All Forum Posts by: Jimmy H.

...anthony scampers off, tail between legs

Interesting thread as a whole. But I, for one, am amazed that anyone would be willing to transact through Ebay for a quarter million. I wouldn't be buying ANYTHING on ebay for that much, nor would I be the seller - do you think an ebay contract is strong enough to effect specific performance?

I've had people bail on buying my xbox, much less a castle.

Also want to give props to Josh and BP, I wasn't so sure of the merit of the "influence" rating. But i've noticed very consistently that negative influence is strongly indicative of phonies and cons on here - the system seems to work pretty well. Kudos to you for keeping BP from being overrun by scammers and the like.

I may be interested in partnering/syndicating on this deal.

I would like to hear a bit more detail. What type of neighborhood etc?

Even if you add in the 100k for repairs and 50k for vacancies (what is the current occupancy level?) the effective asking of $800k equates to under 20k per unit; that seems a bit low, but of course i'm comparing to units in my area.

I'd like to hear a bit more, PM me if you'd like.

Brandon,

I can't speak for Bryan but I am seeking the latter: I want to minimize my payment and maximize cash flow while maintaining as much flexibility as possible in terms of prepayment, etc.

There are a few properties i'm looking at, none of which are single family owner occupied.

As an example, i'm looking at a 5 unit property 2bd/1.5ba each. Rents are currently $400, fully occupied, all utilities are the tenants responsibility - owner pays about $40 per month for trash and $20 for common area electric/security lights.

A longer amortization term is better for me as I plan to use this owner financing as permanent financing, I do not want to refi with a bank if possible. I have a high credit score but currently am leveraged as a high as a bank will go in terms of my personal DTI.

The SAFE Act is a big concern for me. But, I do not fully understand it, even after reading a bit of it. And yes, I would like to make the owner financing part of the offer.

And by coercive I meant persuasive and appealing to the seller.

I am in the market for long term buy and hold rental properties. I have the cash to acquire a couple of units but would rather use that cash as a down payment in an owner financing scenario. I do not believe that I am in a position to get bank loans very easily, which makes owner financing more attractive.

I have come across some sellers who are open to the idea of owner financing, depending on the terms. I need help in crafting the terms of the note that will be both attractive to the seller and beneficial to me.

My thought has been to offer around 20%-25% down, 6% fixed interest, and a 15-20 year amortization. But, I wanted to post here first and get some suggestions so that the owner financed offers I make are as clean, concise, and coercive as possible.

Thoughts? Suggestions?

I am looking at a 4plex, listed at $95,000. Realtor says it has some plumbing/leaking issues and other maintenance needed but nothing too significant. The property is a Freddie Mac homesteps (similar to Fannie Mae Homepath) property with about 10 days left in the "firstlook" (only owner occupants can make offers for the first 15 days).

The property next door (same exact 4plex style and look) just sold for $130,000 and needed some repairs as well. Other 4plexes on the street that are in better shape are listed for 175k-195k.

My fear is that when the "firstlook" is up, investors will be all over this thing, Now i know it doesnt meet the 2% rule, but im certain this is a good buy at this price.

I have cash, should I offer above - say 100k cash no contingengies? How should I make my offer the most attractive, as I know investors will likely be all over this one as soon as the firstlook period is up.

Should i get my contractor through it now, should i pay for an inspection if they'll allow me - what steps do I need to take so I am prepared in 10 days when the firs tlook is up (I think firstlook ends March 16th)

Good call on insurance, that slipped my mind.

I don't believe to be responsible for any repairs if you purchased only the land, but if you purchased the 5 available homes from the owner as well, that would be different.

Lots are gravel, which should require minimal maintenace. May be worth paving with blacktop instead?

Good points - I will get the treatment facility inspected by a couple of different vendors. I will also check with the health department.

Turns out there is not septic, but there is an onsite treatment facility. It costs $165 per month to maintenance and apply chemicals etc.

There is also electric cost running $150 per month, presumably covering common areas and for running the sewage treatment facility.

Other than that, the other big cost is property tax is 200 per month and a State and sewage permit for $35 per month.

Expenses look to total $550 per month, including everything (that I know of thus far) except debt service.

What are loan terms like on these deals post crisis?

Given 30% down 8% rate and a 25 year term (just geusstimates) an resulting $800 payment - I'm looking about $1000 cash flow per month ($2350 - $800 - $550 = $1,000).....Thoughts?

Just saw a recent listing on a mobile home park that is about a 45 minute drive from my current residence. I am unfamiliar with MH park investments and am curious as to how to value the cashflow.

Seller is asking $199k for the land + 5 park owned homes.

Homes rent for $450 (includes lot rent of $195)

Or the seller is offering the land alone for $149k.

Lot rents are $195 * 12 = $2,340 gross per month.

2% rule indicates land value of $2,340 * 50 = $117k (I know the 2% does not neccesarily apply to MH parks)

Water and electric are paid for by tenants directly to the city, the owner incurs the cost to operate the septic system.

Is there a rough rule of thumb for MH parks? I've read an online article that mentioned a 30% operating expense retio as appropriate.

Would a land only deal be a fairly passive venture? I'm thinking that collecting lot rents would not be too troubling - no maintenance?

Deal or no deal? Land only or both? Lonnie the owned homes out? Thoughts?

PS I am working on getting accurate property tax, septic, and insurance costs - what other costs might I incur?

I think mark to market is an ideal that shouldn't be applied to real estate. Why? Because real estate is far too illiquid to determine reasonable market value.

Mark to market is fine with equities as they are liquid and can be accurately valued at any moment. A piece of real property is worth whatever someone is willing to buy it for at the particular moment in time and that value will be different for each indivdual - highly variable. It is an exercise in futility to attempt to mark real property to market because there is no liquid market to mark to (sounds like i'm reading Dr. Seuss).

In fact, FASB recently issued a statement indicating that they will likely be moving away from mark to market regulations concerning real estate (at least for bank's). They will be moving away from mark to market and towards the international standards currently being used.

As is noted in posts above, it depends on the situation and intended use. Think of it in terms of accounting rules: Held-to-maturity securities are not marked to market but trading securities are - therefore Vikram and JScott are best served by incorprating market values and accounting for transaction costs to determine net realizeable proceeds. Buy and hold investments are akin to Held-to-maturity securities and should be accounted for as such.