All Forum Posts by: Chris Nowlin

@Wayne Brooks

Thanks for the input, can you please take a look at my thought processes below? I picture this in my head as a way to get top dollar out of tenants for a short time. The process is more complex, but the returns seems to be significantly higher in a shorter amount of time.

I have a lender that will do 10-15% on investments. I'm not worried about the down payment, its equity that will come back to me. Interest rate is more so what I'm concerned about. I'd be willing to put more down to drop that. Higher down payment would result in lower payment and more cash flow in the middle.

Whether the commission is rolled into the house or taxed and returned to me, it ends up as a profit on the deal, correct? Lowering the the cost and not taking the commission would only cut into the margins.

Doesn't all rents cover tax and insurance indirectly? P&I, Tax and Insurance should be between $750-$800. Typical rents in my area are at about 1% of the selling price. Bumping that to 1.1% should pull an extra $100 cash flow.

As for closing costs, my girlfriend just negotiated a deal that for $225,000 that included $5,000 towards closing costs. That wouldn't cover closing costs? Netting the seller $220,000. Again, I could negotiate a deal for $5,000 less, but it would cut into margins.

On the back end, doesn't the buyer typically pay closing costs?

Thank you @John Thedford

Lease Purchase Example- $100K Home w/ 10% down.

I'd like to work close witht lenders and have them refer me there "top reject" prospects. Ones that have the financial credibility, but are just short on their credit scores. I would like them to choose their own house that I will purchase and hold for them. (Giving them a reason to pay a premium rent.)

Assuming they are looking for an FHA, I'd like to take a 3.5% deposit up front. This will go to their down payment on the back end. It will also cover most of the closing cost if the deal falls through and I need to dump the property, preferable to a wholesaler where I can avoid real estate costs. The purchase price of the house will be negotiated to cover closing costs. As my girlfriend is an agent, we will roll her 3% commission into the down payment. Giving me an extra 3% equity off the top and reducing my necessary cash to $7,000.

I will rent the property to them at 11% of the selling price for as long as they need. The best candidate should be able to qualify to purchase within a year. Because this house will eventually become the tenants, all maintenance cost will be pushed onto the tenant. I believe this is called a triple net lease? (needs more research). For a $100k house I would be looking at a $350 cash flow. Plus approximately $140 in equity being built each month.

The contract will have an agreed upon appreciation value built in, appraisal allowing. Say 2%, providing an extra $2,000 upon closing.

Assuming the buyer pays closing cost on the back end and no agents are used, my numbers are as follows:

Final Equity- $11,700

Cash Profit-$4,200

Appreciation- $2,000

Initial Investment- ($7,000)

Final Profit- $10,900

Is this possible or am I missing something?

@Luke Petrozza I hope this thread gets some attention. I do not have personal experience on the topic, but have similar interests. I haven't researched the topic too much yet, but see some potential in the concept. I'll lay out my idea and hopefully we can both get some good answers!

I'd like to work close with lenders and have them refer me there "top reject" prospects. Ones that have the financial credibility, but are just short on their credit scores. I would like them to choose their own house that I will purchase and hold for them. (Giving them a reason to pay a premium rent.)

Lease Purchase Example- $100K Home w/ 10% down.

Assuming they are looking for an FHA, I'd like to take a 3.5% deposit up front. This will go to their down payment on the back end. It will also cover most of the closing cost if the deal falls through and I need to dump the property, preferable to a wholesaler where I can avoid real estate costs. The purchase price of the house will be negotiated to cover closing costs. As my girlfriend is an agent, we will roll her 3% commission into the down payment. Giving me an extra 3% equity off the top and reducing my necessary cash to $7,000.

I will rent the property to them at 11% of the selling price for as long as they need. The best candidate should be able to qualify to purchase within a year. Because this house will eventually become the tenants, all maintenance cost will be pushed onto the tenant. I believe this is called a triple net lease? (needs more research). For a $100k house I would be looking at a $350 cash flow. Plus approximately $140 in equity being built each month. 

The contract will have an agreed upon appreciation value built in, appraisal allowing. Say 2%, providing an extra $2,000 upon closing. 

Assuming the buyer pays closing cost on the back end and no agents are used, my numbers are as follows:

Final Equity- $11,700

Cash Profit-$4,200

Appreciation- $2,000

Initial Investment- ($7,000)

Final Profit- $10,900

Is this possible or am I missing something?

@Kerry Baird Thank you!

Anybody?!

My dad currently has 4 paid off townhouses that are getting older. He is interested moving the equity into new investments. His plan is to buy a piece a land, build several townhouses, sell enough to pay for the rest that will be kept as rentals. 

Is this a possible asset transfer that will meet the tax requirement of a "like" property?  

What is the best way to go about it? Phases? One development?

Any information is good information.

I understand that this is a loaded question and there is not right or wrong answer. I am asking because I am curious of the process. I'm sure there are times where the searching process last anywhere from a day to a year...or more. 

I'd like to hear some stories of people on both ends of the spectrum. Is there an average that some of the more aggressive investors come across?

@Timothy Church I have only spent a small amount of time looking into Galveston. Just started exploring those options about a week or so ago. I am working up in Alaska right now and don't have the face time or experience to feel comfortable taking on too much rehab. 

I think for my first deal, maybe more, I'd like to stick closer to the move-in ready homes. These tend to be the ones that I see moving extremely fast. Without having any properties of my own at this point, my ability to analyze numbers is not proven. I'm sure when I get back to Texas it will get a little easier to evaluate deals. I'll keep the option period in mind as I am looking. 

Thanks for the help!

@Account Closed The thought of buying from wholesalers has crossed my mind, but I have not done a whole lot of research into wholesaling as of now. Let me know how it works! What are the best resources for locating wholesalers?