All Forum Posts by: David Dachtera

I hear ya - firehose!

There is an alternative that might be more your speed. Forum Terms of Service prohibit me from saying more than that, unfortunately.

Hi, Adam,

I'm going risk sounding like an idiot here - just speaking the truth.

What the folks in my group want - but know they can't get - is 100% of the purchase + rehab cost up to 65% loan-to-FMV (given: FMV is usually higher than ARV) based only on the financial merits of the deal and not on individual credit, with no points and no higher than 12% with payments interest only while holding.

That said, what would be a realistic expectation?

You may want to sell that to an investor. There's too much going on in there unless you're willing to take it on yourselves.

Multi-family - 8 unit. So, you were right to express the value based on (potential) income.

Well, ok. Let's look at your numbers...

Monthly Gross income: $2940

Monthly Expenses:
Taxes: $6140 / 12 = $512
Insurance: $1200 / 12 = $100

So, my first question is:

Electric - does each unit have its own meter plus one for each building?
If so, do you have detail on electrical expenses for the building?
Does that detail include the well pump(s)?

What about maintenance expenses for the septic system and well pump(s)?

You'll want each building broken out separately, then look at the finances of the land purchase for the rest of the property.

There will be more work to do from there, but that at least presents some idea about the compexities of what you're considering.

Find someone locally who can mentor you with this.

I have a saying, also: Learn how to do real estate before you try to do real estate.

Max,

Please reconsider mentoring your friend who came back after two years. Chances are, something in his life has changed. Make clear that you'll waste no time with him and be clear about what you expect from him. If he can't live up to it, then it's his fault - and make that clear to him upon parting ways.

Indeed - that nonsense about raising your credit card limits is just that: nonsense. My investing group has a nationally known credit expert who can explain the right way to go about getting funding either through your own personal credit or credit in your business entity(-ies).

I can't really say much more without violating the forum's TOS, so I'll stop there.

DISCLOSURE: I am affiliated with an on-line real estate investing education provider.

@Matt McCourry,

Does your small company have any equity in its current holdings that you could leverage?

Well, let's do a quick analysis...

1. Why sub-to instead of a short-sale? If you don't know how, then this is a classic example of why you should learn how to do real estate before you try to do it.

2. What is the cash-flow? Remember - the rent has to cover EVERYTHING: PITI and management plus your profit after you establish a cash reserve.

This sounds to me like a case of what can happen when folks go out and try to do something BEFORE they learn how to do it.

I'd look elsewhere unless you're willing to put forth the effort (and likely some "investment") to learn how to do short sales properly.

Another alternative you might not already know how to do is called a "sandwich lease option". Again, if that's a new term to you, don't try it. Get educated first.

This just meant to provoke thought...

A quote from one of my investing group leaders from his noon conference call today, paraphrased slightly:

Originally, he said, "People say they don’t need education, they just need money. If they had education they would have money.”

I'd augment that slightly to say that if folks had enough education they'd know how to find all the money they'll ever need for their deals.

Time to get hip to self-directed retirement accounts and doing deals using private lenders.

Given what's going on in the world right now, folks will be looking to shield their IRAs and 401(k)s from the foibles of the Wall Street Casino. Savvy investors can help them not only do that but also grow their retirement accounts even in the face of what looks like looming financial disaster.

@Alex Chin,

You won't really know until you explore them.

They could be ripe for the picking.

They could be sellers willing to wait for the end of days to get their price.

Time to go find out...