All Forum Posts by: Henry Kicera

I'm trying to figure out what I'm missing.

Duplex for sale. Comps put it in the $136-140 range.

Listed for sale on MLS for $160k in sellers market

Gross rent $1,700/mo. Market rents.

I offered $136k, planning to finance. Don't have all the cash on hand.

Got an email from the agent asking why such a low offer?

I emailed back (even though I didn't have to explain) with attachments showing the comps, and how I thought the market doesn't support the list price, and that I didn't think a bank wouldn't appraise the property for much more than what I offered if at all higher.

Offer rejected outright. No counter. I wasn't interested in submitting a higher offer, I didn't want to overpay, even though the property would cash flow ok financed at list price (if it even appraised for that).

Property currently pending 4 days later with what appears to be a cash offer. I'm assuming it was list price offer based on the exchange I had.

What am I missing?

It doesn't make sense to me to seemingly over pay on an asset, and have negative equity off the bat? I don't think the market would support higher rents. The property was in good shape, no repairs to be made.

I understand getting 10% on your money, but the stock market is even out performing that right now.

Forgive me if I'm missing something, I'm just trying to learn.

Thanks!

Thanks everyone for your responses! I really appreciate the feedback

So I may have finally found a duplex that fits my parameters. 

However, my desire is to buy it in an LLC.

I've been trying to get it set up for over a month but my attorney that I've hired is unacceptably slow. I'll still need to get the EIN, bank account, etc before I'm able to establish the business. 

The market is moving fast, and the last duplex in this area was under contract in 5 days. 

What would be the best way to get this deal under contract, then ultimately into the slow-to-start LLC.

On another note, I'm looking for an attorney in Northern Kentucky that is more my pace of action.

Thank you so much for your feedback!

Hello everybody,

I've found several (3) properties which interest me. They all are owned by the same LLC. The person who I've been negotiating with is the principal of the LLC.

She suggested that one avenue to go about purchasing all three together, would be to purchase an equity stake in the LLC and eventually buy her out.

Has anyone purchased property or an LLC this way? The LLC owns all 3 properties.

I'd love to hear your experiences and feedback.

Forgive me if my information is correct, but let me give a perspective.

The property should cash flow, hands down. I believe the reason behind getting into larger apartment complexes (as opposed to multiple quads) isn't for the cash flow amount/unit number. Most investors like to keep cash flow around 100$/unit. On these larger properties. The value of these properties isn't in market rates but comes in the way these properties are operated.

The property is valued based upon its NOI. The good deal comes in where the investor finds a property that he/she sees mismanagement in or a place to add value (reduce expenses or increase incone) thus increasing NOI and the total value of the property.

The payday comes after value is added and the property is refinanced (as long as it can still cash flow after debt service at $100/door). The cash from refi goes into your pocket tax free, and you move on to the next deal.

Personally, I'd rather do one deal on an 80 unit property at $100/door than doing 20 deals on 4 unit properties. A lot of the work is the same when buying a 4 unit or 80 unit.

Just my thought provoking $.02

I've got an itching question: I understand the process of finding investors during the financing/capitalization phase of the process, by what I need an answer to is this: How does one find/support the large deposit needed to begin escrow. I understand that these deposits can be in the tens to hundreds of thousands of dollars, and before the business plan/investor summary is presented. I'm just looking at options and what solutions people found in the past. Ben Leybovich Wendell De Guzman Any Advice? Thanks!

@Sean Butterfield where is this deal? perhaps I missed it....keep us updated. I'm interested in the process.

What came first? The chicken or the egg?

Are you a carriage before horse person?

LLC before property or property before LLC?

What are the benefits to forming the LLC while I look for my first deal? Can anyone go into details about securing credit history of an entity and credit lines without the income source? Without a property (income and losses), how difficult is the paperwork/regulatory requirements/statements without the asset? Will a perception be there that an LLC was formed for ::gulp:: decreasing tax liability dishonestly, instead of creating wealth? Any good cannoli recipes out there?

Thanks a million (the terms of this million don't mature for many years out, so really the thanks a million is thanks zero. think of it as leverage)!

Henry K.

Can I piggyback? I'm in need of private money, and I'm having trouble searching for sources. I'm in NKY and want to deal with someone local. Any thoughts? Thanks!

Yeah. What Scott said