All Forum Posts by: Dave Chapa

@Jason McGraw

Most sellers wont be open to giving your access to their records until you can show then you are a serious buyer. 

Get your approval letter from a lender. 

Offer an LOI.

Once the LOI is excepted, then do your due-diligence (walk every unit and audit every lease). The due-diligence is where you will find all the skeletons.

I have a Home Depot account under my LLC. The last personal credit report that was pulled for a property bought outside the LLC did not show the HD account, not sure why?? The HD account has carried up to 20+k at one time and averages $400+ monthly.

@Vijaianand Thirnageswaram

I feel the same way. I would not leave my job because, A. I like my job, and B. to replace my income it would take 5 time what I own now. I will use my job to continue to fund and build my RE portfolio.

So, at this point in my life it does not make sense for a career change and loss of wage because my goal is to retire at 55+. When I do retire, I will go into the full asset managing mode.

I was blessed to find a job I enjoy doing so I don't see it as a rat-race.

As others stated, expense are low. make sure you account for every expense. 

cap ex: We keep a separate account just for cap ex funds. The amount will depend on the age and condition. I run mine with $350 a door.

"The only thing that scares me is that it last traded in 2015, which is pretty recent." Don't worry about that, they could be trading up to a larger MF, you never know. 

Focus more on the due-diligence after the LOI. Pay to have professional inspectors, pluming, electrical, etc... It's better to walk away with 2 to 4k lost then buying something you thought was a good deal. From 1960s to 1970s contractors were using aluminum wire. Verify if the wiring is copper or aluminum. If aluminum, have it check to see if it up to code.

One of my investment friends didn't have the main plumbing lines check during due-diligence and later found a major issue, it cost 40k to fix. On a small 60 unit, that was a huge lost.

Get a team together and walk (inspect) every unit and check every lease.

Vacancy: You can't ignore vacancy rate. If you add in, say 8%, then your cash flow is down to $136. Check your area and see what's the average.

Rents: Are you asking for more than market rents? You should run comps in the area to determiner price per squire foot.  You want to offer best price and best product.

Management: Are you self managing? If not, you need to add in the cost. If you are then, can the property afford a PM if later you decide it's more work than you can handle?

Lat house I sold I paid the fee. It was $50.

Like Michael posted, expenses seems very low. Without more details it hard to say. 

I have been a 100% commission sales consultant for the last 19 years. So, I value other people's time and understand why it would be hard to spend a vast amount of time teaching RE with nothing in return. 

We joined and found out It was well worth the money we spent; a small price compared to what we gained, to learn and have mentors walk you through the process. It also helps as a new multi-family solo buyer to have the LU education backing you. Can you do this without LU or guru's? you bet! However, that wasn't the road WE wanted to take.

Programs like UL aren't for everyone, and yeah, I felt the same way as you when I went to the two day. But fast forward to today.  After 2 years we have achieved a nice portfolio, and the money we paid when we joined two year ago was a drop in the bucket compared to what we have gained.

I have used the same agent over the last 22 year when buying a new home (my personal home), She has brought great value and is worth every penny. 

As for investment's , not so much. My personality is the loyal type, once you get in with me you have by business long- term. But I had to change over the years, and now I will buy from anyone that brings a good deal.

The last two properties I bought was without an agent, owner sell. I found them and I negotiated the price, there was no need to bring in an agent at that point.