All Forum Posts by: Devin Hightower

Hi everyone!

So I'm an agent currently helping a friend of mine buy a new home. I have an interesting opportunity to help them out and gain some unique experience in the process. They are having a child soon, and would like to be close to family. There is an abandoned house next door to his sister-in-law that would be an ideal location, but apparently nobody has been able to contact the owner for some time now. So there are a couple of obstacles I'd greatly appreciate advice on, and figure the story would be worth tracking here.

1. Tracking down the owner and convincing him to sell. I've done some basic internet searching and found what might be his current address and phone number. He's a 60+ year old man who has lived primarily in rural areas, and has apparently just stopped caring about the property. It hasn't been rented in years, but it seems as though he's still paying on it and everything. He's owned it for over 25 years, so it may be nearly paid off, and there is significant equity, as the market has over tripled since he bought it. Have you guys ever encountered completely absent owners and how did you convince them to sell? How did you get in touch with hard to find people?

2. Negotiating a price. It obviously won't be the standard negotiating process because the seller is absent and has abandoned the property, and because there is a strong emotional driver for my friend to be able to live next door to family. I know I should try to get him to name a price first then go from there, but what other negotiating strategies might be relevant in this context.

3. Rehab. After talking to my friend, he seems extremely hesitant to undertake the full rehab. Definitely understand, especially with the baby on the way. After setting expectations for what might be involved, he seemed a little defeated and as if it is unreachable. This is where my investor hat kicks on. Should I approach this from a flipper perspective rather than an agent perspective? I figure that might be a win for everyone if the numbers work. I would get flipping experience, I'd likely be able to sell them a renovated property for under market value, and they'd get to live next door to family. Would appreciate any thoughts on that from the community on this plan or other ways to optimize this situation.

Anyways, sorry for typing so much, but just wanted to get this one out to the hive mind. Thanks in advance, and I'll keep you guys updated on how this evolves!

@John Warren I am going to do the math today and see what the timeline for that looks like. Definitely need to flesh the plan out some more, and find a good balance between cash flow and protection. I really just don't want to put myself in a position like many were in the last crash, and it seems free and clear properties is the best defense against a market downturn.

@Michael P. Funny you say that. I started the podcast a couple of months ago and am listening at 2x speed trying to catch up to real time, and the next episode is Grant Cardone's on episode 250. Well timed comment!

Hello everyone!

I currently have one rental property in addition to my primary residence. I'm trying to be deliberate with my efforts to acquire rental properties without exposing myself to more risk than I can handle should the market turn. The idea I'm thinking of pursuing is to purchase two more rental properties, giving me 4 total mortgages, then rolling all the cash flow plus money from my job into one property at a time to pay them off. Each time I pay a property off, I'll buy a new one, giving me 4 mortgages at any given time, but snowballing the cashflow to increase the rate at which I'm paying them off. I would also like to flip houses in between acquiring properties, using the profits to pay off properties faster. My two goals are to get $12k per month in cash flow, then to build to $20 million in assets while protecting myself from a market crash. My wife and I both have decent paying jobs at this point, so this is really a long term plan that I expect to start slow, and I don't plan on surviving off the cash flow in the near future, just reinvesting it. Thoughts on this strategy?

@Frank Patalano Great way to start an awesome discussion! Right now I'm trying to hedge my risk by building an appropriate emergency fund (6 months of expenses) and paying off other debt.

Once that's done though (hopefully within 9 months), I have a rental property that I didn't buy with an investor's perspective that I have to figure out what to do with. It's currently about breaking even cash flow wise, so it doesn't hurt me to hold it, and my mortgage is being paid down by great tenants. But there's about 50k in equity I could convert to cash by selling it, and then use that to fund future deals. I've been wrestling with this decision, and would prefer to sell it within about 1.5 years to avoid capital gains, but just not sure what the "right" decision is yet...

Just want to start out by saying that I'm not planning to actually purchase anything for 8 or 20 months depending on when I sell my current rental property. I am looking for feedback/advice on deals I'm analyzing as practice up until that point so that I hopefully have a smooth start to my real estate investing journey. 

Anyways, I decided to look in an area that I lived in for about 7 months because I have some familiarity with it, and because the market seems much easier to find potential deals in than my hometown. That said, I found a place in San Angelo, TX, and all the info with my analysis is below. Thank you in advance for your feedback!

Address: 433 Koberlin Street

Size: 4 bed 2 bath 1610 sq ft

List Price: $35,000 (Craigslist)

Rehab Needed (w/cost estimate)

Paint - $5k

Siding - $8k

Windows - $3.5k

Roof - $12k

Floors - $4k

Bathroom - $4k

Appliances - $2.5k

Furnace/AC/Water Heater - $16k

Total - $55k

Comps listed (from www.sanangelorealtors.org/mls/map):

825 Koberlin St; 4bed/1bath/1857sqft; $111,900

917 Koberlin St; 3/2/1356; $75,000

1120 Spaulding St; 2/2/1178; $105,000

Comps recently sold (Zillow)

328 Spaulding St; 3/2/1648; $135,000

527 Spaulding St; Unk/Unk/1587; $84,850

721 Spaulding St; 3/2/1403; $117,400

The owner currently lives out of state, hasn't paid taxes since 2014, and currently owes the county $8,119.65. The property is in pretty bad shape, so assuming the seller just wants his taxes paid and to get rid of the property, I believe I could negotiate him down to between $10,000 and $20,000. Assuming my fixed costs are similar to those in J. Scott's post ($17,000), I'm guessing my all in cost would be between $82k and $92k depending on how much I paid for the property. 

Based on the condition I expect the property to be in upon completion of the rehab compared to the comps, as well as the proximity to the Air Force Base, I believe the ARV would be at least $105k but likely higher. I would need to talk to some local agents to get a better idea of the ARV, but I feel as though $105k is a safe bet.

That said, I think I would be looking at somewhere  $13k and $23k in profit. Knowing that, I probably wouldn't purchase the property for more than $15k, shooting for at least $18k in profit. 

Thank all of you in advance for any feedback or advice you can give me. I really want to get a good grasp of this stuff before I start throwing real money at it. 

Hello everyone! My name is Devin Hightower and I'm a new BP member from Colorado Springs. I haven't done any investment deals yet, but my wife and I do currently own two properties. We didn't buy either of them with the intent to keep them as investments, but as of right now the SFR we're renting out is about breaking even as far as cash flow goes, so we're not complaining about the mortgage being paid down by someone else. Right now, the rough plan is to educate myself as much as possible over the next 8-20 months by catching up on the podcasts (currently on episode 100), reading a pretty good list of real estate books I've compiled from Famous Four recommendations and from friends, and surfing these forums. At that point, we're planning on selling our rental property and taking advantage of the appreciation we have seen to give ourselves a decent capital base to start with, then working on flipping houses. While we're waiting for that, I'm also planning on getting practice finding and analyzing deals. I've already found one that I believe is a decent find, but I'll start posting them in the forums to get feedback from all of you as I go so that when I am ready to pull the trigger, I'll have a lot of no-risk learning to back what I'm doing. I look forward to getting to know new people through these forums, and maybe even in person at some point!