All Forum Posts by: Chris Majors

@AJ Neal I have a great real estate attorney in Augusta that has done several creative deals for me in the past.  Shoot me a PM and I'll give you his info. if you're still looking.

@AJ Neal

@Troy Durrette

I'm looking to network in Augusta as well.  I am looking for real estate deals for myself and my clients.  I also just sent out a direct mail campaign, so let me know what you're looking for.

@Byron Scott The example I gave you was in South Augusta.   It's in Fairington subdivision off Tobacco Rd. near Fort Gordon gate 5.  It's a solid 1200 SF 3/2 brick ranch in a C+ area about 50/50 renters and owner occupants.  Non-distressed homes in the neighborhood sell between $60-90k depending on how nice they are. Shoot me a PM so we can trade phone numbers.

I forgot to mention that it is rather difficult to find multi-family deals in this market. It's almost always more inexpensive/unit to go with a SFR. I've personally been looking to move into the multi-family space the last several months and feel like the competition is willing to spend way too much. I'm seeing multi's in C areas trade for $40k/unit with $550 rents when I can find SFR's that rent for $700 for less.

@Malik Welch Hey buddy, good to see you on biggerpockets.  I agree, it is generally better to find deals off the market so you don't have competition when negotiating with the sellers. 

@Byron Scott I would point out it IS possible to find good deals on the MLS still. The best opportunities for someone in your situation is to scoop something up during the "owner occupant" phase of bidding. HUD, Fannie Mae, and Freddie Mac all have periods when they are initially listed where only buyers intending on occupying the home will have their offer considered.

For example, I found a Fannie Mae for one of my clients a few weeks ago: ARV $75k repairs $20k listed for $27,900. My client was living in Atlanta and planning a move here to Augusta. As soon as it popped up on the MLS I previewed it for him and advised him to get an offer in quick! We ended up having multiple offers and I got his offer accepted for $28,600. He plans on living in the home for 12 months while completing the renovation, cash-out refinancing with a 30 fixed rate owner occupied loan, then renting it for $750-800/month when he's ready to move on to the next one. Slow and steady, but effective.

It IS still possible to find deals off the MLS when bidding against other investors, but it has gotten pretty competitive the last couple years.

I'm also a Realtor/investor.  In my opinion the pro's to getting a license greatly outweigh the cons for an investor.  Even if you do not actively market and prospect for new clients, you will be surprised how much business you get from your sphere of influence.  If you prove yourself knowledgeable and competent to people during real estate transactions and give good advice, it's fairly easy to create a nice side income stream even if it is part-time.  

You also have the HUGE benefit of having MLS access and the ability to "show" yourself properties and make your own offers, not to mention the commissions on the buy side and savings on the sales side.

That all being said, if you get serious about your Realtor business, the income potential is ridiculous.  It's a business with very low overhead, no need to invest money in inventory, has low barriers to entry, and gives you an unfair advantage in your real estate investing.  

I highly recommend Gary Keller's book "The Millionaire Real Estate Agent" for the models to build a Realtor business.  

Thanks everyone for your responses.  I've decided to pass on this one.  If it was a stick built house it would work, but the fact that the trailer is already at or near the end of its useful life is a deal killer. 

@Jay Hinrichs  On paper the trailer is beyond its useful life, but the owner has done a good job rehabbing it.  I suppose if I were to keep it as a rental I should budget for more capital expenditures than I would for a stick built house.

@Charlie Fitzgerald Thank you for bringing up the high cost loan regs.  For GA I believe the interest rate cannot exceed 10 points higher than the US Treasury yields for mobile homes?  That would put me around 12%.

I have come up with another possible scenario:  Lease option with the agreement that I will owner finance if the tenant buyer pays on time for 24 months.  $2,500 option consideration for $39,900 and a monthly rental of $695.  The buyer handles all the maintenance during this period.  

After 24 months if the buyer exercises the option I will finance $37,400 amortized for 15 years @ 11.99% interest. PMT of $448.62

The seller also indicated to me that she would give me a couple months to get it rented before I would have to make monthly payments to her.  I'm not super excited about this deal, but I think we can make a "win-win" for all of us.  I take over a property the seller doesn't want to fool with, I hopefully make a profit with little money out of pocket, and give someone affordable home ownership who may not otherwise be able to.

I was talking to an agent friend on the phone today and she mentioned that she needed to do something about a property.  It has been sitting vacant for a little over a month and she doesn't to fool with it any more.  

The property is 3.5 acres with a 3 bedroom 1 bath 1000 sf 1974 trailer that has been recently remodeled and could be rent ready with less than $500.  The septic tank is about 5 years old and it was previously rented for $650/month.

The trailer has little to no value, but the market value of the property is about $35,000.

The property was listed for rent and for sale about a year ago, originally for $64,900, then dropped to $38,000.  They had a contract for $31,000 cash, but the seller had a delay in getting a title for the trailer, which killed the deal.  They did end up getting clear title.  

I asked her if she would sell to me carrying all the financing and she agreed.  This is what she offers:

$30,000 sales price

100% owner financed with 10 year amortization @ 5% interest: $318.20/month PI

My closing costs out of pocket will be about $500 and repairs are $500, so my total out of pocket is $1000 (theoretically). 

If I rent the property for $650, this is what I have:

Expenses:

$20/month hazard insurance on the trailer.

$42.83/month taxes

$65/month vacancy

$65/month repairs

$65/month capital expenditures

$65/month management (I will pay myself to manage).

$322.83/month Principle and Interest

Monthly Cash Flow: $8.97

I know This isn't a great cash flow deal, but I would essentially break-even until the property is paid off in 10 years if I held it as a rental.

The other scenario, which I am leaning towards is to sell to an owner occupant with a wraparound mortgage.

I could increase my cash-flow substantially, get a decent down payment, sell for a higher financed price, charge a much higher interest rate, and enjoy less management headaches.

If I sold on a wrap I could sell for 

$39,900

$5,000 down (tax refund time soon :)

$34,900 amortized for 15 years @ 12.75% Interest = $435.84/month PI

This would allow me to make money on the front end ~$4,000 and make $133/month cash-flow.

I could also play with the numbers a bit to make a higher IRR, but this seems like a doable scenario.

Would you buy this?

If so, would you keep it as a rental or sell on a wrap?

Personally, I don't mind the C class neighborhoods in my market.

I find that my Section 8 renters take great care of my properties if I give them a good product and I am relatively responsive to their needs.

There are "professional" section 8 renters out there that take pride in their residence, but find that they are better off keeping a certain income to get their government benefits.

I know this is a totally different discussion, but it is amazing how our local, state, and national governments take care of folks if they work the system.

You can get great long-term tenants by giving a little personal attention to them and letting them know that you are in the business of taking care of their home and want them to stay there for the long term.

The investor receives great returns and the tenant has a nice quality dwelling where they would like to live.

A big problem in my market is that a lot of "old school" landlords don't put money back into their investments.  If you make an effort to respond to any issues section 8 tenants tend to stay with you an extended time at a premium rent guaranteed on the 1st of the month with no headache.

I agree that there is poorer liquidity, but you need to buy these units with the intention of cash-flow and if you need to sell give your buyer a nice ROI.

It is much easier to find a motivated seller in these neighborhoods because the buyer is generally an investor.

It's a higher management play in the short run, but there are quality tenants out there that appreciate personal attention.  I think the key is choosing the tenant, setting expectations, and retention.