All Forum Posts by: Darrell Lee

Partnerships are hard. After my first and last back in the 1980's I swore I'd go it alone and have. l preferred 1-4 units for easier to finance. I sold all my LA property as the numbers don't make sense as a buyer. I can sell at a 9-10% Cap rate in Vt and it is a win-win for both the buyer and me. An example is my 3u at  138 Main St. Springfield, Vt for 250k. Not factored into investment criteria are future value, intrinsic value, historic value, nearly non-existent crime, and friendly small-town charm. 

Being a lifelong Cali guy, I've been robbed at gunpoint, at knifepoint, home burglarized, cars stereos stolen... Here in Vermont I almost never lock my car doors of my trucks only if expensive cargo is visible and I never lock my Mercedes SL500 convertible and often just leave the top down when shopping at Walmart or in town. I've bought houses where the seller never had a key or locked their doors! LOL 

Here's one, lowered the price so now about a 10% Cap rate and 5.5X Gross income.

https://www.zillow.com/homes/138-Main-St-Springfield,-VT,-05156_rb/75484625_zpid/

I am selling a 3 unit historic property at about 5.5x gross in Springfield, Vt. I would carry a 2nd TD but a buyer must have good credit and qualify for a 1st TD of at least 70%. $250k. $46k income, all tenants on a 1 year lease and have passed criminal and credit checks.

I will be selling a legal 3 unit property in Springfield, Vt shortly. It was just converted into a legal 3 unit to code with permits. Gross income will be about $46k per year. Still gathering expenses so I don't have a NOI for it yet. I'm probably thinking it should sell around $275k which is 6 times gross income. 25 minutes to Okemo. It is a historical house built in 1860 by one of the most important people from the town. David M. Smith, inventor of the ubiquitous wooden spring clothespin.

Exterior has been repainted almost finished painting.

@Jordan Lucas a degree is not necessary. Right out of high school, I became a motorcycle roadracer. Progressed to earning my Expert license and competed at National and international levels. But racing is a young man's sport and retired at the ripe old age of 25 yo at the end of 1979 season. 1980 I decided to sell real estate w only graduated HS. Worked for the 2 biggest RE brokerage companies in L.A. giving me the required 2 yrs experience required to get brokers license.

Opened my own company, grew and grew... Became president of my local board of Realtors, Realtor of the year, etc. etc. My last year selling full time, I sold more RE than anyone in my 550 member board.

2 companies a RE and a mortgage brokerage companies. 50 agents and loan agents, 2 locations etc. So for selling residential real estate no college required.

Now for large commercial and multi-million dollar projects a diploma might be helpful and impress a client if you went to Harvard or Yale. BUT... I hired a CPA w Harvard diploma and he wasn't anything special. He had the gall to call me, pick my brain and then charge me for his time. I reminded him he was asking my advice and he owes me for MY time, not the reverse. My hourly rate was double his... I had a couple of MBA's working for me and they were worthless...

So NO... no diploma needed. After I closed operations and took a year off to travel the country and go rockclimbing and alpine mountaineering (I guess I needed More adrenaline rush), I was hired by Marcus & Millichap one of the largest commercial brokerage companies in the country. I swore I'd never have employees as I hated owning the companies and just loved selling.

I'm 2.5 hours away in Springfield, Vt... Sorry too far to drive. Maybe try hosting around Montpelier as that's about in the middle of the state.

Sounds like the market is running out of steam... It's time sell and invest in cash flow properties... 

Having bought a dozen properties within a year, I was never able to start on this house, so I just dropped the price of the Rutland house down to $75k to let another investor rehab this investment. At only $75k, I'm getting 2-4 showings a week so I'm confident it will sell quickly. I would provide owner financing at $85k with 25% down.

I erred by buying too many properties at once and further erred by trying to rehab 4-5 properties simultaneously and didn't get all of them completed. I got 5 done and 2 sold but need to sell a couple more to resume/complete the other renovations. That's why I've cut the price of this one to wholesale it out.

If you are looking for speculative appreciation, the larger cities are good possible investments, however, the prices have already risen significantly so it is very hard to find good deals.

Smaller towns and cities that haven't yet returned to their 2008 prices are where I recommend people to invest. For example I am selling a furnished 2br/1br duplex for $100k and will carry the first at 9% interest with 30% down for 3 years to give you time to refinance and get your own 30 year financing. If you are creditworthy, get your own loan and take a 10% discount off the sales price. Here's the numbers...

Income via AirBnB or Traveling Doctors/Nurses income is approximately $2,400/mo. ($28,800) Owner pays all utilities/landscape expenses. Gross Rent Multiplier 3.5!!! Allow 20% vacancy $5,760 equals $23,040 annual income.

Income via annual leasing is approximately $1,500/mo tenants pay own electric/propane. If interested, PM me for the breakdown.

Buyer Conventional Loan: $20% down $72k = $382.51 mortgage pmt @ 5% 30 yrs

$383 Loan Pmt ~ Seller Financing $525/mo ($70k loan, $30k DP still plenty of cash flow)

$65 Insurance

$50 Lawn/snow removal

$180 Property Taxes

$250 Utilities

$60 Misc

AirBnB you would charge a cleaning fee so that is not a expense to bottom line

=======================

$988/mo NOI Conventional Loan

$11,856 Annual NOI

$18,000 Cash Down plus $3k closing costs. Almost a 50% ROI Year ONE!

This property sits on a 1/4 lot with a year around brook along the rear property line. It is NOT in a flood plane zone. Fully furnished and renovated including new roof, recent F/A furnace, window air conditioner. All work done to code and with permit.

For some reason a majority of people looking at buying one of my houses ask for a "rent to own" here in Vermont. I've forgotten the reason my lawyers had advised against it but usually the people can't qualify for a loan and while I own my properties free and clear, carrying the mortgage doesn't achieve my goal of generating cash so I can reinvest or work on my other projects. 

I don't want to tie up a property by a renter that won't be exercising the option and usually an option sets a price a seller is obliged to sell for, so if there is appreciation, the renter benefits.

You need to do more research as the range of comps is too broad. How are you going to pay for the rehab costs and generally there are always unforseen problems that will increase your cost basis.

I've written a few lease options and the only one that actually closed in the one year the house I sold appreciated about $100k which all went to the buyer. But in 1981 we were paying a 21% interest construction loan so we were desperate to make any deal.