All Forum Posts by: Charles Kagahastian

We have buyers, but no one pays all cash for a building unless you need to 1031 or something.

I'm in New York.

It is not an REO, there is an individual owner. Old school guy, kept his building immaculate.

Hello all,

So here's the situation. My partners and I have come across a number of 40+ unit buildings at a discount and I have buyers willing to move at prices that make all parties happy. The only obstacle now is what strategy does one use when wholesaling buildings?

Can you assign?
Can you double close?
Can you do a Land Trust?
Division of Proceeds?
etc.

Keep in mind however that one particular building we have that we can move the quickest is a HUD building. This requires HUD eligibility requirements. We're working on finding HUD buyers now and we have someone working on finding out how to qualify some of our current buyers.

The main question is what should our wholesaling exit strategy be for a 40+ unit building?

My team and I will be using Land Trusts to wholesale properties. how much does it cost in attorney fees to set up a land trust? and sell a land trust? I was quoted $5000-$7000 to handle all the paper work. They give us a land trust worksheet that we fill out with the necessary info to draw up the contracts (front end and back end). and from there they handle the rest all the way to closing (with our end buyers).

What do you guys think about the price?

Charles

i feel like there is extreme upside in the rents. Rents could be raised to about a $1000 per unit with some improvements and it'd still be below the market rents in the area. I feel like an experienced investor would be able to bring this property to its full potential. The guy who owns it doesn't know what he's doing really.

There's big development in downtown jersey city. This area is not as nice as downtown however.

If I was looking at this as if i was gonna keep it i would project out 2-5 years and within 2 years i could raise rents right below market and make this prop. run smoother and bring in more money.

say i brought rents to 1250 per unit. where market is around 1400. I'd increase scheduled income to 75000 and if the rule of thumb half of that goes to expenses i'm left with 37500. The cap rates are currently between 4-6% because of the huge condo boom in downtown jersey city. If i sold at 6% cap rate with a 37500 NOI i'd sell for $625000? Am i wrong in assuming this?? Am i not being realistic at all?

"The difference between the return assuming 100% financing (which we know nobody gets these days) and your actually financing is the return on your capital, not the return from the property."

- written by Jon -

Jon, can you explain this statement. I feel like it's very important and I don't quite fully understand it. Thanks for all your help guys!

Jon,

I would be assigning the contract. I have an options contract revised by my attorney.

Thanks for the reply. The owner is charging below $900 on average per lease.

Prior to Sept '08

Unit 1: $910.84
Unit 2: $576.52
Unit 3: $600.56
Unit 4: $837.16
Unit 5: $806.52

Starting in Sept '08

Unit 1: $937.25
Unit 2: $593.23
Unit 3: $617.97
Unit 4: $861.43
Unit 5: $806.52

I just found out it is rent-controlled...

Jon, would you be so kind as to explain a little more how you calculated your break even.
The buyer would be coming in all cash so his cashflow would be above the $100/unit/month rule.

Any help would be greatly appreciated. Thanks!

Charles

Also, one of my buyers wants a cash flowing property and was wiling to pay $200,000-$300,000 for a 2-3 family. This is a 5 family...

hey everyone,

so i went to go see a property in jersey city, NJ on sat. It was my first walk through with a property. It was an amazing experience for me. But I wanted to run the numbers with some of you guys because I might be too close to the property. I need an objective view :D

Income and Expense Statement 2008
Total from rents $45,118.40
Expenses: Mortgage=$3,261.52
Homeowners Insurance: $4,200.00
Electric Bill: $267.08
Water and Swear Bill: $2,456.00
Heating Oil: Oil City: $2,185.20

Its a 5 unit building coded as an apartment.

This the numbers he sent me. And from what I've been researching the rent average for the area $900-1200.

The owner said he owes $330,000. He said he wants his initial investment of $113,000 back. He bought it in 12/7/2006 and I dont think he put in 113,000 given the amount he's had the prop and how much he still owes. he could have just been inflating his initial investment because he knows we'll shoot low. We are getting his mortgage statement sent to us. Motivation: He lost his job.

He had it appraised in dec of 08 for $550,000. Caps in downtown jersey city are 4-6% because of the big condo conversion boom there. This prop is at 5.9% cap rate with the current NOI and appraised price.

I have 2 buyers lined up who are coming in all cash. What do you think I should offer and what should I sell to buyers for? I was thinking offering $360,000 in hopes of negotiating at somewhere around $380,000 and selling to buyers at $400-425,000. Thanks in advance for any info.

Charles

anyone else with input on how this is possible?

taz,

do you know NY Queens' legal publication?

I went to the New York Queens County Records Office to get a Lis Pendens list for my postcard marketing campaign and I was shocked to hear what the clerk had to say.

I was told that a couple years ago too many people were coming to the QUeens County Records Office looking for Lis Pendens that they now sell these lists to Big Companies... Essentially Lis Pendens are no longer kept at the County Records Office.

Is this correct? Is this even legal? Public Records such as Lis Pendens should be promulgated for the General Public to at least view... Am I asking the clerk the wrong questions? Please help. How can they do this?

Thanks in advance for any help.

Charles