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All Forum Posts by: Sean Price

Sean Price has started 18 posts and replied 63 times.

Post: New Investor and to BP Fort Walton Beach Florida

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

@Arianne L.

I am also in Fort Walton Beach.  Would love to connect with investors in our area.  When and where are the meetings in Shalimar and at the conference center?

Thanks!

Great story....I am right where you were 12 months ago....I run three businesses and am finally pulling the trigger on real estate.  Excited yet nervous, but your story helps to fuel that fire that burns in the heart of every entrepreneur, its the thrill of building something new, and you are doing it, thank you for sharing.

Post: Putting in my first offers...am I missing anything vital?

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

So I have been analyzing deals and studying for the last two years.  I am finally pulling the trigger.  Yes, it has taken way too long....but cant do anything about that now....so here we go!

I have found 3 properties that I would like to place an offer on and I have a few questions to make sure I don't make any mistakes:

1.  Do I send the offer on an actual real estate contract (I am in Florida) or is there a shorter letter  of intent that I can send the offer on?

2.  I need to have escape clauses for:  financing and inspection.  Financing because while I have the money to put down and possibly pay the entire price in cash, I would like to save as much of that money for operating expenses as possible and inspection because if they take the offer I am going to want to take a contractor with me on my first few to make sure that I am not making any mistakes.

3.  So in summary, my questions are:  1.  Full contract or a shorter form for the offer.  2. How do I word the escape clauses for inspection (not necessarily a home inspection, but thorough look over) and financing.

Thank you in advance.

Post: Which is better? Mortgage from a bank or Independent Mortgage Co

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

Thank you for the responses.  Basically what I am gathering is that it is best to go ahead and shop around and call both to see who can offer the best loan package.

Thanks again everyone.

Post: Which is better? Mortgage from a bank or Independent Mortgage Co

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

I am about to purchase my private residence.  I have been working with a mortgage broker from a bank but I am looking to get the best loan package possible.

Is it better to go directly to a bank for a mortgage, or go to one of these private businesses/mortgage companies that operate in strip malls or individual offices.

Basically my question is this, if I go to the bank, am I going directly to the source so I can get a better loan package, or is it better to go to one of these independent mortgage companies?

Thank you so much

Thank you everyone for the input.  I do realize that Cap rate is only one factor....and I also realize that at 35% expenses, the numbers are skewed toward the sellers side to try to increase the cap rate.  I have requested the schedule E and rent rolls for the last three years to try to get accurate numbers.

I am new to multifamily, so will keep collecting info on the deal....and I realize this is probably a no go, I just needed to make sure that I was not missing anything

Thank you all so much for the feedback. I really appreciate it.

Sean

I found this 6 unit multifamily.  Here are the numbers:

Monthly income: $5450

Yearly income:  $65,400

Total reported expenses:  $22,900 for the year

NOI: $42,510. He is asking $425,000 for the property which puts it right at a 10% cap rate.

His lender is willing to allow a wrap around, so I could take over current financing for $336,000 at 5.5% interest (the current rate of his loan) for 15 years.

The seller is asking for 20% down or $84000.

I am looking to bring on a private lender for the $84,000 down payment and expecting about 7% interest (15 year am but ballooned in 5).

With these two debts, the debt service would be $3590 per month or $43080 per year. This puts the property at a negative cashflow (NOI is $42,510).

So here is my question....it is my understanding that a 10% cap rate is a good rate to buy a property at....but these numbers don't work, is it because of the 15 yr loans versus 30 year loans?

Also, it is my understanding that in a multifamily, it is best to assume a 50% operating  expense budget, so 35% seems very low to me....there are no calculations for vacancies or capital improvements, but there is property management in there.

The possibility for improvements is to have rents increased to catch up with current market by about $500 per month total (that's after cleaning up the property, catching up to market rents, and putting in rules to keep the grounds clean and safe).  There is room in the back to build a laundry space which could be coin operated, but I don't think that would increase rents and income enough to cover the expense of a new building and equipment.

So, am I missing something that makes this a good buy, or is it best to walk away?

Thanks in advance for any input.

Sean

Post: Seller financed down payment

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

@Bill Gulley  thank you for such a detailed answer. I really appreciate you. 

Post: Seller financed down payment

Sean PricePosted
  • Realtor
  • Great Falls VA
  • Posts 71
  • Votes 16

ok, here is a theoretical idea. I am new to this so don't take this as advice, more of a question. Could you and the seller form an LLC with the seller maintaining 20% ownership in the property. Then the seller is not a debtor, but has an equity position. Then after getting the loan and financing, the seller could be bought out at a predetermined buy out price (maybe after the property is capped out and refinanced.

Could this be a potentially legit strategy?