All Forum Posts by: Eric Spond

Quote from @Dalton Willett:

Good Evening everyone! 

I want to bounce an idea off of you all and see if my logic on this makes sense. 

My uncle owns a property in Iowa City, which is a great place to own real estate and a market I want to get into. There is a chance he moves within the next few years and I had talked to him about purchasing the property from him to add to my portfolio as a rental. I was thinking that, since he got his loan through the VA and I believe it is assumable, if this is something that any of you have done, and what goes into assuming a loan, and what are some things to look out for. The reason I want to assume the loan is his interest rate is far lower than I can get today, and at a 6-7.5% percent interest rate the numbers do work, but if I could take over his loan of sub 2%, obviously, it would enhance the investment a great deal on a cash flow basis. I ran the numbers back of the napkin, and here are 2 scenarios given the higher interest rates.

Property Price	$315,000
Loan Amount	$252,000
Down Payment	$63,000
Rent	$2,650
Mortgage	$1,960
Taxes	$350
Insurance	$105
HOA	$100
Total Cost	$2,515
Monthly NOI	$135
Yearly NOI	$1,620
Appreciation 3%	$9,450
Debt Paid Down	$8,400
Total Yearly Earnings	$19,470
Yearly Return	30.90%
Property Price	$315,000
Loan Amount	$252,000
Down Payment	$63,000
Rent	$2,800
Mortgage	$1,960
Taxes	$350
Insurance	$105
HOA	$100
Total Cost	$2,515
Monthly NOI	$285
Yearly NOI	$3,420
Appreciation 3%	$9,450
Debt Paid Down	$8,400
Total Yearly Earnings	$21,270
Yearly Return	33.76%

Yearly return of either 30.90% or 33.76%?????????? Let's talk cash flow. Your yearly return is based on the cash flow, not your equity. Remove both debt pay down and appreciation out of your equation. Those are not earnings. Your equity is a return when you decide to sell. Your earnings are the rent you collect. Some items missing to factor in for your cash flow are vacancies and repairs. Once you factor those items in, you will likely be in negative cash flow. Even if you were at $285 a month cash flow with those factored, that's not much on the bone. Good place to start I suppose, but, that sure won't get me out of bed.

Start calling local architects and see if any of experience in designing a facility like this. These are fairly simple buildings with minimum infrastructure depending on the type of building you build, so if you have the land free and clear, that's a big cost taken out of the equation. Also, a good idea to get ahold of the local jurisdiction (City or County) and run your idea by them to ensure you're in the correct zoning and they are willing to give you the permits you need. 

Check out Enphase solar battery as an option. Great products.

@Account Closed Not sure I'd agree with the baby boomers dyeing and the market flooding. Gen-Z is the largest generation in history coming up behind Millennials.

https://www.statista.com/stati...

@Joseph Bass Is it possible they looked you up on social media? That happened to me when I bought my house. A few weeks before I closed, but had an accepted offer, I was at a baseball game with some friends. There was a group I hadn't seen in a while and they congratulated me on buying a house, when I hadn't made it very public yet. Long story short, they were mutual friends of the people I was buying the house from on facebook. The homeowners apparently did a lengthy social media search for me. 

Hey Cam,

I'm down the road in Salem and have been wondering the same thing. I've done some searching for wholesalers in the greater valley area and I've found a few. Based on looking at property records, looks like the wholesalers purchase the property, then resell to a flipper at a profit. The flipper then conducts their flip. I'm assuming these wholesalers purchase distressed properties that are in or near a pre-foreclosure phase, but I'm still not 100% sure. 

Curious to see what type of feedback you get here.

Hello BP Community!

I recently purchased my first SFH as my primary residence and have been researching ways to jump into the real estate game. I live in an area of town (Salem) with a mix of new construction and homes that were built back in the 70's and 80's. Once I hit the two year mark in my current residence, I plan to turn it into a rental. After that, ideally, I would like to do a live in flip (SFH) for 2 years, then convert the house into a rental and purchase another home in need of work, then repeat several times. There have been several houses flipped around me and I never see a for sale sign up until after the rehab work has been complete. I spoke to one gentleman last week who made it clear he was a "restoration company" not a flipper. Not sure there is much of a difference. I asked him how he acquired the house and he said it was a foreclosure. He seemed to dance around the actual source he got the house from. He mentioned that he gets most of his homes from attorneys. So my question(s) is....

How do home flippers buy houses at such steep discounts? I've seen homes on places like auction.com and other websites, but what is the primary method/source of purchase? Has anyone in Oregon purchased a home in pre-foreclosure? Is that legal to do in Oregon? Is there a way to approach a foreclosure attorney to see if they have clients who are losing a home and would rather sell before losing the property?

Any insight would be greatly appreciated.