All Forum Posts by: Guy Yoes

I’m an investor living in Springfield but have properties in Branson West.  I currently manage some properties for an out of state owner. He is looking to sell up to 5 properties. They are duplexes with potential value added.  You can pm me for more info. 

@Gary Nelson

Gary-

Thank you for the impute.The $500.00 is a payment on all three. It was set up to allow the remaining spouse to have enough income and not have to pay for expensive repairs or loss of income from management fees. I was good friends with the family and they knew I would take good care of the properties.

I continue to flip back and forth on what I think would be the best solution. Here are some things that have come up since I posted earlier.

I have 3 or more REI investors with cash calling me wanting to see the properties. I have told them I can't do anything until I can exercise the options.

The market is somewhat cooling off and that may effect my decision on keeping or flipping the properties.

I have done several 1031's with @Dave Foster and he's the best at this process.

I am managing more properties than I want to already and would need to cut back on some if I plan to pick up any of the three properties ( they will need some cosmetic work for sure).

The first position notes are one's I hold. They are 5 year notes that pay interest only @9% and then the full note amount returned at the end of the 5th year. They provide decent income with no maintenance.

Need to get some work done. will continue later.

Dave-

Thanks for the comments. I'm leaning toward buying two and then doing a 1031 into the third. Option 2 is paying off the last  mortgage I have on the recent duplex I purchased.  

Things may change concerning the lake property. There are too few available and way over priced at the moment.

I'll keep you posted as things move forward.

I have a contract to purchase 3 duplexes with a family trust. All three are on the same street where I currently own 4 duplexes. These are all in the Branson MO area. The terms of the contract are as follows: A separate contract for each duplex @ $100K each, I have 90 days after the death of the second spouse ( the husband passed recently) to purchase any or all the properties. I manage the properties currently and defer all management costs, repair costs and a $500.00 payment fee to be remitted or applied to the sale price of the properties.

These are some options I have considered when exercising the lease to purchase contract

More info: Each property has 3/bed & 2/ bath and approx 1250 sqft with 1 or 2 car garages. Current rents are $600 - $650 per side per month. For an investor the appraised cost would be $140K for the duplex or $80K per side if I wanted to go that route.

1. Sell my right to purchase any or all the properties for a $25K fee. I would walk away with up to $75K cash and of course pay Uncle Sam his share.

2. Purchase all 3 properties to rent and manage myself @ $650 per side (going rate in this area) All are fully rented and tenants pay on time.

3.  Buy 2 properties for $100K each and 1031 them into the property I would want to keep. This would allow purchasing the third for about $20K out of pocket.

4. Sell all 3 properties for a profit of $120K and purchase a small apt. complex that would cost $250K

5. Sell the properties as 6 units with a profit of $180K and buy the lake house my wife wants really bad.

6. I could put the funds toward some first position notes ( I currently have 3) and would enjoy the passive income they generate,

These properties are decent but I call them class C+. They are all on the same street I own 4 duplexes on so managing them would be easy and create decent cash flow. However, the prospect of having $100K + cash on hand would allow me to be creative one some new projects.

SO, these are my thoughts. I would enjoy hearing how some of you would approach this situation.

Thank you for your time and impute,

4% is a good rate at this time. It's good you did the upgrades to add value. Consider adding cash flow by raising rents. Refi will cost you $$$ and you may need the cash to continue improving the property or paying more taxes if the reappraisal increases your tax base Also you may need the extra cash if a tenant can't pay rent. 

I'm not a REA and I have bought and or sold over 6 properties in the last year. I opted not to get my license due to the costs and professional duties that are required. Most REA's I know have a rental or two but they are also busy with their day job. They work weekends and evenings which take time from their families. They don't have a consistant income or good insurance plans. I don't really have any good reasons to get a license.

@Joseph Sapyta

Yes to keeping reserves. I bought 4 duplexes within the last year. I was not house hacking but the costs are still the same. I did a 1031 on two of them and financed the other two. I did the 1031 through  @DaveFoster on BP. He is the best.

I paid an average of 105K for them. I put 30 % down and had to pay about 3000 at closing. Then I had to put a roof on one of them for about 4500k.  Within a year I had to put in a new AC unit for 4000 on the same property. So for the first year I paid around out about 45K for that property. 

As the owner and property manager, I meet the qualifications for a RE professional. Needless to say with the repairs and other costs I took a loss on the property. Which is a good deal tax wise but doesn't help with cash flow. 

House hacking you can do the improvements and write all expenses off. You will basically live rent free and use your income to upgrade the property and get more equity built up quickly. You should live there for atleast 2 years, then rent both sides and buy a SFH and live there 2 years also. Now you have a duplex and a SFH rental property. This is where real cash flow starts. You make good money and your renters pay your loan off for you.

Hope this helps.

Guy Yoes

@David New

Most books cover the same information. I went to Amazon and got 2-3 of them. One was just on REI the other two were about Tax liens. I don't remember the titles offhand as I loaned them to a guy to read and haven't seen them since.

I like that the liens are backed by the city or county that issue them. Usually you get paid back fairly quickly with interest. There are some variations depending where you live. The lien sale is posted in the news paper and usually just a couple times a year. You could go to different towns to attend their auctions.  I suggest going to a few to just watch. It' like most auctions and some people tend to over pay.  Good luck!

To do your first deal, you will need more than you think. IF you can find a duplex for 150K (in Phoenix) and IF you qualify based on credit score, employment history, etc  and get a good interest rate you should plan on having 25-30% of the contract price.  From experience, you will need to replace items (some  costly), do repairs, and cover insurance and taxes (even if you include them in you payments).  House hack if possible so you can live cheaper.  Good luck :-}

I would suggest looking at tax liens. There are some good books on this REI strategy. They pay good interest and in some cases you can take possession of the property. Good luck.