All Forum Posts by: Ian Turner

So I'm sure we're all familiar with the hugely popular Fixer Upper show and what the Gaines family has accomplished.  My question is regarding how one might go about structuring such a deal?  Here is the situation I'm faced with that replicates the way the Gaines operate their business:

-  I bought a fixer with cash and have buyers interested in working with me through the rehab.

-  We want to bring them along, give them a seat at the table, and ensure we utilize a floor plan and finishes that are exactly what they want in their future home.  Who wouldn't want a buyer waiting in the wings, right?!

So, how do we structure such a deal to ensure buyers have some skin in the game?  Would it make sense to structure a purchase contract with a large down payment and extended closing date?  Do we establish a purchase price now when we haven't even started demolition?  How do we protect both parties while ensuring there are methods to handle risks and unknowns?  How is this question different if we're talking a cash purchase versus financing?

Has anyone had an issues with this sort of approach being considered illegal for some reason as was warned above?  Is it an issue from the county's standpoint or more from a potential harassment perspective?

@Wayne Brooks

So you have no reservations about introducing yourself to tenants before the auction?  How exactly do you approach them?  "Hi, my name is Wayne Brooks, and I understand this property is slated for auction due to unpaid taxes.  I wanted to stop by to introduce myself and learn a bit more about the situation.  Mind if I ask you few questions?"  Simple as that?  Do you tell them you're interested in buying it?  (That would probably be assumed.)  Ask them about their lease agreement?  Ask if you can look around?  Do you approach it differently if you KNOW they are tenants versus owners?

Happy to hear you take a proactive approach!

@Chris T.

Interesting, I'm assuming it could be considered some form of harassment?  Good point, thanks.

Well, its that time of year when counties ALL across the country are gearing up for their tax sales.  BP has tons of great information on the ins and outs of sales but I didn't see this topic covered anywhere.  In conducting due diligence, has anyone actually take the chance of knocking on the door of an occupied residence that is slated to be sold?  

In my area there are a couple homes up for sale which I know are not occupied by the owner.  Occupants are either renters, friends, or extended family.  

Pros:  Better understand the situation, chance to view the property, chance to establish an early relationship with the current tenants, etc.

Cons:  Aggression?!, adversarial relationship (they may be planning to buy the home at the auction for minimum bid, now you come in and say you want to buy it too?).  Any other cons?

Any advice?  I'm talking about very inexpensive properties so even if something went sideways, the risks are pretty minimal considering the capital outlay they'll require.  Less risk is always better though!

Hi all, I've successfully completed a couple fix/flip projects to generate some cash I'd like to put towards a quality multi-family.  The inventory is very low for multi-family in my market but rents are good and in high demand with a quality, stable job base here in our rural community.

I have an opportunity to purchase a multi-family property from a gentleman who wants out of the business.  Here are the specs:

-  1960 construction, 4500SF total.  Former church with the upstairs newly remodeled and leased up at $1800 per month with excellent, long term tenants.

-  Basement is unfinished but has some existing plumbing, garages, finished walls,  etc. and I conservatively estimate $30,000 to build out each of 2 additional  units.  $60,000 capital improvement for a conservative $1400 in additional rents.  Once built out, I'd have a 4-unit with $3200+ gross rent.

-  Initial asking price is $250,000 but with zero to no comps around here, I'm struggling to determine if its a good deal.  My initial numbers indicate it is NOT a good deal for the existing use but with the value added building out the 2 other units it starts to look pretty good (negotiating point?).

-  Monthly Expenses:  taxes: $125, water/sewer: $150, garbage $50, insurance: $125, repairs 5% (newer finishes, metal roof), vacancy 5-10% conservatively.

-  I'd be looking at a conventional loan (possibly owner contract) with 25% down.  

What do you guys think?  How are my numbers looking and does this make sense?  I think he'll be willing to negotiate a bit as others who know him think he's asking too much in general (small town talk, people know people!).  The property is not listed for sale right now but I'd like to approach him with a fair offer that positions me well to capitalize on the value added through additional  units.

I'm establishing my new MH park and looking to add some units.  Fleetwood Eagle series are incredibly affordable and therefore I'm weary of the quality.  Basic research shows that Fleetwood had a bad reputation up until  around 2000 when they were bought by Cavco.  How  are they doing now?  

My thought is that there are MHs built in the '60s still going strong in our local  market.  I would assume that regulations and material quality are much better today, even on the lower end of the MH market.  Therefore I'm concluding that the budget-friendly Fleetwood Eagle products should be just fine for decent quality, new rentals.  Any first hand, recent experience with the newer Fleetwood products, specifically their Eagle line?

Newbie to the forum posting  but have been lurking around for awhile.  Anyway, I recently sold a home and have cash available for real estate opportunities.  I live in a small town (4,000) with a huge federal employer anchoring the very rural community.  There is a housing shortage with MANY workers (both full time and contracted) opting to live here for the week but not move to town.  As such, many live in their RV.  The RV parks around that rent by the month are completely full.  I have an opportunity to purchase a distressed parcel with 8 RV/mobile home lots on it.  The park is currently empty, has water/sewer/power on it which will need some repairs, and will need to be cleaned up in general.  The city has granted flexibility in either renting the lots to RVs on a monthly basis or placing MHs on the lots for a more permanent usage.  

I'm looking to purchase the property (25,000SF) for $62,000 and plan to invest up to $8,000 to improve the utilities and grounds.  Here are my projected financials:

-  Rent each stall at $250/mo providing water/sewer/garbage.

-  At 50% Occupancy:  Gross rent $1,000/mo, net $552, cap rate of 9.5%

-  At 75% Occupancy:  Gross rent $1,500/mo, net $958, cap rate of 16.4%

-  At full Occupancy:  Gross rent of $2,000/mo, net $1413, cap rate of 24%

For a $70,000 investment, $11,000-$17,000 per year is sounding pretty nice.  I like the thought of only being responsible for the utilities.  I would strive to rent to government workers and contractors, doing so by promoting the park as a quiet, clean, comfortable setting in a residential neighborhood versus the other parks that are along the highway in commercial districts.  Current estimates are that there will be extensive work going on at this government facility for 15-20 years.  I have the flexibility to slowly place MHs on the lots as cash is available and assuming they pencil out to be more profitable.  If nothing else, the land is probably worth about $65,000 alone.  

Any major concerns here?  Am I missing anything?  Anything to be aware of when renting to this demographic?  On monthly rentals, is it reasonable to require tenants to pay their own power/internet/tv?  Other parks offer ALL possible utilities but charge $340+ for them.  My approach would be if you want it, you can take responsibility for it!

Thanks all!