All Forum Posts by: Emma Chen

@David Moore This deal looks good enough to me as a buy&hold. Are you focusing on buying houses from HUD? or this property happens to be from HUD?

2% of sale cost is reasonable for commercial properties to me. I underwrote hundreds of million dollars of worth multifamily assets. My company has been using 1.5% sale cost of exit sale price. Would be curious to know the  methodology too.

@Erik Hitzelberger, I don't think $60 investment in renovations is sunk cost. It's actually capital expenditure. You want to count capital expenditures into your investment to calculate return.

@Layla Rahm , If you are not in need for cash right now, you should treat this house purely as an investment. To decide how long(in years) to hold on a property, you could put all numbers in the pro forma model to see this year or 3 years later will give you better cash on cash return (IRR). You will find a financial model for single family house at

http://www.biggerpockets.com/files

Good luck!

@Mandy Telleria , I came across this same deal before. As a 4plex, it's located in a nice neighborhood. It's confirmed that the park is in plan. I ran #s includes 6% vacancy, utilities and maintenance& repairs. The cap rate on seller's asking price is very low and even leveraged IRR is not ideal, assuming you will pursue the deal as buy & hold.

As an individual investor focusing on cash flow, I passed the deal. I can see the appreciation could happen if the park across the street is built in the near future. It might be a good deal for a RE investing company if they come in buy this 4-plex and other three contiguous 4-plexs and make them nicer together. Currently this deal is nicer than three contiguous 4-pexs. The 24-units complex nearby is charging $850-$1100 for rent according my market research.  Hope it helps.

great case sharing! Thank you.

@Bill Gulley thank you. I understand more about what I am getting into now. Your suggestions are highly appreciated.

Have a good day!

Emma

@Bill Gulley Thanks for explanation. Yes. I was thinking to offer $60k ish. The market value of house is around $105k based on my research. In this case, I am about to buy the property subject to a CFD agreement.

One more question, so if the tenant fails to pay monthly payment, I can't simply evict them? Do I have to go through foreclosure process? I thought one advantage of buying this deal over buying a note is that I don't need to foreclose the house if the tenant defaults.

Thank You!

Emma

@Brant Richardson Thank you for your feedback. I dont mind making 10.3% interest on my money. It's the same mentality when I invest in tax liens. But i dont want to start with -$1000. I am trying to figure out how much I offer to make it profitable and worth the trouble/time.

Thank You!

Emma

@Bill Gulley , Thank you for your reply. The contract between the current owner and tenant is a contract for deed I think. The owner priced the property at $115k and tenant paid $30k down. The tenant will get the deed as soon as they pay off the balance of $85k within 4 years. In the meantime, the tenant is paying interest+fees monthly. There is no underlying mortgage.

So Bill, you think this deal only worth $40k ish ?

Thabk you!

Emma

Hello all,

As I posted earlier, i am touring rental properties in Las Vegas this weekend. Here is one interesting deal I'd like to share with everyone, hoping you could provide me some feedback and insights.

One SFR with 5 br/2ba, current 4-year lease is $1150/month. It's selling for $86k all in cash. It has great Cap rate and good unleveraged IRR if we buy and hold the property. After touring the outside of the house and the neighborhood, I emailed the seller the offer of asking price. I met with seller and he brought the selling agreement and current lease agreement. I found that what seller signed with current tenant is a lease to own agreement and seller is playing as lender to the tenant. The tenant already paid $30k down payment and is paying interest( interest rate 10.33%) and fees as "rent". The principle of $85k is due at the end of year 4. Current tenant could pay off the principle anytime soon and get the house. All the financial analysis doesnt apply to the current situation any more. So I am buying a performing note instead of a property, except I still have to pay for landlord stuff.

I am thinking of two options I might go with:

First, go back to seller and give a new offer, a discounted current price, saying 80% of the $85k.

Second, tell seller that i would take my offer back because the deal is not what I was informed of.

You insights will be highly appreciated.

Thank you!

Emma Chen