All Forum Posts by: Jesse T.

What market are you targeting?  It looks like in Glen Allen most properties are selling right around(and often slightly above) the Zillow values, which indicates there aren't a lot of distressed sale.  While that is good for homeowners, that can make it challenging for wholesalers and investors.  

It does look like with a good deal, you could get something that matches the "1%" rule for a buy and hold but you really have to run all the numbers and make sure you account for repairs - especially delayed maintenance.  

Do you have investors you are working with?  If so where are they getting the deals that they do?

Start with the tenant that left, but it sounds like there will not be any money there.

My starting position would be full payment until April, then May 4/5 payment.  You aren't really out any money since you can use the security deposit from the 5th renter for May.  You do have a smaller security deposit, so I would insist on that being replaced as part of any break that they get on rent if the vacancy is unfilled.

Welcome to BiggerPockets.

What is the land worth?

What is the least they possible could sell it for?

With a 195K ARV and potentially 65K to get it repaired, even a 90%(which is thin) you would be looking at needing a purchase price of 110 or lower.

What does the existing financing look like?  Are you holding or flipping?  In negotiations especially if you are holding, you may want to drop your rate if you are responding to a counter.  You don't want to drop below the IRS minimum interest, but paying them principal vs. interest means the seller gets better tax treatment.  You can't deduct principal right away, but it does increase depreciation and ultimately the basis.

Is the property rented for 4 more months or 16 more months?

If there are 16 months remaining on the lease, there really is no reason they should not be able to find a suitable 5th tenant for the Fall, so any reduction should only be temporary.

I would probably propose a compromise - increase the rent for the remaining 4 by 2/3 of the amount - it looks like that works out to about $100/tenant.  In exchange for the break on the rent, I would want them to replace the security deposit of the moved out tenant.

Here is the risk of insisting they pay the full amount - they just take anyone on as a 5th tenant.  That person could either be a terrible tenant or maybe even worse, doesn't get along with the others and causes a couple of them to leave.

If you have the parents on the lease, I would start with the tenant who moved out.  They may be willing to pay a fraction of the lease in exchange for being removed from the obligation.  If you get them to fork over a month and give up the security deposit, your reduce your loss to $1800, assuming you can't bump up the rent on the other tenants.

Before you put an agreement in writing, I would confirm the condition of the house and that the rent should be $700.  It may be part of the reason the tenant isn't paying might be the listed rent was high and the only applications were potential deadbeat renters.  In addition to the rental rate, you want to confirm the property value - it could be that she paid 3 or 4 times what it is worth, so getting it for 1/2 what she paid would still be overpaying.

Also I would include in your calculations evicting the tenant and at least 6+ months of carrying costs.

With a loan of 20K, even over 5 years at 5%(which is a pretty generous rate for the seller), your total payment should only be a little over $500(including taxes and insurance).  A 10 year loan would be around $350/month.  With seller financing it is likely that you will pay the taxes and insurance separately vs. paying into escrow.

How close have you gotten?

What ultimately happened with the "close misses"?

If you aren't getting counters(or they are way off), then either your offers are way to low or you need to find sellers that are more motivated.

The houses listed on Redfin are from the MLS. It does look like they add a lot of info about market conditions etc.