All Forum Posts by: Jonathan Holmes

The idea of using leverage to purchase real estate is to allow yourself to own more than you can afford and let the asset pay itself off. There is also nothing wrong with low risk cash investing though the return is much lower. You are looking for a middle ground which I’m not sure is worth the hassle. With that same 100k you could buy two duplexes with 25% down and one more with a owner occupied loan and still have cash left over. That would give you 5 units to rent and 1 to live in. The cash on cash return will be astronomically better. And assuming you purchased these properties at a price point that would allow 200 dollars a month in cash flow you would be putting more in your pocket than the single nearly paid off unit. It would only get better at 10, 20 or 30 years out as the loans pay down. If you aren’t interested in carrying mortgages which is reasonable and understandable I would go around making low all cash offers without contingencies and try to get a deal. Depending on your market it is not unreasonable to think if you are patient and put offers on enough properties you could pick one of the low end ones for 100k cash.

Doesn’t look like a deal. You need to figure out what market rent is for similar properties check rental adds to see if there is even room for an increase. Secondly, be sure to follow the above advice and calculate your expenses. Remember finding the deal is usually the hardest part.

Definitely come up with some comps. See how much you would need to come down to sell it. You may end up having to decide if you want to lose money fast in a sale or slow through renting it out. If the rent is 650-850 you will not cash flow and will struggle to even cover expenses. Eventually something will break and you will need to pay for repairs. Without much room between rent minus payment that will come out of pocket.

Are you sure you can get a 20% down loan? That’s a mixed use property and a multifamily too. Unless you have a connection I don’t the standard would be 25 or even 30% if it needs to be a commercial loan.

Depends on the lease mine says after ten days it’s the tenants responsibility. If it says nothing then it’s yours.

I have never purchased with my own contract. There are usually state specific contracts to be found online. The purchase agreement is probably one of the simpler real estate forms. If you have the cash an attorney is always the safe bet. Assuming you are planning on assigning the contract you need to make sure there is a mechanism for that in the sales agreement. You should also be sure this type of sale is legal for you to perform in your state otherwise you may need to do a double close.

It appears the owner is willing to carry a second mortgage. They want 200k at closing which you would finance and the rest would be a second mortgage paid to the owner at 6% interest. It sounds like he intends the second to be a low payment loan with the balance being paid off when the loan matures. This means your total payments maid during the duration of the second loan will not equal the total amount owed. Doesn’t really seem like much of a bonus to me.

I wouldn't want to pay for a title search until I have a deal in place. Once that is done and I am moving forward then the title search will happen and if it comes back different from what the owner says it will you back out. Otherwise you could end up spending a lot cash running searches on properties when a deal can't be made anyway. 

Comps aka Comparable properties. Is it a three bedroom two bath? Look for a recently sold property (6 months or less) that's generally the same and see what its sale price is. You should look for the same number of bedrooms, bathrooms, garage space, lot size, square footage. Similar amenities like central air, pool, location etc. Look at as many of these as you can find. That will give you an idea of what the property should be worth after all repairs. Then you need to figure out repair costs. A standard formula is .75 * After Repair Value (ARV) - repair cost= maximum purchase price.

I believe he is saying it’s still late on the first you fee just doesn’t hit until the fourth. So even if she pays on the third it’s still late just no fee. The big issue is what is the tenant is lying or so incompetent that they still don’t get their paperwork sorted out. Sometimes a tenant will need motivated with a pay or quit notice to get them on the ball. The downside of the happy story above is that sometimes a tenant doesn’t get a new job and doesn’t pay next month and then your eviction is pushed back and you still lose the full turnover cost. Give her the notice best case scenario she pays up, sorts her section 8 out and you can tell her how happy you are that you didn’t lose her as a tenant.

There is mold everywhere so depending on how sensitive that test is you may get a positive reaction that means nothing. That said I have heard many horror stories regarding improperly installed tiled showers allowing water through. If the whole shower is tiled and you don’t know who installed it that’s a possibility. I would think your plumber would be able to see something but sometimes you just can’t get eyes on the problem. I would do a thorough search of every piece of dry wall and any other surface that is around the shower and go look at it in the attic as well. Generally speaking there is only a handful of mold types that are dangerous. If you don’t see any signs of water damage after a thorough look (and I mean thorough) I would do the mold test to see if it’s actually mold (don’t tell the tenants either way) and depending on what you see decide if you want to rip the wall out.