All Forum Posts by: Colby Litzenberger

Hi all - 

I have a private lender that told me to write out a proposal for her to be my bank on my first investment.  I have a question for BP.  I would like to use the private money to purchase the property and fund part of the rehab.  I am wondering how I structure the deal since the backing for the loan will be the property?  

Since I will be paying cash for the property I will need that on hand in order to make the purchase, but I wouldn't ask her to give me any cash if there isn't a property to back up her loan.  I know I am over thinking this, but I can't get it straight in my head.  I would appreciate if anyone could help a newbie out...

Welcome to BP @Sahvana Stapleton ! I just recently joined and have been learning a ton!  I agree with @Kristin Whitaker the podcast is a must.

A few evenings ago I went for a run to check out a property (Ken Horst would be proud...).  I was standing in front of it and these two guys next door yelled "don't buy it" and started laughing.  I started chatting with them and it turns out they had moved to Spokane from California a year ago with the goal of real estate investing.  They have a bought a few properties over the last year and were really knowledgeable about the buy and hold market in Spokane.  I talked with them for over an hour.  They said anytime I wanted to chat real estate to stop by.

Just thought I'd share. It is pretty cool once you change your focus how opportunities and experiences start surfacing. Anyway so far I am enjoying what I am learning on Bigger Pockets. Thanks to the whole community for being such a great place to learn about REI!

Thanks for the feed back guys.

@Jon Holdman At this point I would be taking a loan for at least the mortgage.  Depending on the scope of the rehab either loan or cash for that portion.  This might be a dumb question, but when you say "significant" renovation are you talking if I am adding bathrooms and moving walls in the basement, for example.  Or does a kitchen gut and rebuild count as significant?

@Nicole Pettis Thanks Nicole! It is encouraging to hear someone else doing the same thing.  I can understand about having to have patience and do a ton of research.  Especially in my area.  The decent deals get snatched up real quick.  One thing I am looking to take advantage of is the Homepath program's first look period.  I will have 15 days access to a property before investors get a chance.  There are some decent houses that come through that program in my area.  Are you looking to stay two years as @Jon Holdman suggested?  That is definitely something I will be considering.

All

I am starting to explore the idea of buying a house, living in it and flipping it a year later.  I have a friend who said he would be willing to live in a construction zone and pay a small amount of rent.  This would help with my holding costs, which are lessened even more since I would be living in the house as well.

I would self perform a large amount of work (I have residential construction experience), and would hire out anything I am not comfortable with. This scheme allows me to get into a house with less cash out of pocket and gets me started in REI.

I have a couple concerns with this scheme. One would be finding a property that has profit potential while being currently habitable, do able just going to be harder to find the right deal. My other concern and question for Bigger Pockets is the one year time frame. Is one year too far out to be predicting ARV? Should I just be amply conservative?

If anyone has ever done anything like this I would love to hear from you!

Thanks everyone!  I agree Spokane is nice because of its lower cost of entry.  However I am quickly finding that rents are correspondingly low which makes it plenty tough to find deals that pencil out.  Guess patience will have to be key here!

I also agree that one has to watch out which neighborhoods one is considering in Spokane.  There are a lot of less than desirable areas around.  We have it all in Spokane...

Thanks @Kristin Whitaker ! I'm sure I will have some questions down the road...  Are you or @Christopher Hunter members of any investor clubs here in Spokane?  I would like to get in front of some local investors.

Thanks guys.  @Christopher Hunter good to see another Spokane guy on here!

Hello Bigger Pockets 

I guess this is officially my 2nd post.  My first post was about a potential deal in Spokane, WA.  I ended up passing on the deal and wanted to post a real introduction and start being more involved in the community here at Bigger Pockets.

I am in my late 20's and have recently moved back to Spokane, WA after living in Seattle for several years.  About right when I moved back I read the famous Rich Dad Poor Dad which, combined with affordable home prices in Spokane, got me excited about real estate.  I spent the next several months paying off my student loans and saving up for a down payment for a duplex or multi-family.  

Currently I am just educating myself in real estate by reading whatever I can find on bigger pockets.  I have been enjoying gaining knowledge from everyone on here and look forward to when I can start offering my own.

Hi All -

First post. I have been trolling around for awhile, but have an interesting deal in front of me and want to get the communities advice.

My landlord has offered to sell me the building I live in. It is a converted house with 6 units. So it would require a commercial loan. I do not have the cash required for a down payment. However, the seller really likes me, and she likes deferred payments so she is willing to work with me.

I talked with her last night and she seemed open to the idea of her carrying a loan amortized for XX amount of time with a balloon payment in 10 years.

I want to run some numbers by you guys and see what the consensus is:

Financials are as follows:

- Taxes, utilities and insurance - $825/Month.

- There is coin op laundry that brings in about $40/mo.

- Rents (with a conservative projection of basement unit) = $3230. Rents are low for the area. One tenant hasn't had his rent raised in 3 years.

- Building has a good roof, and paint is probably 5 years old.

- No central heating or air conditioning.

- Very stable neighborhood for renters.

She said she will list it for $350k. I am going to offer $300k on the basis that she has no Realtor fees, it needs new windows, and the basement apartment needs a rebuild (last tenant was an elderly lady/hoarder, no major damage, just filthy and needs new floors).

My thought is that I offer a 30 year amortization at 5% with a balloon at 10 years. No money down (she likes the idea of me doing some structural engineering for her on her next house). If I run the numbers on that, using the "60%" rule since I would be my own, on-site manager, and I will be doing my own maintenance for at least the near future, it cash flows $367/mo at current rent rates. My only cash in the game will be for the rebuild of the basement. Which I am projecting will cost me $6k since I am going to self perform all the work.

So my ROI is 73.5%/yr. My thoughts are acquire the property. Renovate the basement, and keep the house for 5 years. At that point decide if I want to sell it and pay the seller off or keep for the long haul and hope interest rates aren't too bad in 10 years when I have to finance through a bank for the balloon payment.

Do you all think this is a fair assessment or does it look like I am reaching because I want the house? If I left out some pertinant information let me know

Cheers!