All Forum Posts by: Jay Patel

Congrats Dave! Those numbers sound great. I may need to start sending out yellow letters as its hard to come by deals the conventional way these days. How do you narrow down homes that have an absentee owner?

@ Nikki Grizzle I had the same fears. Hence the low rent estimate. I used $700 for an assumed rent and ended up renting for $935. We listed the propery on Sunday night (zillow) and by Tuesday we had 50+ emails/calls. It was pretty overwhelming and I really wasnt expecting that due to the sleepy area we are in. Do your homework on rents and put yourself in a position where you can offer a competitive price (get a good deal so you can cashflow well) and your phone will ring of the hook come rent time. Goodluck :).

Originally posted by @Dave Hurt:

@Jay Patel excellent - that is our strategy as well.  We are buying cash but build debt service into our cash flow analysis because we know eventually we'll want to leverage up.  Best of luck on the next!

Exactly this. Since I am pretty new to REI I prefer to not have those mortgage payments hanging over my head making me nervous lol. But yeah at some point we will be looking to leverage just like you.

Originally posted by @Rich Baer:

$11,220 per year (minus taxes and insurance) on a $53,000 investment. It is worth repeating.

We would love to find that kind of house again. Its getting harder lately though. I saw opportunities like that from when I started looking (July ish) till about December of last year and since then the MLS has dried up. May have to start looking into other methods to get deals.

Originally posted by @Dave Hurt:

Congrats @Jay Patel!  Do you plan on refinancing to pull capital out and reuse?

 Thanks Dave. Yes. Fortunately we have the ability to purchase a few more homes with cash. But we do plan to refinance to pull out cash after that. I am analyzing deals with an assumed mortgage so that when we do re-finance we still will cash flow positive.  

Originally posted by @Garry C.:

Nice work. As has been mentioned, every deal will be different. :)

I'm considering a deal right now that should bring in about the same monthly, but it's a 0BR studio at about $85k. I look at a deal like yours and I feel jealous. I mean, if the numbers work, the numbers work, but outside of Colorado the prices for deals just seem like it would be 'easier'.

So, what's your next deal and when do you plan to add it to your portfolio.

You are right Garry. But the truth is that I look at deals others have done in areas that are even cheaper than where I live and get the same feeling. I think its best to just focus on your area, know it like the back of your hand, and make sure you are buying smart where you are. That and using the power of leveraging your money for some of these more expensive properties, something I need to learn. I will be looking to re-finance this first home shorty to unlock the cash.

Next deal I am looking at is a a 3/1.5, 1050 SF (1980 block construction REO) listed at 50K. It doesn't have as much curb appeal as my first one but it should rent around the $700 to $800 range. It needs work though (flooring, cabinets, appliances etc.) so I am going to check it out later today to get a better feel of the rehab costs any maybe make an offer if I think I can keep it under 60K cost basis. Its across the street from a cemetery though... not sure how to work that into my calculations...

Thanks everyone! We are already looking at another house tomorrow!

Hello everyone,

After months of lurking the website and listening to some of the podcasts we finally pulled the trigger on a SFR last month! I wanted to give my thanks to the BP community, Brandon Turner, Josh and all of the guests on the several podcasts.

A little back story: I started my RE adventures with attending county foreclosure auctions last September. I started there because I had a friend doing it and some of the purchases he made sounded too good to be true. This was probably not a good idea for a newbie investor. After multiple unsuccessful bids (loosing to pro flippers) and 1 very close call with winning a house that had a bad title I retreated to the MLS.

Details on the deal:

REO - 1958 remodeled 2/1, 1030 SF (Decent Neighborhood, Close to 3 schools and on quiet dead end street)
Zip: 32726

List Price: $49,000 (Our initial offer was $46,500 but it went to highest & best)

Purchase Price + Closing (CASH purchase): $50,800 

(worried we should have stuck with the initial offer but we didn't want to risk loosing this one. There were other offers higher than ours which required financing. With this being an REO the seller (bank) went with our cash offer).

Improvement Costs: $2,100 (re screen porch, Landscaping (bad shape), painted entire inside, drained & filled 10' x 8' deep pond, Appliances) For a newbie, this house did not require much work which is not typical for houses in this price range in my area. In that sense I think we got lucky. The roof, water heater and AC are all mid life, it has updated windows, and the entire house is already tiled. 

Total Cost Basis: $52,900

The home just rented for $935/month. To be conservative during the analysis period we ran all the numbers assuming $700/month in rent so this worked out great. 

We just completed some minor work on the house and successfully found tenants & got a lease signed starting April 1st! I just hope we did a good job vetting the tenants, but I guess we will find out soon enough. 

What do you guys think of this deal?

On to the next one!

Originally posted by @Mindy Jensen:

I bought an REO in as-is condition, but was still able to do an inspection. They just won't fix any problems that you find. If you're not an experienced investor, you'll want that inspection.

Do you know what inspector you want to use? Call them and see if they have time to inspect before the time is up.

I'm wondering if the bank countered your offer, or if your agent wrote your offer with no inspection time? Good you caught it now, but this is why you read everything carefully.

Thanks for your reply. Yeah I do understand that they won't fix anything that we may find wrong with the house but it would still be great to know how much money we would potentially need to throw into it if something was found before agreeing to go through with the purchase. But I appreciate you clearing that up.

Being that this is the furthest we have gotten into a deal we do not have a go-to inspector. We have decided to call one first thing tomorrow to see if he can get it done the same day. If not we will ask our agent to go back to the selling agent to see if the bank is willing to give us inspection days. 

So they bank did come back for "highest and best" offers in which we gave instruction over the phone to our agent. The instructions were to up the offer price but not to remove any contingencies. 

Really at this point its 0 days. We have 72 hours to return the signed contract at which point we will loose all rights to canceling the sale due to something found in an inspection unless we leave the earnest money on the table. Is this the norm with a REO property given the contract says its being sold "As-Is"?