All Forum Posts by: Jesse Scroggins

Quote from @Chris John:

Quote from @Jesse Scroggins:

Quote from @Terry Hall:

I am in Fund 8. First year projection was 2-4%. I invested $50k; I received a whopping $125.very disappointed; I could have easily bought another rental or invested in a mutual fund and done so much better.

To be fair annually that would be a 3% return. 

@Jesse Scroggins  Is it me or are you off a digit?  3% on 50k would be over $1k.  He mentioned $125.

I took that as his first and only distribution was 125.

Fund 8 was launched February 2023. The fund likely just started distributions.

Distributions don’t start until 6 months after the last property of the fund is closed on. 

Quote from @Terry Hall:

I am in Fund 8. First year projection was 2-4%. I invested $50k; I received a whopping $125.very disappointed; I could have easily bought another rental or invested in a mutual fund and done so much better.

To be fair annually that would be a 3% return. 

Also distributions don’t start until 6 months after the final property is closed on. So there will be a long lag between when you invest and when distributions start. 6-12 months typically. 

I’m invested in the 3-pack and fund 9.

@Simcha Davidman

Eastern Oklahoma and western Arkansas is mobile home central.

DM sent.

@Alyssa Dyer Will you please send me their info also, thank you ! 

@Tim Herman

I mentioned a balloon term at our first meeting. Had to explain what it was and at that time he decided he was not open to owner financing. This being a couple of months ago. I will bring it back up to him cause that would be ideal. Another factor is I believe they are wanting a certain monthly payment to "live on". 

As far as doing a portfolio and not individual mortgages--- Initially my offer was lumped together to help drive the price down and I think we just ran with it. Also due to simplicity. It is something that is on my list to negotiate in person where I can explain easier. 

thank you for the response !

Originally posted by @Dennis M.:

Leaving way too much meat for the pm .No excuse not to manage yourself . You work 9-5 ? That’s part time ..I work 60 hours a week with three kids and manage apartments myself. Paying 40 grand and only getting 650$ rent is never going to cashflow big numbers for you even with a bunch of em . That being said it’s probably worth doing but you gotta find a way to increase your bottom line . As far as seller finance goes Those really aren’t bad terms either , it has more to do with the income to cost ratio imho

Using a PM is more of choice than a necessity, I certainly could do pull it off if i wanted. That may be the deciding factor if I want the deal. 

Thanks for the response. 

Help me analyze this deal and make sure I’m not missing something.

Backstory: I’m currently purchasing two duplexes from this same investor via owner finance. Currently 3 years into the deal without a hiccup or any issues from either side. I’ve added our previous primary home to our rentals. So that is a total of 3 properties, 5 tenants. We’ve used a local PM for the last year. PM is on board with the new properties.

This new deal consist of 11 properties, all occupied.

Average rent is 650 which is average for the area. Not necessarily B class neighborhoods but not bad areas. 2 are currently section 8. I don’t have a complete tenant break down, yet, but seller is “selling” the fact that these are all long term tenants. That’s to be determined.

The Midwest town is a weird one. With nice homes and run down/vacant homes side by side throughout town. I’m 31 and lived here my entire life. Property values have increased over the last several years and I feel these are under valued. Coming in at about 32k each. I think they are worth closer to 40k each or 450k and that may be a little low. I’ll have a better idea of this once I tour the properties. My issue is even with all this equity my cash flow is thin. More on that later.

He is wanting to sale due to his age, 75. This will be his entire portfolio. We are still in negotiations but have more or less agreed to 350k purchase price 40k down. His current proposal is owner financing 310k at 7% over 15 years. Hoping I can counter at 6% and stretch it to 16 years... increasing cash flow by 271.00 a month.

7200 total rent
-720 property management
-720 vacancy
-720 cap ex
-280 property taxes
-450 insurance
-2786 mortgage (7% over 15 years)
-1050 maintenance 15%

Cash flow $474.00
$745.00 at 6% 16 years

I know cash flow is very low. However I feel my numbers are very conservative. Another cushion is I could immediately stop the PM expense. Which would also slightly lower maintenance if I were to self manage. Increasing the cash flow by as much as 1,000 a month. This is not my plan as I still work my 9-5. My wife and I just had our first baby. Im perfectly happy giving up the cash flow. IF THE DEAL ALLOWS IT. I don’t plan on touching the cash flow, so that’s another “cushion”.

This isn’t an appreciation play as much as it’s an equity at purchase play. Paying down its own equity as well as gaining roughing 100k+ at time of purchase.

Plan on having an attorney write up the contract. And hoping to structure the deal so I can unload single properties. With a pre-determined pay off amount we agree to for each property. It would be ideal that upon each payoff the loan is restructured to lower my payment but I’m afraid that’s a stretch and to confusing for the seller. I would prefer to use a loan servicing company and will be looking into that and the costs.



Thank you guys in advance for any advice. I'll be happy to answer any questions you may have. 

Jesse

Just came across this and thought I’d share and get everyone’s opinion. https://gizmodo.com/a-california-family-won-a-1-6-million-lawsuit-over-the-1825022554/amp

Just came across this and thought I’d share and get everyone’s opinion.

https://www.nytimes.com/2018/04/04/us/california-b...

Couldn't agree more with @Kyle Eckert

Your family, your daughter so I'll leave that to you.

But I hope to get the opportunity to teach my future kids not only real estate but wealth building. It may take a real life, personal experience for many kids to grasp/care about financial responsibility much less wealth building.

Wife and I are expecting our first in August, sooo I know nothing lol