All Forum Posts by: Destin E. Thomas

Hi Peter, 

Yes, so far it's been putting in offers that get outbid by those offers going well over asking (no surprise there), so just starting to look off-market since it's pretty dry on the MLS at the moment. I've been looking primarily in Long Beach, Torrance, Carson, Azusa, kind of all over Los Angeles county as it seems. I'm not picky either, I'm all for deferred gratification and know it doesn't have to be the best deal, but it can't be a bad one either. Thanks for reaching out!

Hey everyone,

I'm in the process of trying to house hack a Duplex in southern California (my first investment property) and haven't been having much luck on the MLS, so figured I'd try BP!

• I'm pre-approved (with proof-of-funds) for financing up to $675k - $700k (depending on the property)
• Credit Score: 790 (average of 3 credit bureaus)
• FHA approved at 5%+ Down Payment
• Looking for units with minimum 2 bed, 1 bath
• Preferably Class B neighborhood (Class C doable as well if necessary)
• Only looking for cosmetic fix-up or better condition (no fixer-uppers)

Thanks!

Hello,

In our current situation for the first property we are seeking, I am the managing partner handling all the prep work and day-to-day operations with an initial cash capital contribution of $20k, and my business Partner, “Joe”, has only provided a cash capital contribution of $50k (no other sweat equity, equipment, etc.).

We have the P&L allocated with myself at 40% and Joe at 60% due to our initial contributions (since I contributed less money), and for each property we plan to own will have its own separate LLC.

However, as part of the on-going business relationship, we want distributions (cash-flow) to be specific to our initial investments for each new individual property we purchase since one Partner may contribute more or less of an initial contribution toward the purchase of each new property.

Ideally, we want the ownership split of the overall business to remain 50%/50%, and depending on any properties we purchase in the future under the umbrella of the business we would like the ability to allocate the P&L distributions per property.

This is because, for example, we don’t want to disrupt the overall 50%/50% ownership of the business, and want the P&L among us to be allocated per property (like 60%/40% or 70%/30%).

Since this is my first Partnership situation, does anyone have any real-life experience with these types of Partnerships and how it’s worked out for you?

Thank you for your input!!

Hi @Dustin Morris!

Yes I agree, the rents weren't as strong in the area as I had hoped as well and the reserve expenses (Repairs/Maint., CapEx, Vacancy) just take up so much of the CF that lowering them any further just wouldn't make sense. Unfortunately I'm "stuck" in California so rent to own wasn't a viable option and LD investing was on my mind, but even so, every way I've looked at it so far just doesn't work (as far as the numbers). Thanks so much for the input, it is much appreciated!

Hey @John Daley!

Thanks so much for your input! Yes I agree, I had started thinking about asking for more of a discount because I would be paying for the new roof and any discoverable repairs, as well as saving her the hassle of doing it herself like you said. Just out of curiosity, I may need to re-run the numbers with more of a discounted price to see what my true “maximum allowable offer” would be to make this work (fingers crossed). And thanks for clarifying the lawn care, snow, and utilities! It always felt like kind of a grey area for me figuring out who should be paying those, so I’ll definitely take your advice on that! Thanks again John!

Hi Alex!

Thank you so much for your response! I think you may be right. I’m going to try to re-run the numbers just out of curiosity (based on Grant H Willcott’s response) to see how close it would get, but I predict this might be a deal that might not work out in my favor at this time. I just didn’t want to pass up a potentially good opportunity (if it was one), but thank you once again and I appreciate the insight!

Take care Alex!

Hi Grant!

Thank you so much for taking the time to go through so much of the detail in your response!

• >  I hadn’t thought about talking to her about getting the place rent ready & rented out before closing to eliminate some of the holding costs, that’s a great idea! I’ll have to re-run the numbers with that scenario for sure!

• >  I will also re-run the numbers by cutting back on the snow removal, lawn care, and pest control frequency as well (she didn’t mention any current “bug” problems, so I just assumed that was a normal expense that a landlord would have to take care of just in case);

• > Not necessarily trying to BRRRR this property, I just included the estimated rehab/repair cost of $23k for the new roof and a buffer for anything unexpected that might come up in an inspection. With the discounted price it has remanence of a BRRRR, but just "normal" fixes (besides the roof CapEx) and anything cosmetic I would estimate at this time (and thanks for clarifying the equity also!);

• > My apologies, I forgot to mention the mortgage payment and cashflow/CocROI. You pretty much got it almost exactly anyway haha. The Rental Property Calculator gave: Mortgage (P&I): $787.50/month; negative $464/month cash-flow; and negative 5.26% CoCROI.

Thank you so much once again for the help with that! Still a big learning curve on my end, but it’s those baby steps that count hahaha.

Thanks Grant and take care!!

Hello,

Rookie investor in need of some guidance with regard to a potential long-distance rental property in Kansas City, MO. My aunt is going to be selling her Single Family Home (currently off-market) and wants about $220k-$225k. It is in good condition and she says just needs a new roof (I’d still get it inspected), and given the closest comps in the area are about $260k at minimum, I inquired about buying it from her (for both the discount and the immediate equity of about $35k-$40k).

This would be my first long-distance rental property (and my first property in general), so I’ve run the analysis numerous times and just can’t seem to make the numbers work (even with the discounted price). For those of you experienced investors (and even better anyone based out of Kansas City, MO or with experience investing in this city), do you have any opinions/suggestions/critiques about the inputs I used for my numbers (below)?

P.S. I used a lot of conservative rules-of-thumb figures (given that I am a rookie) in my numbers obtained from Brandon Turner’s books, as well as from podcasts, webinars, blog posts, and YouTube videos of other investors, until I gain the experience to know how to calibrate my numbers organically.

P.P.S. No seller/owner financing because she is getting too old and sadly might not be around much longer, so she's not going to want to postpone cash payout.

If anyone can provide any input, it would be very much appreciated. Thank you!!

Purchase Price: $225,000

Closing Costs: $5,625

Misc. Costs: $2,500

6-month Cash-Reserve: $9,204

6-month Holding Costs: $6,000

Approx. ARV: $260,000

Approx. Repair Costs: $23,000

Down Payment: $56,250 (25%)

Interest Rate: 3.8125%

Points: 2%

Loan Term: 30 Years

Approx. Gross Rent Income: $1,743

Property Taxes: $277/month

Landlord’s Insurance: $238/month

Repairs & Maintenance: 10%

Vacancy: 8%

Capital Expenditures: 10%

Property Management Fees: 10%

Electricity: $0 (tenant to pay)

Gas: $0 (tenant to pay)

Water & Sewer: $0 (tenant to pay)

HOA: $33

Garbage: $10/month

Lawn Care: $100/month

Pest Control: $50/month

Snow Removal: $50/month

My business partner and I are starting our joint venture to purchase our first rental property investment, and we are in need of an attorney (preferably with experience working with investors and/or invests in real estate themselves) to draw up a Partnership Agreement, as well as develop a working relationship going forward to assist us with any potential legal matters in the future with regard to the properties we plan to purchase over time. Thank you!

- Destin E. Thomas