All Forum Posts by: Devan Mcclish

@Chad S. Those quads barely meet the 1% rule. They are new so your expenses will be lower; however, your monthly payment at 427k financed at 5% interest amortized over 20 years makes your monthly payment at 2817.99. meaning you would need to fill three of the four units at all times to cover the monthly payment. If you don't, you will lose money on them monthly, and if you don't have cash to cover those payments, that's taking on a lot of risk. If you house hack and live in one of the units that means all three units need to be rented for you to cash flow positively. You're also paying market value for these properties. Because quads are based on comparables and not income, if the market in your area declines at all, you're upside down in your investment. Banking on appreciation is pure speculation. What I would do is try to list all of the quads that are built in that area, take the commission and go find a multifamily unit that gives you 2% rent and a 10 cap rate or higher. This investment seems kind of risky in the long run

just my two cents

@Sherrie Pickens hard money is probably not a good option it's meant for a short term loan usually around 6 months. If you're buying and holding that's not going to work. Buy and hold private lenders are not easy to come by because it takes a while to get their money back. You should get bank financing for the property if you can't because you don't have the money down it requires then try to wholesale it to another investor as long as the numbers work. If you want to be apart of it, develop a relationship with buy and hold investors in your area and ask one of them to split the profit and offer a partnership 

@Chris Melton FHA usually only requires 5% down and they recently lowered that standard as low as 3% down. I would try to find a quadplex out there in your area. Live in it and rent out the other three so you can qualify for the FHA loan. Make sure you are building credit as well throughout the process. If you have decent credit you can put less money down and still have a good interest rate below 4-5%. You can also avoid PMI.

Good luck on your journey!

@Ricardo Acevedo check your state law about the earnest money just to verify in my state it's not mandatory. 

@Stephen Chatto People typically use transactional funding here that I have seen used two different ways. Sometimes lenders use just interest on the purchase price so 100k at 2% interest. Or they attach points. I've seen as low as 1 point to as high as 3 points just depending on how long you hold their money. Actual closings costs are pretty low here. Our REIA gets discounts at certain title companies. So it's not as bad as you probably have it

@Ricardo Acevedo earnest money is not mandatory. I never include it in my contracts unless the seller asks for it. And you may find investors like @Stephen Chatto who don't use that formula as a guideline to buy deals. I personally don't look at deals that don't fit that formula because there's too much risk involved for me as an investor. Almost all investors I know in the buy and rehab side in my area use that formula. But I agree talk to investors in your area and see what they prefer and where they would like to get deals at.

Double closing is always cleaner. Most homeowners don't get upset with you making 5k on the deal but once you make double digits they get upset that you didn't give them more for their home 

@Brandon Siewert that's one thing that is making me hesitant on this property is having to renegotiate all leases with the tenants. 

@Jeremy Tillotson the park is post 1978. I'll definitely send you a pm if I decide to pursue it.

@Jeremy Tillotson yes, I haven't seen the properties yet so I don't know how much deferred maintenance there is. I was looking at 5k a unit just as an assumption to run the numbers. Are you a mobile home park investor? 

@Thomas Quinn yes it is city sewer and water 

I agree with @Christopher Goldie. A wholesale is ARV x .70 less repair costs less your wholesale fee = MAO. Check your numbers make sure they meet that formula before you put it under contract and find a buyer. You want to build a name for yourself as a wholesaler who brings GOOD deals to buyers not the other way around. My advice is after analyzing that, just put it under contract with contingencies to get out (inspection, etc). That protects you from your buyer under cutting you at all. Also, don't put any earnest money down unless they ask for it. There is no law saying you have to, so I wouldn't unless you have to. If you're making 10k on that property I would double close. Lastly, to get better at estimating rehab costs buy and read J Scott's book on estimating rehab costs, it has helped tremendously in estimating rehab costs

Hope that helps @Ricardo Acevedo