All Forum Posts by: Giora Sela

Hopefully in the near future blockchain technology will disrupt the title industry by not needing a 3rd party to search/verify titles. Records can’t be manipulated and all past transactions would be transparent.

I agree, I feel like that amount would be significantly less if I was to make an offer. 2 units did have a rate increase recently and are on a lease until 10/18, other units are on a month to month basis “to allow future buyer to increase rent” as the agent stated. 

How will you factor into the deal the cost associated with deferred maintenance that I expect will come up during the due diligence process? 

Deduct immediate costs from price is obvious, but what about future costs?

Only have experience with Single family and would really appreciate anyone who can share their input!

Build in 1983, 5 unit 2nd row from the beach rented on a long term basis. 

Rents - 3br $1250, 2br $850, 1br $750, $675, $675

Utilities are included and total $3800/year,  not sure if possible to meter separately, but would definitely need to be charged back to the tenants if possible.

* Taxes $3750

* Flood insurance $1000

* Wind & Hail $2,000

* Home owner insurance $500

Owner financing is offered with $240,000 down, 3% fixed over 30 years with a ballon payment after 5 years. listing has been active for over 2 years with original price of $750,000.

5% Vacancy
NET OPERATING INCOME	$37,222
Cash on Cash Return	6.40%
Gross Rent Multiplier	13.30
Debt Service Coverage	1.71
Operating Expense Ratio	23.07%
Acquisition Cap Rate	5.54%
Breakeven Occupancy	65.31%

Rent hasn't increased in years on most units and should be able to move up 100-150$ higher per unit as well as having them cover utilities.

The agent is making it clear that price/down payment is negotiable. Briefly walked the outside of the place and it clearly has some deferred maintenance. I plan on getting a GC to walk through and get some estimates on how much maintenance will cost with the current conditions.

If I rent went up and utilities charged back then the numbers would look like this - 

5% Vacancy
NET OPERATING INCOME	$44,062
Cash on Cash Return	9.22%
Gross Rent Multiplier	11.64
Debt Service Coverage	2.03
Operating Expense Ratio	20.21%
Acquisition Cap Rate	6.56%
Breakeven Occupancy	57.15%

I would expect to lower the asking price by at least the amount of deferred maintenance, but this has been on the market for over 2 years with low inventory in the area, so I can't tell with what numbers this would be a good deal. 

If you can share your thoughts I would greatly appreciate it!

Hey Steve, we actually briefly spoke after your presentation in our local REIT last year I believe

In the past few years I’ve been buying only single family properties and I’m really interested in getting into the multi family side of investing. Wilmington isn’t a major city, but we’re seeing a significant amount of multi family properties being build over the last few years. I was wondering if anyone on BP dealing with those properties is in my area and is open to either partner or just share some of their knowledge of the local area

I'm looking to buy my first auction property and I could use additional opinions on a specific property.

The house FMV is $175k which I know is accurate since I own several other rentals in the area.

Looking through the county records I found that Chase is the lender and the loan was for $75,000 in 2013.

In 2014 a 2nd lien was issued for $200,000 but shortly after it was also removed. It seems like the $200,000 lien was issued as a collateral for a bail bond..

The Auction.com report actually shows the $200,000 lien as active but I'm pretty sure the county records are accurate since its clearly states it was removed and I can actually see the document stating that.

I also know that the property was converted to be a rental property from the language of the mortgage documents which were also recorded in 2013. 

My main question is why would they have to foreclose if they could have easily cover the balance with selling the house?

does it mean lots of damages? there's no signs of any damage to the outside of the property besides some minor issues. 

Is it possible that the $200,000 lien is still in place?

what would your max bid price with all of the above in consideration?

What else should I consider when bidding on this house?

Thanks!

Originally posted by @Sean Brady:

Why not just ASK one of the other complex's Management office's if there are any 10 door smaller unit complexs around your area? Wilmington huh? i had a job offer with a local nursery operation down there to run they're equipment but dont like the fact id be near the coast! lol

 Thanks for the advice, definitely worth trying that!

Most people will consider the ocean a plus lol

Originally posted by @Jared Carpenter:

@Giora Sela what type of research are you looking to perform?

 General information (location, past rental listings, tax records and other public information )

I currently own single family properties only. I track similar information over time as different listings go online to have an idea of price/rent trends in the market. 

I understand if this kind of information would be more challenging to get with multi-family but I just want to know first where are they to begin with.

I’m trying to do a general search for small to medium size (~10 doors) multi unit properties in my city (Wilmington, NC) that are not listed or even offered for sale at the moment so I can just do some research before making any moves in the future. 

Tried to look for rent ads on Craigslist but all I can find are either huge apartment complex or duplexes. 

I was wondering if anyone had a good idea on how I can find properties in my criteria any other way?