All Forum Posts by: Jeff McCaskey

I am currently looking into a purchase in Kansas with the financial qualification from someone I know well who is in the Springfield MO area. 

I'd like to receive any suggestions of an investor friendly or portfolio lender/commercial lender in Springfield who I can direct my partner to in order to get the ball rolling on this project.

I should also mention that this project is a 40+ unit apartment project.

Of course if anyone who comes across this post who has private funds to lend or can connect me with private funds, that would very welcome also. The purchase price will be between 475K and 600K, depending on how far I can negotiate off of list price.

I have been an investor for many years now and am looking at the possibility of making this purchase and then liquidating my portfolio as it stands now and trading up as far as the assets I own/manage. My portfolio is about the same size in terms of dollars, but in terms of units this would triple the number of units owned and therefore nearly triple gross revenues as well.

If anyone can suggest a lender to work with in the Springfield MO area that would be great. Thank you.

@Luke Nelson

You don't need to have your license at all to invest. Most people don't have a RE license but there are also many who do. It all depends on the path you want to take, as was mentioned above. I personally don't see the need for myself in my area to reinvent the wheel when I know the top agents. My time is better spent elsewhere. Knowledge is power and more knowledge never hurts.

@Denita Ozenne

Yep you got it! Good luck..... Congrats on number 1.

My contact info is below my posts if you need a lifeline sometime.

@Denita Ozenne

Also, not that you have control over this but....... Don't use that inspector again if you can keep from it. He doesn't know what he is doing.....

Why is that? - he said even though there was evidence of water damage to the sheetrock that it was dry and not wet and given patching evidence it was probably fixed. 

Well...... To me, if the ceiling was cut open to fix the drain above then the damaged sheetrock would not be put back in place. The way this should work goes like this.... 1) notice plumbing issue. 2) cut open ceiling and investigate.  3) find problem. 4) fix problem(s). 5) replace damaged sheetrock with a new undamaged piece. 6) after mud and tape, match existing popcorn or texture to what currently exists now on rest of ceiling unless it is a smooth finish. 7) if it's smooth finish or textured then prime and repaint ceiling. 8) done!

For him to say yeah it shows signs of water damage but was probably fixed actually makes no sense to me. I don't think he is very familiar with how things actually get built or repaired if that was the comment he actually made to you. And if for some reason the old piece of sheetrock was put back and finish work was sloppy, well it was a poor standard of work that was done anyway and I wouldn't trust it at all for a minute.

So here we are with water running out of the ceiling........ See my point?

@Denita Ozenne

You're welcome for the input. I was worried it would be to long as it was. 

As for your as-is situation. You can always ask, you can't ask and be told no, and be any worse off than you were before asking. So it's all an upside to asking. Never know, they might not do much but might give you an extra 500$ toward that problem. Maybe it will cost more to fix it but you get something. Just have to ask. Rules are guidelines usually, anything is possible. Though, yes legally they might not have to budge. Depends on how motivated they are too, if they worry about losing their buyer they might cave or they might just say no. Either way they likely will not walk away from closing the deal just because you ask. Give it a try and see what happens!

Congrats on deal 1. The rest will come much easier now!

@Denita Ozenne

Hey there. So I am assuming that this is deal number one for you..... Might have missed that but I think that's right huh?

I would say that the answer to your question varies. If this is a really great deal then perhaps there is room enough to just let it go and close and deal with it yourself. However, if the numbers are on the tighter side then forcing the repair might be a good option to use and still close the deal.

I would assume that if you were able to get responses from a number of others on the site they would probably say things like I am going to list here.

1) Problems can seem small and simple at first but grow larger in a hurry - it happens.

2) Depending on the type of shower/tub installed in the above unit it may be more than a simple fix and get into much more money than you think - you won't know until you open the ceiling for sure.

3) After the plumbing repair you could be looking at mold potentially in the joist spacing area between units.

4) Depending on the length of time the issue has existed and been patched to get by you may also have damage to the wood - joists between units and or sub floor issues under the upper unit tub/shower.

5) If there is insulation between the two units, you may have soaked and degraded insulation that needs to be replaced as well - good news is that rock and insul are cheap to replace.

6) OR......... you may have someone open it up to fix it and its just a simple plumbing issue and is a quick and easy fix - totally possible too.

Just as an illustration, I went to replace a bath faucet for an accountant friend of mine yesterday. It's simple right? Pull old faucet off and reattach new one and turn the water back on right? NOPE - I had faucet off and new one on and then the drain piece broke, actually fell out bc of the pressure I had gently applied and was already broken anyway - just waiting to fall apart in my hands. The faucet was very old though didn't look the part. It was a major frustration given my expectation for a quick fix. What should have taken about 30 minutes or little over ended up with 2 runs up the street to the ACE store for additional parts, and 3 hours later - some of that due to the fact this is on main street and it took a while to get the water shut off figured out as it was all redone this summer by the city. Although it wasn't anything major it still shows how the faucet suddenly became the sink and drain assembly as well and combine that with the fact that the sink cabinet was so small I could hardly squeeze into it to work on things as it was. It wasn't just as simple as it had started out to be. Same could be the case with this situation you have here.

I would say that you can ask for the issue to be fixed, prior to closing is better so you can reinspect. Better option would be for you at this point to get a concession in closing from seller for an amount given by a plumber as estimated cost of repair so that you can fix it yourself (have it fixed), so that you are in control of the work that is done and know it's done right to your satisfaction and isn't just another patch job to get the property off sellers hands and into yours for the least amount of effort and cost possible (this does happen often).

Simple question with not so simple answer, sorry about that but hope that helps cover the bases. Some of this will totally depend on the age of your unit, so keep that in mind too. 100 year old houses can propose more issues than more recent construction.

@Tereal Wilsonn

To answer your question about what I did in the situation. I honestly try to work things out where possible and had spoke with the tenants on a few occasions. In the end I was at the multi unit property fixing some items on a newly rented unit when the police showed up and went to kick the door in, I asked if they would like the keys to the apartment, so they took them and entered. Nobody was home and they removed a number of items. I later spoke with the tenant and we decided calmly it was best to part ways. I said at the end of the month which was the end of the lease, he made plans to leave that week (which did not really offend me personally). After he had his stuff out he called and decided to pick a fight with me about the rent he owed for the month. Personally I don't think this group is very responsible or rational at all (the people who use) and so I ended up at the point where I told him he really didn't know anything about running a business and didn't have a right to tell me how to run mine and that I was done arguing with him about it, that I had other work to attend to and that if he didn't like what I had to say that he could kiss my *** and I hung up and went back to work on my flip project I was standing in when he called to argue. We went to court, I won, he lost. I'm still waiting to see any money though. I believe he left town after that. Also fine by me.

Rather dramatic answer to the question I suppose but that's the honest answer! I don't know where you are at in your investing but hope this thread might be of some use to you.

@Michael Boyer

I agree with most of what you said there. Yes I have a no smoking policy too. Some people just aren't going to respect the rules or respect other people and unfortunately that causes issues in the end.

@Michael Gansberg

You had a good idea with the vaporizer and the air filtering machine. You also had a good point about the he said she said scenario. Fortunately it came to its own end, though smoother is better lol.

@Ehab Shoukry

I was reading along here and wondered if you had thought of it this way......

You say that you expect some rehab to be involved basically. So why not make the agreement in the bylaws/op agreement etc of the LLC such that you don't have to pay back your half of the 20% DP in cash from monthly cash flow but instead you assign an equity position to your partner from projects that you rehab.

Example: 

purchase price 70k + 20k rehab costs = 90k cash invested ARV = 125k

20% DP of 90k cash invested = 18k   ***your 50% of DP = 9k

Total equity in property after rehab = 35k   **** your 50% of equity = 17.5k

Assign to your partner (your 50% of DP which = 9k) to pay back the portion that you would be paying from cash flow so that you can see income in real time from your investments. You would still have 8.5k equity in this deal. 

Perhaps you could assign the remainder of that equity to your partner on deal number 2 if there was no rehab to push ARV above actual purchase price.

Obviously this doesn't improve your equity position in the company nor exactly build your net worth initially. But from some of the verbiage you used it seems like you would like to see monthly income rather than holding an equity position.

You could use a formula like this until such time you feel you have reached an income threshold that you could afford to pay back from monthly cash flow/pay cash for your portion of the down payment. At which time you would no longer need to assign an future portion of equity positions to your partner and would not need to go beyond your initial 50% agreement.

I assume from the way you spoke that you are looking at buy and hold almost exclusively at this time.

Just an idea, hope it's worth consideration. Good luck with your partner!

@Mike V.

Hey no problem! Glad you could use the info. Best of luck in MD buddy.

have the owner or title company get in contact with the last lien holder to obtain a copy of the lien release. Should be pretty simple if that is truely the case. Good luck!