All Forum Posts by: Greg Jeanfreau

@Clayton Crawford It looks like you have worked it out with your broker, but she still should (not must) present offers or at least provide supporting data. Don't count out the MLS. Sometimes opportunities hide in the most conspicuous places. Keep on market deals on your radar.

I think that is a great way to start. This will be much easier to manage than say 2 duplexes or 4 single family homes, but not so large that your financing will have to be commercial. It will also limit your exposure from vacancies. If you do end up getting it, please make sure to have the best leases possible and screen the heck out of your tenants. Don't let the need or want for occupied units affect your judgement. I would recommend renting them out slightly below market in order to create a high enough demand that you can be picky with your potential renters. 

Best of luck with it!

If others are right and you are closer to $10K+ in necessity and are not in too much of a hurry, you could start talking to commercial lenders about giving you a small cash out refi on the property. The ancillary benefit to this is to create a relationship with a bank that you may be able to use later. Commercial banks will move pretty quick on this since the aren't selling the loan with Fannie/Freddie guidelines and can do an appraisal fairly quickly. If this seems too cumbersome and expensive, then the credit card 12 month interest free cash advance plan that others have spoken about could be a good option. Friends and family with a good rate of return is also good. Just be persistent. You've got this!

Just like @Lloyd Lind & @Braden Smith, I looked at the property with my client. We actually put a cash offer in on the first round below the asking price and did not get it. It came back on the market and my client offered a little more cash, but we she ultimately pulled the offer because of the level of work. My client wanted to put the floorplan back to a shotgun as unique as that sounds. I don't think that your assessment is really that high. You can drop $100k on a gutted reno without blinking and without major upgrades. Every window in that place needs to be reworked. The electrical and plumbing are roughed in, but you would likely have to undo and redo it. The foundation has major issues. I have to assume that the sewerline is totalled. The siding sucks. That stupid closet on the back is a disaster. Costs can really spiral out of control when you not only have to renovate, but also undo someone else's crappy renovation attempts. And THAT is why bank owned and short sales are not necessarily the "deals" that people think that they are. Often times, the former owner (or flailing current owner) are willing to walk away from their property and ruin their credit. Why? Was it personal OR what it that the project is a total cluster****? 

On another note, I don't understand how your agent knows what the other bid is on Homepath. I don't recall them ever disclosing what the offers are. Maybe I missed something. But either way, whether you are buying it as an investor or an owner occupant, you shouldn't overpay and if you've put together your numbers along with research and come up with your highest and best, then that's that. Put it in and see what happens. You really never know what can happen. I've facilitated all kinds of crazy deals throughout the years that I thought didn't stand a chance. Don't get caught up in the BS hype. There will always be others.

@Stephen Roche I have some questions/comments:

How long ago did you purchase and how much did you pay for them? And therefore, what kind of capital gain and/or depreciation recapture will occur if you sell? (Ask your CPA) Or did you live in either (or both) of them 2 of the last 5 years? If so, then you could (and probably should) sell now with no gain. I agree to take into account being an absentee landlord. There are countless nightmare scenarios that can happen to absentee landlords. I also agree with the 1031 exchange idea with the caveat of making sure that you have your ducks in a row on the selling side and be knowledgeable of what you want that is realistic on the purchasing side. 45 days to identify is not a long time and if you identify first, then you need to make sure that you can sell the NOLA properties in a reasonable amount of time. What area(s) are the the two properties in? This could make a difference whether to hold or sell if there is a chance for appreciation (or not).  

I do think that the multi-family vs. single family strategy really depends on the market area. Personally, I stick to historic, small multi-family properties for middle/working class tenants that could be converted to singles and sold if it makes sense. Some people don't want to live in the large complexes, but can't afford to buy or rent a whole house. The large apartment building market definitely seems to be getting a little to overheated these days, so I try to stay in my easily understood wheelhouse with good cash on cash returns. FYI, I am on the same 15 year Am retire around 50 plan. 

You could split the commission with the seller and add 1.5% to what they are willing to pay to pay ONE side of the commission. Or you could ask the seller (or have your agent ask the seller) to bump it up to 2% and and you pony up 1-2% to bring it closer to 4. You are correct that when the FSBO seller says they "protect agents" and are even willing to pay 3-4%, it ultimately ends up becoming a dual agency level of work for the agent without the luxury of getting paid accordingly. Of course, it also depends on the price point for the agent.

Motivated seller leads

Having been burnt by a low score tenant or two, I would definitely recommend saying no. It sounds like others here feel the same. What is your minimum credit rule? If it is 700 and you've told others or plan to tell others that that, then you may want to tell this lady the same thing as to not trigger any fair housing issues. On a side note, 6 weeks seems like a long time with out a new tenant IMHO. If it hits week 2 and no lease signed, then I typically would drop the price and/or do what I can to make the place look better. Each month it is vacant is about another $100 it could have been dropped by and filled and stress that I don't have to deal with. Plus, I like going a little below market to keep them in the apartments for as long as possible. Every turnover takes money and more importantly, time.

If it's month to month, then can you not just give 30 days notice to them without having to pull what I call the "Nulcear Option" of eviction? You shouldn't need a reason to give notice if they're not in a lease. Louisiana is an extremely landlord friendly state compared to some, so I may be oversimplifying this.

How much time do they have on their lease or are they month to month?