All Forum Posts by: Henrik Frank

"Subject to" deals sound like the holy grail. The seller gets to sell (and likely at a decent price) and I pick up a house without spending (much) money. If it can be rented to cover and eventually be sold at a profit, all are happy.

However, I was wondering what happens to the seller in the meantime? He would obviously still have the mortgage on his credit - I assume this would significantly lower his possibility of buying a new place and maybe even his ability to rent a home?

Also, is the end date of the contract always a fixed date (e.g. we will sell the house exactly 3 years from now) or is it more of an option to sell anytime before the expiration? (If the latter, I assume longer contracts would be better...)

Thanks!

Ryan, Dave, Dan and Dick,

Thank you so much for your warm welcome. This really seems to be a very friendly forum. I'm surprised to see just how willing people are to share their knowledge! So much great information to absorb...

Now, if I could only decide on what to do first (other than read posts all night every night :mrgreen: )

I'm a 40 year old IT specialist with an MBA I don't use for anything and a long standing interest in real estate. I'm currently working on a few deals in Palm Desert, CA, but it looks like I may have gotten it all wrong. Along with a long time friend and business partner, I had been scoping out places out there for years (mainly vacation rentals), but finally decided the market was ripe for picking up a couple of small condos each for the purpose of renting. Places are selling at less than 50% of what they were 1-2 years ago and a 2bdr 1 bath for less than $150K is unheard of in most areas out there (and here in OC). With that in mind, we've been securing places for around $130K which will rent for app. $1050. The places all have association fees of about $220 per month. Using various calculators that include depreciation and assuming property mgmt fees of about $100 per month per unit, we were happy to see that the places seem to be close to breaking even (at least post tax). We figured any time we could get someone else to pay off the mortgage on a property (over time) we were in good shape, and if appreciation kicked in, that would just be icing on the cake. I should also mention we are operating is the absolut lowest rent range found in Palm Desert.

However, from reading this board and applying 2% and 50% rules - it appears we're way off. The question then becomes, how do we buy places in areas like Palm Desert, Palm Springs and Orange County at the prices suggested by the "rules"? We're already bying REOs and a prices less than they were offered for.

Finally, my friend did manage to get one unit for $85K. It was in need of lots of repairs and will probably total around $15K for the complete rehab (rent will be $850 with the same HOA and Mrmgt costs as above). This is the lowest price we've seen any unit sell for in Palm Desert, and we've seen nothing else come close in the last 4 months.

I should mention that we are both skilled and interested in doing almost all rehab work ourselves. If we could find units priced way below market and do profitable rehab flips, we would much prefer this (we actually enjoy the rehab part). We're sticking to condos for now (they are a little more straight forward to deal with and seem to carry a little less risk).

That ended up being a rather long and messy introduction. I'm happy to have found BiggerPockets - I've already learned a lot just from reading posts all night.

Thanks,

\ Henrik