All Forum Posts by: Geoffrey Fellner

@Salvatore Lentini

I’m definitely interested in your course on working with private investors

@Salvatore Lentini

To be honest, I’m now finding out that probably the biggest issue for me is that I don’t have my financial goals clearly laid out.

At this exact moment, I’m actually putting pen to paper on my 1 year goals...just finished my 5 year ones, and narrowed them down to 3 areas.

What I’m finding out as I’m reverse-engineering them is that there is a LOT of info that I still need to learn. (Such as what to expect per-door in small multi-family properties of 8-16 units; or how to find the Section 8 rates for different sized homes in my area; or how to identify areas in the path of gentrification; and really focusing on my underwriting/number crunching)

So, as I said...I’m determining my goals tonight. This seems to be taking some time, but that’s ok. I’m getting a clearer picture of the direction that I want to go, so I want to be thorough.

Tomorrow after work, I'm going to run the numbers on some practice properties on the MLS (my goal will be 2 for tomorrow, and 10 by the end of next week)

I’m hoping to just hammer the hell out of running deals in a practice-type of atmosphere until it becomes somewhat second-nature.

After that, I have some ideas on where I should go, but I’d definitely like to hear input from any and all investors that have been through it before.

@Guifre Mora

$3-5K

@Frank Geiger

Also, you said “extended finance”

How long?

What I was thinking was this:

They were going to discount their price for me from 90k to 80k, which amounts to 88.9% of their asking price. If it could sell for 130K, that would equate to about $115,500. If they were to sell it at $130K, they’d be looking at $8,500 in agent commissions (7% on the first $100K, and 5% on the remaining $30K). This would bring the total down to $121,500. Also, there are a few minor repairs that they are wanting to do in order to get max-value from their sale. (Finish off the last room in the basement, replace a couple door casements on the garage, and some paint). These are a total of around $2k for materials and labor. This is work that they won’t need to perform if they sell to me, so I’ll take that off of their total as well...bringing their walk-away total to $119,500

So, my goal with seller financing would be to bring the amount that they’d walk away with somewhere in between those two.

**This also brings up another question that I have. Would closing costs still remain roughly the same with both methods? From my research, closing costs on a conventional sale in Ohio range from around 1.49-3.0% of the sale price. Aside from inspections and such, are there any other closing costs that wouldn’t be a factor in this deal?

So, my thinking is this:

If I can get them to agree to the mid-point of those to numbers ($117,500)... I can make principle-only payments of $550 for 6 years. That would be $39,600 paid to them toward their price, and it would bring my balance down to just under $80K at the time of refinancing.

@Frank Geiger

Sorry, I wasn’t trying to come across as dismissive...

Like I said, I’m a definite newbie, and all input is highly appreciated!

Ideally, this would be a long-term but and hold, as long as it still makes sense to do so. I am a bit nervous about buying with a downswing looming, and am trying to figure out a way to get the seller what they want AND protect myself from getting buried when balloon time comes.

@Frank Geiger

Well, as it’s my parents’ home, I know for a fact that a lot of the common expenses shouldn’t be a concern for a number of years.

- new furnace & A/C in 2016

- new water heater in 2016

- new roof in 2015

- upstairs bathroom remodeled in 2017

- kitchen remodeled in 2017

- foundation/drainage issues remediated in 2016

- panel updated in 2016

I realize that there is no way to guarantee that no issues will arise in the future, but this is about as close as you can get. They were absolutely meticulous with their upkeep on this house.

Also, I said that “low-end” rent would be around $850/mo. I can legitimately expect to see around 1,000-1,100/mo based on comps. As of right now, I have a tenant lined up at $950/mo. (As their move is still so far away, I didn’t want to bank on this, though) I just want to go with the worst-case scenario to see if it would still make sense. You’re saying no?

.

@Addison Good

Low-end rent would be $850, so that’s what I was basing my numbers on. That’d be almost exactly $150/mo cash flow

Ok, so I'm definitely a newbie at this, and am sure that I've got a bunch of stuff in here that'll reflect my experience level. I apologize ahead of time if some of my questions sound dumb. So here's my situation: My parents both retired this year, and have decided that they're going to move to Alaska in the late spring of next year. They own their current house (in Columbus, OH) free-and-clear, and were going to list their home for $90K, however they were going to allow me to purchase it for $80K. I told them that I might be interested in buying it as a rental. My wife and I took a little time to think it over, and in that time, they contacted 5 or 6 real estate agents. ALL of these agents told them that they had DRASTICALLY undervalued the house. All of the agents told them that the house could be sold for anywhere between $120-135K, due to all the updates and they had done, and some of the amenities that none of the other homes in their neighborhood have to offer! One agent told them that they could sell it in two weeks @ $130K. Needless to say, my parents were extremely happy to hear this! But now this brings about my dilema... Now, my stepmother is STUCK on the idea that their house is worth $40k more than they had thought (understandably so, I suppose) I realize that I won't be able to get the house for $80k now, and that's fine. Now, I've been trying to put together a seller financing proposal to present to them that'll make sense. Originally, I was wanting to keep the purchase price down around $85K, and give them a larger interest rate (7.5-8.5%) with a 5 or 6 year balloon, in order to make up some of the difference. My reasoning behind this (although I'm not sure if I'm correct or not) was for a couple reasons: 1) It would (theoretically) keep my property taxes down. 2) It would (also theoretically) safeguard me against a market downturn, as I would have a lower principle balance at the time of refinance. One of the down-sides to this, I found, is that the interest that I pay to them would need to be taxed as income, as long as I wanted to claim the interest as deductible on my taxes. Then, (coincidentally enough) I was at work listening to a BP podcast, and the guest said something that made complete sense when I heard it. Lets say I give them a price that's closer to what they would actually walk away with through a traditional sale...but don't give them any interest? That way, they'll still get the same amount every month...but since the entire payment would be going toward the principle, they wouldn't need to have it taxed as income, and I would be paying my principle down substantially before the balloon payment. So, come refi time, I should still be pretty well protected against a possible down-market. Any input on either of these scenarios would be greatly appreciated. Any other options that I might be overlooking? Anything else I'd need to elaborate upon? Thanks!

@Thomas...Thanks a bunch! Looks like another good site for useful information. I checked it out briefly, and intend to go back for a more in-depth look into it.

@Anthony...I was thinking along these lines already, and it's good to hear this be reaffirmed. Now, also...I have a few realtor friends in the area. I'd imagine that getting comps from the very similar properties on the same block (sale price, how much they're being rented for, amenities, etc.) would be essential to include as well? this may be a dumb question, but if I talked to the investment companies buying and rehabbing these properrties, would they give any of the information on how much their renovation costs average out to be?

@Joe...Thank you very much! I will definitely get information on my team well-drafted for presentation. I also have another issue...may be nothing, and I know it may sound incredibly dumb. Here goes: the prospective lender that I want to approach first is a self-made multi-millionaire. He owns over 70 Verizon Wireless franchises, and is also a fairly successful semi---pro poker player (has a couple mid-6-figure cashes) I say this because I understand that he's a businessman, and the bottom line is that he wants to make profit from his business ventures. I know that the numbers in this deal will work out, because we're most likely going to get the property (or properties) at a very low price. My [possible] problem is simply: what if he makes too much money on his own to be worried about the meager profits from a few fix/flips? He pretty much clears about $20K/day from his franchises...would it be worth it to him to put up $300K of his money, just to make less than what he makes in a week? Like I said...I might be over-thinking things a bit here. I do know him on a personal level, too. Been to his house a couple times, we went to play in the WSOP together, yadda yadda...He's very approachable, and loves to help people. Any input?

thanks again, everybody

Hi, BP community!

I'm a definite NEWBIE! I've been a member for about a week now, and absolutely love what I've seen thusfar. I've listened to about a dozen of the podcasts, and read numerous posts in the forums...and they are absolute GOLD! A buddy of mine and I started working for ourselves about 6 months ago, doing home repairs/remodels...and have decided that we're ready to move forward towards our long-term financial goals (owning multiple cash flow properties) Firstly, however, we're wanting to get a couple fix & flips in our portfolio.

Let me briefly explain our situation...

A client we've done a substantial amount of work for has just recently started talking to my partner and I about selling all of his rental properties. He has 4 rentals, all close to each-other, all sitting vacant, all paid off. The owner, Gary, is 86 years old, recently lost his wife of 50+ years, and is just looking to have these properties off of his mind. Sounds great, right?? It gets better!! These properties are in an area where pretty much 2 real estate investors are buying up ALL the properties, rehabbing them, and renting them out to mainly college students. Anyways...none of these properties have even been listed yet!!

So we have a motivated seller (who is definitely open to selling well below market value), the ability to do the rehabbing work ourselves...and we have a couple/few different options for possible private money lenders. These are all businesspeople that I have known through managing a poker club in my area. Two are self-made millionaires, one comes from money.

I feel like we have all the big pieces to the puzzle...I just need a LOT of advice as to where to go from here to put together the puzzle. I'll need a VERY solid plan to take to the prospective lenders, asI don't have a track record established. I guess what I'm asking is this: What all should be included in my presentation to the lenders? If anyone has links to good blogs, any calculating tools, any advice from personal experience, or any other means that might help me map out this plan, I would be infinitely appreciative!

I know that this isn't a very comprehensive description, so please comment as to any key questions that I need to answer for you in order to give the best advice.

Thanks in advance!