All Forum Posts by: Jacoby Atako

@Mitch Messer, yeah I was looking for a 15-20% overall return.  I had hoped for a 7-8% cash on cash return, which at current, this will not do.  But getting the house for $.80 on the dollar, and being able to manage it easily since it's next door seemed like good concessions.  Also, if I got creative and did a 5 or 10 year arm, I could get the cash flow to breaking even and earning the return in the pay down.  I may just be too excited to do a deal lol.

@Mitch Messer, thanks.  I actually wanted to use it as a rental.  But even then the margins are a little slim.  Rents for about $1700 on the low side, about $1900 would the high side (if I add a bedroom).  But my numbers when I calculate cash flow after repairs, cap ex, taxes, insurance and mortgage, I would down about $200 a month.  But holding for 5 years should net a large profit with the equity and pay down.   I am hoping, I can steadily increase rents to the $1900 range, but it would obviously be an appreciation play.  Have you ever taken a deal like that?

@Mitch Messer

So I was finally able to have a discussion with him this morning.  My first real negotiation and it went pretty well considering.  I didn't talk numbers in too much detail, just tried to gather info, but I ruled out seller financing.  He is planning on using the money he gets here to purchase a property in Kentucky for about $400k.  He mentioned upfront that he wasn't going to take a big hit on the price (initially) because he got burned years ago on the previous home where he came down $150k.  But I pressed on.  

He has a contract with his realtor for about 3-4 months.  He said he would be willing to stay in the house another 2 years until he can get the price he wants, but I know he and his wife really want to move and he may not survive another 2 years (older guy).  Plus, I casually talked about a decline in the market coming, which he agreed with.  I also got him to admit that he was going to have to spend another $25k paying his realtor, so I know he's easily willing to come down that amount.  I also happened to get an appraisal on my home next door (which is the same model with a slightly larger lot) and appraised for $385k).  When I mentioned that he said, "thats about what we are looking to get."

So I am pretty confident I can get him down to at least $360k.  My plan is to put an offer to him of about $315-325k.  Letting him know that I would not need an inspection, I can close on his time table with an option to buy with a $2k earnest deposit on it) so he can find the Kentucky home and not have to worry about renting in the meantime.  Maybe even help with moving costs.  I think the home will need about $6k-8k as I would want to add a wall to convert it to a 4 bedroom (which I did to my home) and paint and/or upgrade the flooring.  

I left off with telling him I would make an offer that he could plan for in case his home doesnt sell with the realtor.  But if prices continue to drop I may have to adjust it accordingly, so that could work in my benefit.

THoughts? 

@Mitch Messer that makes sense.  I will open up the dialogue and give an update.

I am looking for a little strategy on this situation.  I live in a nice neighborhood in Las Vegas.  My next door neighbor (older couple looking to relocate to Kentucky) is selling their home, which is the exact model of home I am in and appraised for about $400k.  He is looking to sell for $400k but so far hasn't had much interest.  His home is in great condition, but looks exactly as you would expect an older person's home to look.  

I havent talk to him about buying his home, but I know it is paid off. I know the expenses of maintaining these homes very well obviously and estimates maintenance, vacancy, HOA, cap ex, taxes, insurance, etc at about $600 a month. I am sure we could rent these homes out for $1700-$2000 right now, which I would have to price on the lower side based on this market.

So, getting to the point, I am just learning about options for seller financing.  Is there any way to make this deal profitable for both of us?  Buying it outright with a bank is not going to cash flow anything enough to be worth it.  But what type of seller financing options would you consider to make this cashflow but also a win for him? 

@Casey Powers yeah those numbers help me calculate worse case scenarios.  For instance if I plan on purchasing 2 properties, I can get in one using these numbers, keep a large amount of cash handy in case things get drastically worse, and then be able to potentially pick up better cash flowing properties to offset potential losses in the first house (in a perfect world).  More than anything this tells me to keep a significant amount of reserves regardless, but ultimately you can still rent homes out just expect lower income for the next 1-2 years.

Originally posted by @Casey Powers:

I just pulled the numbers from MLS for all of Las Vegas, properties leased for 1 year or longer. I am purposely excluding shorter term leases for obvious reasons. I ran the dates April 1 - May 28, 2019. Then for April 1 - May 28, 2020. I am only pulling LEASED properties and LEASED prices, so, the rent prices people actually paid, and the time to close.

Here is what that looks like for all properties, April 1 - May 28, 2019:

All properties for April 1 - May 28, 2020: (notice average and median price per square foot did not change, and the average and median days on market increased significantly)

April 1 - May 28, 2019, rentals up to $1400:

April 1 - May 29, 2020, rentals up to $1400: (notice again, pricing basically unchanged, while average and median days on market increased significantly)

April 1 - May 28, 2019, rentals priced $1401 - $1999: 

April 1 - May 28, 2020, rentals priced $1401 - $1999: (again, time on market significantly increased + more supply)

April 1 - May 28, 2019, rentals priced $2000 and up: 

April 1 - May 28, 2020, rentals priced $2000 and up: (increased time on market again, though a little less of an increase + median price per square foot decreased while average PPSF increased - average and median prices decreased while supply also decreased)

Those are the actual numbers for all of the Las Vegas MLS. Yall can interpret those numbers however you want but what I personally am seeing in this, is that rents are NOT going up this year and it is taking longer across the board to get properties rented. This is supposed to be the beginning of our busy leasing season.

 Those are great stats for someone like me looking to purchase 1-2 homes this year in Vegas.  I am looking at a couple of homes  4 bd 2 bath, that I can rent for $1700ish.  This gives a great deal of information into what I can expect.

The easiest to get past fear is to know the numbers.  I appreciate the insight.

@Casey Powers

Are you seeing any trouble with new landlords being able to secure tenants since people aren't moving? Longer vacancies, etc?

@Shina Franklin hey shina, you have a resource that I'm currently lacking. Getting strong at finding off market deals is where a lot of investors shine.

I might be willing to partner with you on deals if you can spend time finding them. I'm in Las Vegas as well.