All Forum Posts by: Jim Hartmann

Hi @Thomas Daly,

Numbers are not looking too bad.  A couple items I noticed was the closing costs of $20,000 and the property management.  For a property of this size, I would not expect that you would need to set aside $20,000 for closing.  I would check with a title agency in the area and see what is typical.  You are not paying realtor fees and unless you do an environmental study I would suspect you would be 1/4 to 1/3 of that cost.  

Also, even though you are self-managing, you need to set aside 8-10% for property management.  If you choose to pay yourself or not that is up to you, but if you are looking to sell these one day it makes sense to factor in the management fees.  Also, should you get to where you are tired of managing or too busy to manage then you already have it factored in.

Another thought, it is good to analyze everything to make sure where you are at with a deal but do not wait forever either.  The market may correct in your area due to the virus shut downs and so you may soon find a better deal than you had before.  Home values will be hard to determine during this time, but find something that works for your numbers and jump in.

Best of luck.  

Hello Jennifer,

With the market turning, some brokers are just trying to figure out the market and also determining whether a seller still may want to sell or not.  With brokers it very much about building a relationship with them.  While email does work pretty well and they really should at least send you some kind of response, it can be slow based upon the current virus shutdowns and people just trying to figure out where the market is and where it is heading.  You would keep trying the email, but reach out on LinkedIn or Facebook if they have a profile.  If it comes down to it, you may just have to call eventually and see where they are at on things.  

If the property is on the market, there should be some financials there so just keep digging.  I have had some brokers and owners who don't give you much and you have to re-create it.  If you know the area well, you may be able to come up with estimates for income and expenses based upon current rents and expenses for the area.  Knowing the cap rate of the area, you should be able to estimate a value for the property.  Once to get to a broker or seller, verify all assumptions at that point to get your real numbers.

Wish you success.

@Joe Splitrock and @Joel Owens - Thank you.  Great feedback on the commercial market.  I had assumed that it would get hit pretty good with everyone working.  I do know that some areas are allowing restaurants to stay open with delivery or carry out service only.  Not sure on this one.  

I had also been talking to someone who owned a retail store in a small town in the Colorado mountains, but he wanted full price for the note which is not something that any note investor would want to jump into unless there was enormous upside somewhere else in the deal.  This one did not appear that way.

@Dion DePaoli I may have another note that I would be interested in discussing with you.  I will reach out and get your feedback on how your company quotes as well.

Thanks everyone.  Happy Easter.  He is Risen.

Jim

Thanks everyone for the feedback.  @Bob Malecki, I also agree that there is a high risk of taking back the property and that would definitely need to be calculated into any purchase for a while now.  Since we don't live in these areas, it is hard to get a sense for the local economy there as well.  

@Scott McElhaney I can imagine there will be some who are just looking to unload the property to avoid the hassles.  Will definitely have to dig in and do more due diligence and really determine the reason the seller is looking to sell at this time.

Jim

Thanks @Bob Malecki.  I will watch that.  

I agree.  We are in somewhat of a holding pattern.  Hopefully you are all doing well and staying healthy in WA.

Be safe

Jim

We have been marketing with letters to seller financed note holders of commercial properties and have been able to close a couple of them over the last year.  In the last month, we received two calls from note holders wanting a quote.  We typically wholesale the notes when we get these types of leads.  Our list of buyers was not very large and we asked our buyers if they are interested and it seems that the pandemic has caused everyone to be more cautious toward buying commercial notes at this time.  One of the notes was on a building housing a restaurant in southern Colorado and another was a retail store in the mountains of Colorado.  Is anyone else looking at commercial notes?  If so, is it just a time to wait this out and then find out if the seller is still interested once this all passes or are you actively doing something different with selling these types of notes?  I understand the concerns in the market, but just don't want to miss opportunities if they are still available and I can help others as well as continue to make a little profit.

Thanks for your responses and input

I had considered going.  @Bob Malecki have you been before?  If so, what did you feel was the greatest benefit to attending?

Thanks

Jim

@Kenneth Littrell besides all the great info on this site, look up Eric Upchurch's website called Active Duty Passive Income www.activedutypassiveincome.com.  He is former military and has a passion for helping others succeed in real estate after serving.  He has a podcast, ebook and other resources.  I am not affiliated with him, but know him through a mutual contact of my real estate coach.  As with everything else, check it out before spending any money on products or coaching, but his site could be a great way to jump in.

We have been sending out letters to seller financed note holders for a little over a year now and have had several calls/month and those have turned into one deal every quarter.  It definitely takes a lot of work, but we send out around 200-250 letters/week.  We saw a few more calls when we hired our daughter to help with some of the letters and we started sending out around 400 letters/week.  She did not want to fill them out too long and so we dropped back down.  I need to get back to hiring out the envelopes again as it definitely frees us up for other work to grow our businesses.  I have looked at postcards recently, but want to make sure I have a good clear message on them.  Postcards are definitely cheaper and you can have them sent out for you if you like.  People still do call on the mailings and so it is worth it, but as mentioned it is a lot of work.

Best of success to you in your efforts

Jim Hartmann
Hoosier Note Solutions
www.hoosiernotesolutions.com

When we buy notes, we look at the paper to make sure it is written well and covers all the details of the note as well as the collateral. We also want to see good pay history. A servicer is a plus as well to help collect payments as well as tracking pay history. The property is also reviewed for the type of property and the condition of the property. A SFH with an owner/occupant will receive a higher offer than one with a tenant in it. Commercial and other specialty properties have fewer buyers in the marketplace and thus will have lower offers as well. Commercial is also a little more risky in that if you had to take it back, there may be a harder time leasing or selling again. If all these factors look good, you would be more toward the 20% discount that @Chris Seveney mentions.  Any issues or items on any of the above would likely draw the offer downward.

When selling a note, there are groups like ours which purchase notes and there are also institutional buyers which would purchase them as well. A search on the internet should reveal institutional buyers. You can also find someone in your local REIA to see if they are interested in purchasing at the price that you desire.