All Forum Posts by: Chris Sellers

I'm really interested to get some opinions from other BP members for what price point you would sell to cash out vs hold for cash flow.  I'm considering selling two properties located in smaller towns outside Charlotte, NC (one small apartment building, the other a portfolio of houses):

1.  An 8plex generating $3,850 per month revenue ($500 per unit, will be $4,000 per month as two older leases renew later this year).  Taxes and Insurance are $3,500 per year together, property management 8%, no mortgage.  Normal maintenance and vacancy, no special appreciating foreseen.

2.  A portfolio of 1 duplex and 4 single family homes generating $3,750 per month in revenue (all close together in a small town).  Taxes and Insurance are $4,500 per year together, property management 8%, no mortgages. Normal maintenance and vacancy, no special appreciating foreseen.

I look forward to seeing how other investors make this decision.  Thanks!

Chris

Cori,

Very exciting position to be in.  You have so many options.  I like to buy with cash, only borrow if needed (and leverage light).  I focus on buying where I can add value, I love empty sfrs or mfrs with a lot of empty units.  It takes some looking, but I offer at 50 times my estimated fair market rent minus rehab (ex:  if I think an 8plex will rent for $4k after  $20k rehab, I'll offer $4k x 50 - $20k = $180k.  I get turned down a lot on usually only get the stinky ones with unpleasant cleanup, but that pays off.  I'll creep up a few thousand if needed too.

Since you're coming from an extreme high priced market, you'll need to calibrate yourself to the new local market.  Investors will hear "Bay area" and try to give you retail prices for sure.

Good Luck!

Brianna,

Sounds like this could be a very interesting deal.  I've bought a lot of deals for flip or hold over the years.  I would recommend you only buy inside your knowledge / comfort zone.  Early on, I would buy "lipstick" flips, those only requiring carpet and paint.  These aren't as lucrative, but less risky.  As you build construction knowledge, you can estimate repairs more precisely and bid on houses with more problems (make more money).  This old house could need a lot, depending on when the electrical, plumbing, hvac, roof and windows were last updated.  Also structure has to be a concern.   I'd pass unless you posses these skills or have someone you trust with these skills to estimate the repairs accurately.

Good Luck!

Esther,

His concerns are valid, but I lean toward you're way of thinking.  A lot depends on how "tenant proof" your apartment is and how well you screen your tenants.  I would only choose tenants you are very comfortable with.  Get a good lease, a healthy deposit and do a video walk through of your place before you turn over.  Remove any expensive breakables and don't allow pets.  I'd say a normal tenant will cost you only a cleaning fee, plus some minor wall scrapes you'll probably just live with.  

Good Luck!

Tim,

Sounds like great deal.  I assume the listing price is $80k and you're going to make a full price offer?  I've done this before, offering full price then we get into a bidding war.  Not a big deal.  Just have your max offer in mind so you don't get caught up in the excitement and over bid.  

I have a great realtor who helps steer me in these areas, tells me what he thinks will get it.  Sometimes I bid that amount, sometimes I bid lower.  I'm probably about 1 for 5 on these.  Have lost a couple by less than $2k and I really wished I had bid higher.

Good Luck!

Patricia,

Congratulations and keep the ball rolling!

Kim,

I own several in NC.  Property taxes usually run around $1,300 annually per $100k assessed property in bigger cities like Charlotte, $700 for smaller counties.   Bigger cities more aggressive on making higher assessments, then not reducing for investors like they might owner occupants.  I don't see it as a big problem in NC.  

Good Luck!

Cecil,

Great looking property.  I agree, the numbers you shared do not work unless the price is reduced very significantly.  I'm not too familiar with this area, but a quick search showed rent for two, 4br units should be much higher than $3,450/mo.  If you want to pursue this deal, I would determine the fair market rent, how long it would take you to get that fair market rent (getting new renters) and make an offer based on these factors.  I like to do the math and make a lot of offers where my numbers work.  If sellers reject or counter too high, I'm moving on.  Good Luck!

Larry,

I don't think it's worth it. Most realtors will set you up with buyers access to MLS for properties inside your search criteria for free. This isn't everything, but enough for your needs. Also, the MLS is just one source for finding deals, not really the only game in town like it used to be.

I wouldn't get the license unless you want to spend significant energy as an agent to learn your market and the players in your market.  This can make you a better investor for sure, but it would be a lot of effort too.

Get yourself a good realtor, one that knows the market that you're interested in and one that you're compatible with.  I have a great one and it makes all the difference.  

Good Luck!

Chris

Adam,

Thanks for sharing all these details.  Looks like a cool deal.  

For me, $220k tops unless there is significant appreciation potential.  I own an 8 plex and a portfolio, each doing about $4k in rent with similar taxes, lower insurance.  I have under $200k in each of those, but they aren't as neat as these little duplex money makers.  

Good Luck!

Chris