All Forum Posts by: Graham Nash

@Cole Johnson Good job on finding the off market 4plex! That should be a nice asset to begin your portfolio. Now that you've found it, you gotta lock it down. I think that comes down to how comfortable you are in going at it "on your own." If you're the "I got this" type, download a purchase agreement from your ND board, or get in touch with a local REI group (both suggestions have been made), and walk the property with the owner. If you would sleep better at night, contact a local attorney. The person you're buying the 4plex from might know a good real estate attorney. Which will be a good team member going forward anyway. Your financier is going to require an appraisal. Just curious, how did you come up with your offer?

Graham 

It's an off market, 89 acre tract. I have been communicating with the executor of the estate. It contains approximately $35-$40K in timber. However, the market is down right now, so that could be greater in the future. It has 20-25 SFR rentals on the property, very few of which are functional. The majority are dilapidated and better off torn down (which will be an expense to the owner, est.$4k per). Only 4 are rented at the present. I think there are 2-4 more that with significant rehab ($15-20K per), could be. Once the current rents are brought up to market value, the SFR's would gross a total of $2,900 per month.

There is an 8 acre section of the tract that is not connected to the 80 acre tract. The "island" is located across the road, and sits in a point. The island borders a large and very busy convenience store. The 3 acres on which the convenience store sits, is zoned for commercial use. The tract I'm looking into is zoned R-MH (Residential-manufactured home). I think the 8 acre "island" would be more valuable rezoned for commercial use, and sold separately. It is accessible by 2 sides of road frontage.

My plan is to make one more trip over today and take pictures of all the properties. The family doesn’t live here, and i’m not sure they understand how far down hill the property has gone. My goal isn't to throw it in their face, but make certain they are aware. so my offer might not sound so unreasonable.

I also considered replacing some of the torn down properties with manufactured homes, and selling them with 2 acres per home. This would be consistent with the area, and generate some income for possibly developing some 4units on the property. The property contains a 5 acre pond that could be a great focal pint for a small rental community.  

The question I have is concerning financing (Big surprise right...). All of the property is owned free and clear. So there might be an opportunity for seller financing, but I’m not holding my breath. That leaves conventional or private money. (Maybe others, please suggest if you are aware). If the property is financed through a conventional loan, would I be able to sell smaller tracts of land? Or would those tracts need to be established prior to obtaining a loan, so they could then be sold/resold separately?. If this is the case, I would offer to have the property surveyed prior to purchasing. I'm going to speak with the county zoning dept. tomorrow when they open.

So, that’s it...any feedback, suggestions, thoughts, ideas would be appreciated. And if you’ve taken the time to read all this, THANK YOU!

Graham 

@Timoteo Guy @Luis Fernandez I'm about 3 hours from Sav. GA. and have spent may nights there. It has a couple of colleges and a solid tourist market. Also has a small airport with routes to Atl, NYC and DFW. Not sure about the rental market, I would think property is going to be pretty high because it's on the Atlantic. Might be an ideal place for an Air b&b if you found a cool spot. 

I think a garage can offer slightly more options to an exit strategy as well. It could be marketed as is, or an opportunity for extra living space when finished. I know the latter isn't uncommon here in the south.  

@Luis Fernandez I like it. You know what you have, and what you want. I think if you're willing to fly around the US & check out different areas, then you'll probably find a property that works for you. I'm not saying it wont be a challenge, it defiantly will be, for the reasons listed above, but I do think you can find property that meets your criteria. The only question I was wondering is about the "cash" payment. Are you not interested in using that $100K as a down payment? It would go a LOT further...Just a thought. Good luck and keep us posted on your search. 

Graham  

I can answer that one for, Jerry Padilla, he does.  He was the loan officer on the last deal I closed about a month ago. The seller required the 2 properties be sold as a package. I was looking for 2 separate long term fixed rate loans. I called what seemed to be a lot of banks, credit unions, etc...  They all wanted to go the ARM route. 

I called Jerry and he was able to make it happen. We had to extend the contract 12 days, but that was probably more on me than MB Financial. Due to me signing the contract prior to having secured the financing (sometimes you gotta do what you gotta do). It all worked out well though. I would recommend him. I will probably be giving him a call in teh near futuer about a cash out refi myself. 

Holler at me @Robert E. Bogino if you have any questions about using an out of state financier.

Good luck 

Sean, I recently tried to acquire a property through a similar situation. The owner I was working with, had a USDA loan on a property that she had ,for the most part, abandoned. I contacted her and she said she was willing to sell the property. The bank was also willing to entertain offers.  She told me that she would have to incur the difference between sale price and appraised value as income.  

I made her an offer, no response.  I guess it was an insult. This probably doesn't help you much. I do think the short sale depends on the financier who holds the note. 

Good luck.  

Max, in addition to the other responses, you might want to consider attending a REI Meet up. The ATL area should have more than enough to choose from. Check out @Jered Sturm. He's in the ATL area, and I believe started a meet up. I'm sure it's well worth the time.

Also, when considering house hacking, a quadplex might make as much, or possibly more sense than a duplex. If the numbers work, it's all about the numbers right?

I think using your first time home buyer stratus to your advantage is a great plan. Depending on where you land, you might qualify for a USDA loan, as well as the previously mentioned VA. 

Sounds like you already have a solid plan in place, and really, by being on BP, and asking questions, You've already started... good luck. 

Graham

Closed on 2 fixed rate loans, to purchase 3 units.

The numbers:

Property A) 1300 sq' brick, 3/1.5, SFR, rents for $875 per month.

Property B) 2150 sq’ brick 3/1 & 2/1 Duplex, rents for $1075 per month

Asking price=$120,000

My first offer, $92,000

Purchase price= $111,000 (negotiating is not my strong suit…)

Gross monthly income=$1950

Cap ex, rep & main, vac, prop mngnt, garb, P&I, =$1510

The owner would not sell the properties as individual. The agent is a commercial agent and accustomed to dealing with investors who use commercial financing. I was determined to acquire a long term fixed rate for the properties. I found a loan officer @Jerry Padilla with MB financial, through BP, and was able to obtain 2 fixed rate, long term loans.

We did have to extend the original contract by 11 days, which in the big picture, wasn’t a big deal to the agent or seller. I tried to make it a point to communicate with them, as to where I were in the loan process.

Takeaways…

The formula I was using to purchase these properties was based on previous purchases in c neighborhoods. These properties are in B neighborhoods. They are in much better condition, and require no repairs, or clean out. All repairs were made prior to closing.

After closing, the seller pulled me aside and said he has one more property that he is going to be selling in a month. I told him I would try to offer, but I need to replenish my funds. He then offered possible seller financing. So that’s in the works now.

The agent also asked if he could share a 4plex that he was getting ready to list. I should get that email in a few days.

I owned 3 doors prior to this deal, now I own 6. While I don’t think this is a great deal, it cash flows nicely, and should do well for a long time. 

@Thomas Rutkowski Thanks for the reply.  I will definitely read more on your bog. I also appreciate the Mass Mutual suggestion.  Having a place to start is a big help. I'm actually looking into the topic for my parents.  One is retired and the other semi retired. They have some money in savings and of course they would like to make the most of it. However, they are pretty content to let it sit...

They've worked hard to earn it, and I would like to see it work for them.