All Forum Posts by: Cory Deeter

@Kennesha Powell, LOC stands for Line of Credit.

@Kennesha Powell, I used an unsecured line of credit with a credit union. They required that I assign a term life insurance policy to them for the amount of the LOC, but that wasn't a big deal. Frankly, I needed to buy more life insurance anyway so this forced me to do it which was a good thing. You may want to call around to a few credit unions. I made the mistake of applying for an unsecured LOC with Wells Fargo and they would only give me $35,000 which I didn't think was enough.

My advice is to run the deal by one of the forums on BP, get their feedback, and trust their judgment on the quality of the deal.  The collective opinion of the group is going to be way more accurate than a newbie like me agonizing over a bunch of deal spreadsheets trying to determine whether or not a deal is good or not.

@Ray Dipasupil the house was built in 1947 and is a little over 2,100 SF (they converted the attic to a bedroom).  

@Nadia Bombino the manager had bought a much larger and more expensive rental unit and needed the cash.  He and his wife bought the place when it was foreclosed and did the renovations.  It was their first rental so my wife and I thought it would be a good starter for us.  

After talking about it for years, my wife and I finally took the plunge and got our first rental (3/1 SFR). We bought the place off market from the property manager who is our neighbor. The place had tenants in it when we purchased it and they recently renewed their lease so I've got them for at least the next 9 months. Since we're new to this and we both have full time jobs, I didn't want to manage it myself so we negotiated with the seller who is the property manager to manage the property for the next 12 months at 5% versus his standard of 10%. The inspection came back with one electrical item that the seller fixed.

List price $50,000

Selling price $48,000 (unsecured LOC @ 4.5%)

Seller paid closing costs and electrical item noted on inspection

Lease and security deposit transferred to us

Property management fee discounted to 5% of rent for 12 months

Ten day close

Rents for $750 / month

Next up is to do a delayed financing transaction to replenish my LOC and move to my next deal hopefully within the next few months. It feels good to finally have get my first deal done.

We worked with another realtor to determine comps and it seems like the asking price is in line with what the market is paying. The Cash ROI is coming out to be 9.75% based on actuals (and includes a CapEx reserve as well as a maintenance/repair reserve).

• Tenants have good payment history, 
• basement was recently waterproofed, 
• roof is less than 10 years old, 
• windows are 10 years old, 
• water heater is 4 years old,
• furnace is 10 years old,   
• painted inside and out last year

He agreed to let us do a formal inspection by a professional if we make an offer.  

We're hoping to drive by it this weekend and determine if we'd like to make the offer.  Thank you to everyone who weighed in on this.

Stay tuned!

I've got an opportunity to purchase a SFR in midtown Indianapolis area from a neighbor who is looking to sell it. The neighbor owns a local PM company and has been managing it for several years. He and his wife are looking to buy a bigger rental property and need the cash so he's offering to sell it. The property has been consistently rented for the past two years and the tenants just signed a renewal for another 12 months. The property rents for $750 a month with tenant paying all utilities.

His wife is a realtor and is willing to sell it off MLS for $50,000. I haven't had another realtor pull the comps to determine if that is a good price or not, but I will do so. I've got my financing lined up and ready to go so I'm in a good position to buy it.

I'm looking for the BP community to help me through this process by telling me what questions I should ask of the seller to make sure I'm not stepping into a terrible deal.  If you were in my shoes, what questions would you ask the seller?

@Jerry Padilla

Just to clarify, you're saying that I could use cash to buy the house of 90k + 3k closing costs and then turn around let's say 30 days later and do a delayed financing transaction for 75% of the LTV (assuming the property is a SFR) which would be $69,750 in this example?

Thanks for the advice @Jeremy Hunter!  I've got a realtor who owns her own brokerage that lives in my neighborhood and her husband owns a property management company so I think I will talk with them and get their input to see if they know of any deals or trustworthy wholesaler. 

@Jeremy Hunter, I am seriously considering going the route of a wholesaler. Is that the way most people find their first deal? I need to find some wholesalers in th Indy area. I did a search on BP and found some local wholesalers so I'm going to start reaching out to them. 

 Thanks for the feedback. What I had meant to say was that I am setting my sights on a $15k - $25k profit but when I run into unexpected expenses or problems that eat into my profits, I will still consider the deal a success in my book if I can walk away with $5,000 more than what I put in.