All Forum Posts by: David Morrow

@dan n. - I did get one referral, but I never called the agent after taking a look around the market. I just didn't see any of my desired property type around. If you want to send me a message, I'll get that name and number over to you.

$300 per door in actual cashflow is unrealistic in my experience. Most experts I've read say $100-200 is the acceptable range for small multi-families and down to $75 per door in the larger complexes. In my market, I would do backflips for $200 per unit, but I can find plenty of deals and make a fine ROI at $100.

Can somebody please tell me where *specifically* to find relevant employment stats when researching a city or area?

I am trying to find data on my home market, Springfield IL. I have been on the US Census website, the Bureau of Labor Statistics, the State of Illinois, and the Sangamon County website as well. I can find a wealth of too-specific job information, but the basic stats like number of total jobs in each of the last five years eludes me.

Thank you in advance for your help.

[quote=Bryan H.

Another thing might be that the listing agent is non-responsive to calls/emails. It could fall into that 'hidden listing" that Bryan L. referred to.

Wish me luck, I'm going in.

I agree! I've been eyeballing a listing for EGHT MONTHS where the listing agent has NEVER responded to calls or emails. No surprise its still on the market with several price drops. I see this as an opportunity for a deal, and therefore believe it should fit in Brian L's
Hidden Listing category.

Good luck with your offer, and keep us posted!

I have a similar situation. In order to finance in the name of my LLC, I would have to go to commercial lending, which has less favorable terms than what I qualify for on my personal credit. I've been qualifying and purchasing as an individual, then transferring ownership to my LLC via quick-claim.
The mortgage, while in my name, is paid by my LLC and the property is officially owned by the LLC. My legal professional tells me that this arrangement maintains my asset protection.
I'm curious if other members have advice on a better way to do it. . .

Great question, Bryan H.! I'm following this thread so I can see people's answers. I think I get impatient about a deal that I *like* and tend to under-negotiate rather than chance losing it. Maybe some more seasoned investors can help talk me out of that behavior!

Unless there are details that are missing, I would contend that you are NOT, in fact, limited to flipping. You're going to have implement creative financing to get your purchase money and your rehab money. If you can do that, then you could use the same financing techniques to buy-and-hold.

IMO, wholesaling with simultaneous closings would actually be a better way to make money without having, borrowing, or otherwise securing purchase money. Sandwich leases (does anybody still do those?) might be another option if you don't include option consideration. Buying on land contract (aka contract for deed) might also be possible without cash to put down.

You must be fully aware that this will be a money hole at the beginning. At the current rental rates, you have an $800-$900 NEGATIVE cash flow (using the trusty 50% rule again). It will take you at least 30 days to begin raising rents (I think that's the minimum everywhere), after which you have vacancy and rehab costs. Like Joel said, you better be buying at a steep discount to justify taking all that on.

Because I am not a handyman or experienced rehabber myself, I will walk the potential investment with a handyman or contractor to get the best picture I can of rehab costs. Take that cost, plus your extra vacancy allowance, plus your down payment and see if your cash on cash return still looks good compared to your expected rental income.

To expound on what the other fellas are saying:
If you choose to live in the in the cheapest apartment, AND your able to increase BOTH rents by $50, you have a Gross Potential Income of $2350. The expenses you listed didn't account for maintenance and vacancy, so lets apply the 50% rule and assume you'll average $1175 operating costs. Since you will probably manage the prop yourself, you might fudge that to 40%, but lets stick with the rule for a quick and dirty rundown. P&I on your mortgage (at 4.5% over 30 years) is $1105. That leaves $70 in cash flow.

Adam Roberts, Ben Leybovich - since the owner is occupying, would it not be appropriate to include the rent he's NOT paying as cash flow? To assess the PROPERTY accurately, he could add $700 to his cashlfow, making the deal look more attractive. To assess his SITUATION, we could instead add the $1050 hes NOT paying in rent, sweetening the deal. Even if he cannot increase rents, he cashflows at $670 or $1020 respectively.

Wouldn't it be more accurate to judge the deal this way, or am I putting lipstick on a pig?

Maybe we should talk more about other details of your life situation.

Such as - does your current income easily pay your current bills? Do you currently own or rent? Do you have a a long or short term RE investment plan?

Depending on answers to these questions, perhaps shopping for an owner-occupied multi family would be a good starting point. You may be allowed to buy with as little as 3.5% down, and the rental income would offset your living cost, which would free up money to throw at cc debt. Meanwhile, your building equity and learning from experience about buying, landlording, and budgeting maintenance and repair costs, etc.

Your profile and the OP say your interested in flipping, but it also says you haven't read much yet. Nearly everybody will tell you that education is critical for getting started (and for everything afterwards, too). Maybe check out the Ultimate Beginners Guide here on BP and search for book recommendations. The Millionaire Real Estate Investor by Gary Kellor is one title you'll see endorsed more often than most.

Maybe none of this is the advice you're seeking, but I believe you have to crawl before you walk, walk before you run, and run before you fly!