All Forum Posts by: Jerry Ellis

@Robert Buck I've done essentially no research on wholesaling and don't really have a detailed understanding so perhaps my post should be titled something else, sorry. I just stumbled across these off market properties and didn't want to let an opportunity pass.

@Jerry W. Even though single family isn't part of my plan until later, I'm going to do the math and drive by them for a look. As a consumer, when I'm in the market for something I tend to research the crap out of it which helps me to make an informed buying decision. This adds time to the process but when I see a good deal I can execute without hesitation or remorse. 

You hit the nail on the head. I'll use this as a chance to sharpen my skills so when the next opportunity comes, I'll be better equipped to evaluate it.

So I call an acquaintance with a duplex for sale to ask some questions. My intention is to find a 2-4 unit for buy and hold as my first investment. Turns out it's under contract but then he says he's got three single family homes he plans on listing in a few months. All are rented and while I haven't seen them, I pretty sure that they should be in decent shape. 

At first I thought I'd pass but then it occurred to me that maybe I could do something with them. He's got a a pair that he wants to sell together. Something about the garage for the one is positioned on the lot for the other house. Rented at $600 and $625. Wants $129k for the pair. Third rents for $500 and wants $56,900 for it. Located in a small town in the midwest. He's selling so he can focus on his other business interests. 

So they aren't distressed or at half price. At least I don't think they are. Is there anything I can do here?

There are several triplexes in town that have been on the market for a while. I think it's been 9-12 months but there has been some sort of change in the MLS that has affected the area agents and the listings are all out of whack in terms of information. I keep running the numbers plugging in different purchase prices usually varying $5-$10k (and sometimes more) off the asking and while it has an affect, it doesn't seem to break the deal. I'm going to self manage and am using 10% for vacancy, maintenance, and CapEx. I'm trying to be conservative in my estimates.

So an idea I had was to see if I couldn't get the owners to finance. I'll pay them close to their ask in return for a low down payment (or none) and favorable interest rate. I'm focused on selling them on the idea that it's good for them. 

Can someone post a link to an agreement so I can see what the typical language looks like?

Sounds like maybe clarification is needed and I'm sorry if this is coming across as a rant. You are correct in that she hadn't asked me to sign a buyer's agreement. I was looking for someone to serve in the capacity and spirit of an agreement and invested time to explain that along with the criteria for what I was looking for prior to and during the showing. I thought that she was willing to help me to find a place and this is what she lead me to believe all the way up to her parting statement. I would have signed a buyer's agreement had she asked as I thought she understood and was willing. 

I guess the point I'm trying to make is that one shouldn't blindly sign an agreement unless you're sure the agent is going to be able to serve your needs. Get a referral or perhaps build a relationship that goes beyond the first encounter. 

I can appreciate why an agent would want a buyer to sign an agreement in an effort to keep from wasting their time, and I like the idea of the agent representing my interests in a transaction. However, I've encountered super crappy agents and would hate to be in a position where I'm forced to work with them on a deal they didn't have any effort in.

Just before I bought my residence 6 years ago, I was putting in tons of hours at work which included some travel and didn't have time to surf the internet trying to find a place that met my specialized criteria. I did eventually run across a place I wanted to see and called the listing agent for a showing. On the phone prior to and as we walked through the property I explained what I was looking for in both a property and an agent to help me in my search. She was all peaches and cream and led me to believe that she was "my guy". As we were parting ways, she says, "Just let me know if you find any other places you want to see." I nearly lost it.

It was clear to me then that this particular agent wasn't going to put effort into helping me find a property and that her interest was really just to write up an offer and cash her commission check. Signing a buyer's agreement with here would have made me very unhappy.

There are plenty of good agents out there. Just be sure you vet before you sign. 

Thanks @Shawn Q. and everyone for all the advice. If I can get off work early enough, I'm going to swing by the assessor's office. I'll report back what I learn. 

In the meantime, if anyone has anything to add I'm all ears.

Thanks!

It's possible that I was given correct information by the Assessor's office in that it shouldn't go up. I feel like now I have to widen the margins for my property selection(s) though. That is to say that I feel like I now need a rental that cash flows exceptionally well in order to cover the tax increase possibility. 

I've read statements from some who among other things shoot for $100 a door. It's not too hard to find those but it might be a while to find one that pays $150 or $200. Or, am I wrong?

You're reading my mind @Connie Bhimireddy. I'm going to stop in the Assessor's office and pour on the charm to see if I can get an answer I feel has some credibility. 

I've been analyzing properties and often it's the property taxes that seem to kill the cash flow and not so much the price. It's my hope that I might be able to find a property with cheap taxes that I can make improvements on that will command higher rents. An earth shattering idea, I know. Ha!

From the Assessor's page:

List on the property is $84,500.

When I bought my primary residence, the property taxes went from $1,200 to $3,600 a year. The sellers were elderly and had owned it for twenty or thirty years. I wasn’t prepared and it was quite a shock. I’m looking to buy my first rental property which coincidentally has been owned by the same folks for twenty or thirty years and is also about $1,200 a year in property taxes.

I called the Champaign County Assessor’s office to inquire about a possible change and the clerk who answered said that there were no exemptions in place that would discount the tax amount and that it shouldn’t change. She seemed annoyed and I’m not sure if it was because I was asking such a dumb question or that crabby is just her everyday thing. Regardless, I feel some doubt and am looking for someone to share their experience.

So how worried do I need to be?