All Forum Posts by: Christian Belleque

talk to Matt Sewell.  he's the man for Spokane.  :)  i do some wholesaling in the area too.  feel free to drop me a line.  

Have you heard BP Podcast #86 with @Cory Binsfield. He was awesome, and discussed some of the details you are sharing here. If I were you, I would be very interested in his opinion on the matter.

@Christian Belleque 

I am not sure where I got the idea that you would be living there (maybe from one of the other posts talking about you living there which might have meant the area and not the duplex itself) This solves item number 1.

item 2. so you are not renting the duplex by room ($600) but rather as unit 1 and unit 2.  This will be good for common area maintenance (security deposit) but you will need to find groups to rent to rather than individual's (this might make you pool of potential tenants smaller) something to keep in mind.

item 3. your statement is misleading "This is true for most students (frat guys, football players) but in my experience at many different houses in the area that are rented to college students, they generally take good care of the property if the owner takes good care of them and the property as well. If I left them a dilapidated house, they wouldn't take much pride in it. Another thing I would insist on is having females live in the house because they are generally less messy and less prone to parties every weekend." On one hand you say this is true for most students, and then you are applying your window of experience which is different.  In a previous post you have also stated that you are going to do minimal fix up (paint and minor landscaping) because it is for college kids.  So how much pride are you putting into the unit that you are expecting them to return to it?  If you are going to insist on having females in the unit, you are again shrinking your potential rental pool.  I agree with you that female roommates are better keepers of a unit I am just not sure how you then screen your applications or advertise (Only accepting applications with at least one female occupant?)

I am happy to see you really looking into this, I am just playing Devil's Advocate here to make sure you have thought of as many things as possible.  At 300k  do you know where you are going to come up with the down payment?  The closing costs? The fix up money? The holding costs until rented?

Cool, LB State works too. I think there is way more wiggle room in LBC as compared. 

 Price is only one factor, terms are critical as well.

If you can get a duplex in Fullerton for 300k that could be a great score. The market is rapidly softening though and you will see sellers willing to take less very soon is my prediction. The huge appreciation wave is over for now IMO. You could do some driving for dollars with your 300k see who wants out of the next roof replacement etc...a burned out older mom and pop LL would be ideal.

@Christian Belleque Some things to think about:

1. How do you fair with other people, strangers? You have lived with team mates which is a completely different dynamic than living with people that respond to an add on craigslist. How will you be able to keep business separate from the living relationship?

2. You stated 6 total rooms (4 in one 2 in the other), you are going to live in one room so 5 left.  How are you going to do common area maintenance? If every person is on their own lease for their room ($600/month) how will you hold each separate tenant responsible for areas like the kitchen, bathroom, living areas? Especially if you have tenants leaving at different intervals?  Or do you plan to really have groups rent the unit as a whole unit and not individual rooms?

3. When I was in college I lived with teammates first and then friends after a couple of years.  As the more responsible person generally out of the folks that I lived with I can tell you that there are a lot of people out there that don't care one bit about "your" property and they don't know how to take care of something they are technically borrowing for a price.  Some of these kids have never been away from home and don't know the first thing about taking care of a house (their parents have always done it for them).

4. You keep looking for what others will pay for this property, so I will ask this... What would you pay for it and why?  What do your numbers tell you? 

Potential rent (5 not 6 rooms)- vacancy (this can vary based on how you do your leases basically is it going to be a vacant room or a vacant unit (up to 4 rooms in one unit))-all your expenses (Maintenance, insurance, taxes, utilities, cap reserve, advertising, & PM (even if you are doing it account for it))- Debt Service = Cash flow.

Quickly doing some back of the napkin numbers if your rent is 3000 a month, 10% vacancy, using the 50% short cut for expenses, and using a 30 year loan @ 4.5% you are looking at a purchase price of 335,000 if you just want to break even on your investment (meaning zero cash flow).  If you want to make 10% on your money invested (money in vested is down payment, closing costs (I am assuming 4% of purchase price), and Up front repairs (I am assuming 2.5% of purchase price) you are looking at a purchase price of around 217,500.  Again you need to run the numbers and find out what you are comfortable with when it comes to a return. 

The first thing I see that is missing is Motivation. Is the seller motivated? Then ask yourself if this is such a hot market and such a great deal thats a cashflow king why are the sellers who are investors selling it? I buy all my properties for 50% of ARV. Is this $399k full retail? Here's one way you should look at it, you mentioned you might wholesale it but in order to do that you'll need to be in it at the right price. The price is $399,999 (call it $400k) well my experience tells me List price and Sold price are rarely ever the same so the average retail negotiation from a listed property is 5% so thats really retail at $380k How much money is needed for repairs? Call it $20,000 so back that out of the price $360k closing cost is $7200 Equity is minimum of 30% how many months til you get it fully rented, you still have to make a mortgage payment rented or not. so say 1 month on the positive side of live is still $2000 I would make a offer at $236k