All Forum Posts by: Sam LLoyd

A deal I'm working on right now has the seller taking my property as a down payment of 25%.  Basically, it's a sale of my property to him, and then a sale of his property to me, with a simultaneous closing so that no funds actually change hands.  I haven't completed this though, but it might work.  Of  course, your seller would have to want the town house, or the deal would have to be sweat enough for them to take the town house...  Man, I wish there were 4plexes for less than 200 here.  Or maybe I don't..... it's just a way different market.  Out of curiosity, what do the units rent for?

I would sign a simple purchase agreement, get the title into your name.  The agreement can say that you will pay her after 5 years or sale of property, whichever occurs first.

If she doesn't like this, maybe she could quit-claim 50% or whatever value you decide on, to you.  That way no matter what happens, you'll be protected.  Added bonus is that this way she'll have taxes split up.... some now, and some when you sell.  The only thing I can think of to help you tax-wise is if you are on title for more than a year so that you avoid short term capital gains tax... but there are people who know more about that than me.

Those are the ideas that I had, hope they help get you thinking at least.

So, unless I'm mistaken, NOI is before you pay principal and interest.

I didn't get the same total expenses when I added it up, but all of those look reasonable.  It looks like a solid investment to me as long as your management  and vacancy are accurate. Is that management fee a quote, or are you managing it yourself?  If you were quoted 7% from the PM, I'd use 8% in your numbers in case there are fees for things like uprenting, but even if you're a couple percent off, it looks like a solid investment to me.  I don't have personal experience with anything over 4 units though.

First DON'T TAKE 'ANY' ADVICE.  That's my advice, take it or leave it.  There is advice that is good, and there is advice that will get you in trouble.  There is advice that will work for you, and there is advice that will work for other people but would cost you a lot of time and money.  Everyone has a different skill set, so be careful with any advice you get.  The first advice I got cost me 60k in the long run.

So addressing your questions, here's some more advice.  On a limited income.... go buy a duplex and move into it.  If you can swing a 4plex, that would get you up and running faster, but there are two reasons you might not want a 4plex.  You'll be dealing with a slightly different class of tenants because it's a 4plex.  You'll also be dealing with a different class of tenants because you'll only be able to afford a 4plex in a worse neighborhood.... I'd rather have an awesome duplex in a great neighborhood than a 4plex in a slum.... if I didn't have any management experience.

So:  Go to a lender, get pre-approved for a multi-family residential owner occupied loan.  Save up the 3% or whatever you need as a downpayment (or ask for a gift from family members that want to see you get ahead), and make an offer that has the seller cover your closing costs.  Just do a little research till you are confident that the duplex will make money if you moved out.

I would do this even if you live in your own home now.  If that home would make money when you move into the duplex, keep it... if not, sell it.

There, that's my advice for someone starting out with limited resources. It has worked for me, as well as many others.

Och!!

My thought:  Honesty is the right policy... and if there are headaches from telling them your good up, at least you get the headaches out of the way now rather than worrying about them later.

On the other hand, if you're buying with cash, I don't think it will mater one way or the other.  

Another option is to just send them an amendment to the offer and see if they sign it... they might do that without caring much.

There's a flipping book or two out there that walk you through repair costs... you can study those.  Another thought is if you find a place you like, get an offer in on it (assuming you haven't noticed anything major), get your inspection, and get a contractor to bid the items noted in the inspection.  There are a lot of protections in place to keep us from getting in real trouble... such as the title company doing all there stuff, and the appraiser doing his thing.

Neighborhoods are subjective... and that's the point.  Are you in an area that you want to live in?  Is it an area you would be ok living in if you were on a tight budget?  If you could afford the rent there, is there another neighborhood that  you'd prefer to live in?

As to comparing the different options, what I've found is that if you're working with an agent, looking at properties on the MLS, the properties are not going to be drastically different. One will sell for less because it's worth less.... not because it's a great deal. So if you have a trustworthy real estate agent, pick one that you would like to live in and go buy it if the numbers work for you.

First step is to check with any government agencies that would have records on the wells.. hopefully they will, as well as an as-built so you know which is which.

Then, unless your budget is really tight, hire a well company to come trouble shoot the well, find out which one is flowing, get a pump installed.... I would pay someone to do it right and take that whole burden off of you.

I hope this opinion helps.

Personally... I'll go with the green granite every time because it's my favorite color (and I have in several houses).  If I were moving back in, I'd go with that.  However, I don't think it will go with the white cabs.  If it's all the same to you, the neutral tones will go better with the white.  That's my opinion.  I'm not sure what the other colors look like, but if the gold is similar with the floor tile, that would probably be a nice color bracket for the white cabs.

You have to work it into your overhead when you compare it with other properties.   Right now, there is a similar duplex in my neighborhood that is almost exactly the same, and I'm not going to even look at it for that reason.  However, if it's still the best deal around, and doesn't need any work, and you can find great financing, and and and....

Also, it depends on the cost of utilities in your area.  If you could find out exactly what the utilities cost, get an educated estimate on repair costs and vacancy, then we'll be able to know more about how good a deal it is.

My mortgage broker says that 6 months is a good amount of time after purchase.... that way it is more believable that you have affected improvements... but in the end, proving that you've done the improvements is what counts... even if it's less than 6 months.  What you need is justification for the new value.... ie: appraisal.  Having before and after pictures is a big plus, as well as receipts for material/work done.  If you have to wait a year for the higher income to hit your tax returns, that works too... but you're also going to want your rehab to go against the income, so your taxes won't look that good.