All Forum Posts by: Grace Widdicombe

Thanks for your reply, Van.  Since I haven't looked at the BP spreadsheet I didn't know the vernacular. 

I find as a landlord that you can't do all the upgrades at once if the property is decent to begin with. So, you do what is most effective and makes the tenants happiest, or healthiest, or gets you the most leverage for the marketplace to meet your goals.

My point being that you have 3 line items for maintenance/repairs in your budget. AND you are financing $20,000 worth of repairs! - So, that's 4 line items in your budget (because you are also paying off that financing over time.)

• Maintenance: 10% 188/mo = $2256.
• PM: 10% 188/mo = $2256
• CAPEX: 10% 188/mo = $2256
• $20,000 = $20,000

Total Repairs / Maintenance first year: = $26,768.00

Do you really think it's possible? 

- Oh, ya, and my review sheet,- I don't use it as an automatic spread sheet.  I developed it to teach myself the math.

Grace

Hi Van,

I didn't see a reply. Did you get some help? gross rents = $1900/mo and the asking price was $150k. Therefore it was at 1.27%  Yippie!   Another great factor is the very low down payment of only 3.5% (of both the price of triplex and the repairs!) = $5950. Hooray!

The first Cash = $6k 

Your expenses you put down are worse case scenario, and I must say that I did the very same thing when I bought my 4-plex two years ago.   

If this a tax return onto itself, like a partnership llc, then yes you 'll probably have a $500 to $800 tax bill for it at end of year, depending on how good you keep track of records. You'll also have the state's business taxes each year. (Oregon has them at least.)

Here's my math for you: Except for: GMI / CAPEX / - to what are you referring?

• Income: 22,800 (annual)
• Occupancy (95%): $21,660
• Maintenance - 2166.
• Reserves - 2166
• Accounting - 600
• Sewer/trash - 600
• Prop Tax - 2200
• Insurance - $396

------------------------

• NOI = $13,532.

Your Deal starts off with the best of all worlds and should have great cash flow. The Net Income is figured before the payment to the bank. You take the Net income and divide it by the sale price. That = the CAP Rate. $13,532 / $170,000 = 8% CAP Rate

Since you are paying a bigger chunk back to the bank this will affect Cash on Cash, 

You're paying less cash out in the beginning, but paying more out in the payments. However, if you are getting a low interest rate, that is all the more reason to take advantage. 

• I did a calculation for a 30 year loan at 4.5% interest on $164,000 present value: Gives payments of $830.96 per month for 30 years (includes interest).
  
  • Payments = $830.96 x 12 = $9971.52 
• 13,532 - 9971.52 = $3560.48 = Cash made first year. 
• How long does it take to make your cash back? 
• Cash down = $5950 / $3560 = 1.67 years!  Very good! After 1.67 years it's profit!!!

I have a form that I created for multi-plexes and mobile home parks that I could send you if you are interested.  

One of the common mistakes I see new investors make is combining monthly figures with annual figures, and another is counting the same expense twice, not knowing what the expense is referring to. 

The calculations only work if the information is good. The information is only as good as the due diligence. It takes a lot of interviews.  Again, I did not include the two expenses which didn't seem to belong to me. You may have to add them back in.

What happened to the deal? 

Best wishes in your investing! I'm heading to Tacoma on the weekend, I'll have to check out the area!

Hi Walter,

I know it is a trip to Eugene from Medford, and believe it or not, there is a gentleman that is driving up for the REIA meetings at least once a month in Eugene from a town outside of Medford.

By the way, I am the moderator for the meetings in Eugene, and on the board of directors for the Northwest REIA in Portland. I travel (only 120) to get to the meetings in Portland, and then drive back the same night. It was with the encouragement of Cody Cox, our NWREIA President, I started the satellite group in Eugene, OR in September of 2012.

Please email me and I can set up an introduction for you, as I know he has been networking in Medford to someday start a REIA group.

[email protected]

Hi Ginny,

The only way to know the value is to look at sold comps, and I suspect there are sold comps of the townhouses, besides the REO, in the area. As you indicated, the power lines are a negative on yours. It's good that you have an exit strategy. You've thought this through, now to talk numbers.

Zillow is completely inaccurate. "Don't quote Zillow." (That should be a slogan.)

Please attend the Deal Analysis meeting tonight in Beaverton, as suggested by Randy Johnston. Anita and Courtney who head the meeting are very valuable leaders and there are always a couple of private money in the meeting as well. You will be so glad you attended.

You can buy food and go into the big meeting room. You can Stand-up and tell about your deal. If you don't have a contract on it, then don't give the address, etc. If you don have a contract, then you can give more information. I suggest you tell the leader that you are a guest, and that you want to present an acquisition deal to learn from.

Grace Widdicombe

Northwest REIA, Board of Directors - Portland

Northwest REIA, Moderator - Eugene

Hi Mark,

I read through this conversation and noticed that you didn't post after the BP meeting in the Portland area. I'm guessing that you learned that the laws in Oregon make a big difference in what you do, in comparison to the majority of the replies that you acquired from your posting. So the big steps that you need to accomplish in order to move forward on your short sale (in Oregon, because we are both a Judicial and a Non-Judicial Foreclosure state) are:

1) Is the paper a Mortgage or a Trust Deed?

2) Who is the bank? - I have a trick for locating the loan, playing "who's got the loan now?" game.

3) Get with the leading realtor to list this with you since you are not Short Sale savvy, you need the best. (I happen to know the best in the Portland area. He has successfully closed over 500 short-sales.) Please email me to get the lead on the real estate broker.

4) Join NWREIA for great education and networking.(Just a thought!)

5) in the meantime you have to gather the homeowner's financials:

Last 2 years 1040's, last two months bank statements, last two pay stubs, or proof of unemployment, a hardship letter, medical bills, (what ever it is that caused the hardship.)

6) Go to the county and pull the trust dead (or mortgage doc) and make sure you know everybody who is on the loan.

7) Get the name of the bankruptcy attorney AND:

8) Get the SSN(s) and go to the US Bankruptcy website and actually check to see if he/she is still in bankruptcy status. *** Pacer website is: www.pacer.gov

You'd be surprised how many times people say they are in bankruptcy protection status and they are not. This happens because they fail to follow instructions. If you need help looking it up, let me know.

Grace Widdicombe