did not end up going through with this deal due to concerns about the long-term prospects of downtown Niagara Falls as well as the advice of @Jaysen Medhurst about not trying to stretch the numbers just to get into a 1st deal. I ended up getting an offer accepted on a duplex in Town of Tonawanda shortly after this post, and followed that up with another duplex in Cheektowaga in late 2017.

Thanks Jaysen. This being my first post, I wasn't sure what numbers I should be including so i kept it vague. 

The property is move in ready and in great condition,  so I was estimating capex at 5% per month or $37.50. Similarly, additional repairs have been estimated at $30 per month

Vacancy @ 8% = $60/month

Property taxes = $220/month

Water = $45/month

Snow removal - $30/month

Lawn care will be the responsibility of the tenant.

I will manage the property myself so i have not factored in a cost of my time, mostly because I am trying to learn how to manage and this property will be the start of my education.

To your second point, appreciation has been estimated at 1% per year and i highly doubt it will be higher than that. Niagara Falls is an incredibly depressed area, and not much I am seeing as a resident makes me think that will change any time soon.

Thanks again for your help! 

Hi Everyone,

I am new to biggerpockets and this is my first post. I'm 24 and haven't done a deal yet but i've listened to about 50 podcasts, read a few books, and now I am looking to start acquiring rental properties. 

The property in question is being sold by a family member, and they have not yet listed it on the market yet. From an informal discussion I have heard they are looking to get about $55k out of the 3 br 1.5 bath SFR.

I would have no problem offering $50k off market because they wouldn't have to pay any agent commissions, but not much lower because as I said they are family. Details are as follows:

Downtown Niagara falls off Hyde Park blvd, not the nicest neighborhood but not terrible. Looks to me like comparable SFR's are renting for $700-750/month.

Property built in 1904 but extremely well maintained, move in ready. NF county website shows FMV at $67k

3 br 1.5 bath, 1.5 car detached garage with electrical hookup

Assessed at $57k, Taxes were $2,650 last year

Landlords typically pay water in NF, my estimate is $45/month

Homeowners insurance estimated at $50/month.

I put the property thru the BP rental prop calculator with what i thought were conservative estimates for capex, etc. and it showed positive cash flow of $50 per month if I only put 10% down.

Any thoughts/advice/critique would be extremely appreciated. Thanks in advance!!