All Forum Posts by: Jesse Houser

Hi @Michael Maslanka,

This deal did happen! The structure we ended up going with was an unsecured note between my dad and the other investor's LLC. They had promissory note to document the loan between the two of them, so there was a paper trail, but there was nothing recorded stating that it was a mortgage against the property.

My advice is to always get everything in writing so that everyone involved knows what they are agreeing to and there is documentation to hold everyone accountable. Whoever is lending to you will have to decide if they want to secured or unsecured note. Secured meaning they have some asset tied to the loan and they would receive that asset should you default (the property in this case). Unsecured meaning they are lending you the money but there's no asset attached to it. They don't have to be accredited in order to lend to you. There's a lot more that could be said about how to structure the note, the time frame, interest rate, payment structure, etc. I'm happy to share some of my experience with that if you feel it would be helpful, but there's also many other posts on BP that discuss these topics. Feel free to reach out if you would like to discuss in more detail.

- J

@John Boland If you're looking to invest out of state, I would take the next couple months and look at what markets are growing in the US. Population, employment, median salary, etc., and I would let that determine where I'm going to invest. And that doesn't mean you have to buy specifically in that city. For example, I live in Ohio, and Columbus is growing like crazy right now. You're going to pay two arms and both legs for anything there right now. But unlike Florida, it's not landlocked, so it's just continuing to spread out over central Ohio to the other cities and counties that are close to Columbus. What if you look at buying there (or somewhere similar), "knowing" that the city is going to continue to bloom outward. You're not buying in the top market area where everything is crazy expensive, so you could pick something up now that's reasonably priced with the potential that it grows into a prime market because of it's proximity to a city that's seeing extensive growth. And given projections about population growth, the demand for housing is going to go up. More demand, higher rents, increased property value providing you with equity. And it gives you multiple exit strategies. Rent it and cashflow like crazy, pull the money out and leverage the property to buy something else, or sell it to someone who is wanting to buy an investment property in the area but didn't get in before that market grew.

One side note, I wouldn't buy something purely on the belief that it's going to appreciate, and all of the amazing things I listed above are going to happen. But who wouldn't want to buy something where appreciation, both in property value and rents, is strongly projected to occur. That's why I'd suggest determining the market to buy in before you look for a property. 
 

@Nathan Shankles I've used PropStream off and on over the past year. They provide you with a ton of information about the property, property records, owner, market, etc. I've used it to send direct mail postcards to find listing as an agent and to find investment properties. You do have to pay for each lead on top of your membership, which can get expensive depending on how much marketing you're doing. But, you get access to a ton of information and marketing without doing a bunch of work yourself, which I think is where the value is. It puts a large majority of the information you want to know about a property all in one clean space without doing any of the leg work. The information isn't always up to date but I've found that it's accurate the majority of the time. 

Personally, I'm not at the point where I'm spending tens of thousands on marketing, so it's not worth it for me to pay for a subscription every month and buy the leads, particularly when you can find this information yourself with some digging as it's all public record (checking the county auditor's page, finding when the mortgage was recorded, pulling your own comps, etc.) However, you could get the membership for a month, put a list together, purchase your information, export it as an excel file, cancel after that month, and then market your list. Rinse and repeat whenever you need a new list to mail/market to. You're essentially using it just like you would ListSource but in a format that is maybe a little more user-friendly and cleaner.

It's definitely an amazing tool but you're paying a decent chunk for the convenience and getting some of the work off of your plate. With that said, if you close one deal because you've used Propstream the membership has paid or itself.

Thanks @David Hendrix! The numbers worked out really well and we're happy with how the renovations turned out. It's off of Main St. If you're heading towards downtown Mansfield from 71, it's in the neighborhood Straub and Logan Rd. Nice little neighborhood back there. Hope things are going well for you David!

Thanks @Michael Ealy! It turned out to be a pretty good deal. We closed on the purchased in January but we didn't get the contractors in until February due to wrapping up another project. We closed the sale this week, so 5 months to purcahse, rehab, and sell. And yeah, this is the first flip I've done. Not a bad start!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $80,499
Sale price: $157,500

Contributors:
Jeffrey Houser, Kaleb Packer

This was a foreclosure that was purchased off of Auction.com. I partnered with another investor to purchase and flip this property. We estimated $20k-$25k in rehab costs with an ARV of $140k. Actual rehab costs ended up being $35k. This was done intentionally as it allowed us to reach an ARV of $160k. We accepted an offer of $157.5k and paid $3k towards the buyers closing costs. In total, we walked away with ~$36k profit. Best of all, I had ZERO money in this deal. Partnerships are great!

What made you interested in investing in this type of deal?

While I don't primarily focus on flipping, this property was hard to pass up. Almost all of the work that needed done was cosmetic, although there was a lot of cosmetic work. I was able to partner with my dad and a friend of mine who is also an investor. It was fun getting to work together on something that wasn't a long term property.

How did you find this deal and how did you negotiate it?

This property was purchased off of auction.com with no negotiations. We had bid on this property during two previous auctions but did not meet the reserve requirements. We had decided that this was the last week we were going to bid and we ended up winning the auction.

How did you finance this deal?

This deal was purchased and rehabbed using all cash, which provided by a private lender. Typically, we provide private lenders with an interest rate that is paid out when the property sells. However, my dad was the private lender for this property and provided him with an equity cut of the sale.

How did you add value to the deal?

We made several improvements to the property to improve the ARV. New flooring throughout, new appliances, fresh paint, new/refinished drywall, new bathroom vanities, new interior doors, new garage door, new ridge vent, painted kitchen cabinets.

What was the outcome?

We were able to sell the property for $157,500. We paid $3000 towards the buyers closing costs. Net profit was just under $152,000.

Lessons learned? Challenges?

I underestimated the amount of time it would take to complete the rehab on the property. We did end up putting more money into the property than we had initially planned, which extended the rehab time and cost. However, we also increased our ARV by $15,000 with these added improvements and time.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a real estate agent and was able to provide us with comps and the opportunity to see the property before it was auctioned. We primarily work with Barrister Title in Mansfield, OH and have been very happy with their services. They always do a great job getting everything together for closing and have working with us when we were on a short timeline.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $80,499
Sale price: $157,500

Contributors:
Jeffrey Houser, Kaleb Packer

This property was a foreclosure that was purchased off of Auction.com. I partnered with another local investor to purchase and flip this property. We initially estimated $20,000 - $25,000 in rehab costs with an ARV of $140,000. However, our actual rehab cost ended up being $35,000. We made this decision intentionally as it allowed us to reach an ARV of $160,000, which is where listed the property. Although I'm a real estate agent, we marketed this house FSBO so that we would cut our commission cost in half.

We accepted an offer of $157,500 with the condition that we pay $3,000 towards the buyers closing costs. We were comfortable with this because the buyers were not represented by an agent, saving us about $5,000 in agent commission. In total, we walked away with around $36,000 profit. My favorite part of this deal is that I was in it with ZERO money out of my own pocket. Partnerships are great if you're getting started or don't have the capital to invest yourself.

What made you interested in investing in this type of deal?

While I don't primarily focus on flipping, this property was hard to pass up. Almost all of the work that needed done was cosmetic, although there was a lot of cosmetic work. I was able to partner with my dad and a friend of mine who is also an investor. It was fun getting to work together on something that wasn't a long term property.

How did you find this deal and how did you negotiate it?

This property was purchased off of auction.com with no negotiations. We had bid on this property during two previous auctions but did not meet the reserve requirements. We had decided that this was the last week we were going to bid and we ended up winning the auction.

How did you finance this deal?

This deal was purchased and rehabbed using all cash, which provided by a private lender. Typically, we provide private lenders with an interest rate that is paid out when the property sells. However, my dad was the private lender for this property and provided him with an equity cut of the sale.

How did you add value to the deal?

We made several improvements to the property to improve the ARV. New flooring throughout, new appliances, fresh paint, new/refinished drywall, new bathroom vanities, new interior doors, new garage door, new ridge vent, painted kitchen cabinets.

What was the outcome?

We were able to sell the property for $157,500. We paid $3000 towards the buyers closing costs. Net profit was just under $152,000.

Lessons learned? Challenges?

I underestimated the amount of time it would take to complete the rehab on the property. We did end up putting more money into the property than we had initially planned, which extended the rehab time and cost. However, we also increased our ARV by $15,000 with these added improvements and time.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a real estate agent and was able to provide us with comps and the opportunity to see the property before it was auctioned. We primarily work with Barrister Title in Mansfield, OH and have been very happy with their services. They always do a great job getting everything together for closing and have working with us when we were on a short timeline.

Thank @Mike Flora that was extremely helpful to read through! I always love hearing about the way that other investors structure their seller financed deals. My ideal situation would be to get it from him with around $20k down on a 3-year seller financed note. Then if he wants, or his next of kin, to call the note due they have that option. Currently, there are two units that are vacant, and three of the other four units are below market rent. So my thought is to structure it where I keep paying him around what he is making now during those three years so that it feels like he didn't even sell it. If I could get him to agree to that, I think we'd have a win on both sides.

Hi all,

So I'm meeting up with the owner of a 6-unit of Friday to discuss purchasing the building from him. He's in his mid-80s and looking offload the property just in case any health concerns come up down the road, and he's not able to take care of it/sell it then. He owns the building free and clear. Every time I've talked with him, he's expressed that he's not really interested in seller financing but always references back to times in the past when other people have offered to buy it using a land contract.

Does anyone have any ideas to try and get him to open up to seller financing? I have some ideas in mind but always think it's helpful to pick as many brains as I can.

Thanks!

@Elliott Stern One of the things I would point out is that you explain it as "taking a gamble on a property." If you feel like buying a property is a gamble, it's probably not a good decision to buy this property because you don't know enough about it. Obviously, there are always going to be unknowns when it comes to buying a house or investment property, but if it were me and I felt like it was a gamble, I would try to educate myself as much as possible. Learn as much as you can about the property you're looking (assuming it's made it through the general examination phase), hammer down on your numbers and stick to them, build in some contingency expenses into your budget to prepare for any unknowns that may arise. Knowledge helps to eliminate fear and reinforcing your knowledge in these areas should help account for some of that fear. And if the numbers don't work, they don't work. The more logical you are on the analysis and information side of things, the less emotional the process will be and the less fear you will have.