All Forum Posts by: Christopher Juntura

Quote from @Chad Blankenship:

As a new investor, I like others am looking for hard money lenders. I am finding deals but after one of 2, the 20% down will be tough. I have a great w-2 job and credit. Just looking for ways to get going and scale. Any advice is appreciated. 

 I've come accustomed to running the numbers... really boils down to make sense of the numbers... 20% down can come from anywhere... your own equity, other peoples equity, seller finance etc... the key is action.

Quote from @Isaac J Mork:

Wondering if the strategy is to do interest only loans on commercial multifamily buildings? Principal payments aren’t going to be tax deductible. Or are you just happy your tenants paid like 90k of principal and all you gotta pay is $10k in taxes. I mean that’s like a 9x return right there.

But if tenants pay principal payments probably could cash out refi faster. 

But as we move down the amortization schedule 10-15-20 years. It’ll create more taxable income. 

I may have to discuss with a tax advisor. How to get the taxable income from multifamily to be 0%.

I've done a bunch of research in the matter and from my understanding you'll always get taxed one way or another. Ordinary income tax from rent and depreciation. Might get some tax shelter from deductions and your company "losses" but I'm not an expert... the non payment of the principle is only a strategy for the short term imo.

I think its important to have goals like replacing your w2 with passive income, and things of the sort. My 2 cents... have a strategy that accounts for taxes and achieve your financial goals.

I'm negotiating a seller finance deal with a 4/1 house that will rent from 2500 to 3000. Along with it two .6 ac lots.

With the codes I can build 2 units and an ADU on each lot.

the numbers....

5 year term

6.5%

interest only payments

total cost $744k.

down payment (still negotiating)

house cost 450k

estimated cost to build 605,800

interest monthly 4030

potential rent income after construction $13500

taxes are 21.37 per 1k valuation

roughly 1,080,000 

roughly 1923 a month

Usually id leverage the land as collateral to secure a construction loan. At this point I don't think I can do that. Trying to make sense of the deal but I'd like to hear your thoughts on the deal and how to make it work or if I should walk away.

I was at a Meetup the other day and they had asked me about if I had countered anybody on my rentals who wasn't supposed to be there and when you call the police they presented a fake lease to the police to prevent them from being kicked out. Apparently this is going on specifically in short-term rentals and out in the West Coast, which got me thinking how is anybody protected against the scams? And how do you deal with these things if they were to happen?

I've done 2 deals in my real estate career and both have been seller financing.

Both deals were done with my aunt whose 79 and just wants out. She had non paying tenants on 2 single family houses and it was costing her. I had been managing a 6 unit rental for my parents so I was familiar with the eviction process and decided to help my aunt. I filed the notice to quit and then the FED and after some conversations with her what she wanted to do with the properties, she wanted to sell and not worry about it, so I approached her with obtaining the properties and paying her a monthly payment for them for 30 years and I'd cover all the costs to close and eviction of her tenants.

This was fairly easy cause I was talking directly to the owner understanding their wants and needs and came to a win win scenario. 

fast forward to recent experiences.

I've been using an agent, found properties I liked and wanted to approach the seller with terms / seller financing. 

Not the easiest thing for many reasons.

My agent had no experience with this type of financing so approaching the other party was difficult and all 10 properties I had asked to do any seller financing was shot down.

I had asked to see what the conversation looked like and it wasn't the best, to sum it up they looked like...

My agent: my client is interested in the property and is wondering if the seller was interested in seller financing. 

Seller Agent: Doesn't seem likely I'll ask though.

outcome: No.

So all 10 times this was how my agent approached the other party about seller financing and I'm not blaming them but I can't expect anyone to be convinced with this approach.

At this point I had a sit down with my agent and explained to them that their approach isn't likely to work because it didn't make things inciting for the seller.

They discussed that they were always told not to mention price and to be vague.

I had asked them if they were willing to give a change of strategy, I would be willing to work with them on some deals.

One of the things we talked about were operating under a win win outcome. The selling party would get a price where made them happy and we would secure the property. The price would be the hook where it would get the seller's attention.

One of the practice sessions we had involved how to bring about seller financing. Since we would be working with agents keeping things simple so the message wouldn't be lost in relaying messages from the buying party to the selling party.

my agent: I've got an interested client whose willing to meet you at your asking price, they would like to discuss the property further either over the phone or in person.

Just this simple change got us to another conversation.

How the one following conversations looked like.

@ The property in person meet up.

Me: Really like the property, tell me more about how you got it, and why you are selling?

Seller: I bought it a while ago looking to retire, do more fishing and relax.

Me: Sounds like your looking for mailbox money while you enjoy your life by doing things that interest you more. Sound about right? 

Seller: Exactly, I spent most my life working...(I'll save you from the whole background story, but they're just shifting their focus).

Me: I see where you're coming from, thats what most people want but don't always get the opportunity to do. I want to help you have that kind of freedom and I think that if your willing to work with me, I can meet you at your asking price. 

This scenario is much better than before where we weren't having future conversations. 

This deal is still being discussed but its leading to creative financing to some form.

Id love to hear about your experiences with approaching seller financing, working with agents or sellers. Also any helpful advice to bringing up seller financing, closing the deal or getting to the next level of the conversation could help me or anyone interested is always welcomed.

Thanks in advance! 

Quote from @Eldon S. Bailey:

I would like to run an analysis on a 6-unit that I was made aware of (for education purposes), but I don't see a calculator for this.

it is a seller finance, interest-only three year term. I don't see this option on the rental property calculator.

I think that it would be helpful to understand the numbers your looking at.

Purchase price
Taxes
Cost that tenants aren't paying for.
Monthly income minus interest costs minus fixed costs minus any other costs.

looking for whats the cash flow look like, or is there any equity. Also what type neighborhood and whats the market look like. So many things to consider.

Also the costs after 3 years with a refinancing.

More about the cash flow and benefits of having the property to really understand if its a good deal or not. 

 These are just the basic questions I would want to know before knowing if this would be a good deal or not.

Quote from @Scott Trench:

That's one way to respond to it, if you are highly confident in your other numbers. 

 I honestly don't know TBH. I'm looking at the deal and and I'm consuming a lot of content and trying to figure out if it's actually a good deal. It's in an okay neighborhood, I want to say like a C to a low B, not a lot of nice houses near by, but its walking distance of a YMCA, shopping center and the downtown area. Schools are close by and there is a major employer of the state in town. I own a rental next door so its convenient, but I'm trying to not jump on every deal. I don't think I'll be getting too much more than cash flow from this deal, but I always welcome other people's perspective, so thank you Scott for your time to helping me!

Quote from @Scott Trench:

Biggest missing piece for me is that there is no management expense baked in. Always assume you have to pay a property manager, long-term, when you buy a place. Some day you may be forced to move and can't self-manage. If that happens, your analysis here says you are negative. 

 Great thank you for your help, would I try to negotiate a lower price for it to makes sense?

Looking at this deal and I'm still trying to figure out how to work the tools, but it'll need work eventually, but the whole place was renovated within the last couple years. If anyone can help me look at this and see if I missed anything or could tell if this was worth buying.

I already have a single family home rental (next door)

My goals are to increase my doors, I've heard that I should be looking more into cash flow vs appreciation.

Happy to provide more info if needed to determine if this deal is the right one for me.

Thanks in advance! 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Laws differ from state to state, but I would go through the process of 7 day eviction, Forcible entry and detainer and abandoned property( They'll have 7 days to contact you). This process will prevent any legal issues for you, when/if they sue you,  and if these steps weren't followed it could mean a big pay day for the tenant. Check your state laws and consult with an attorney if your unfamiliar with the process.