All Forum Posts by: Jeff Kehl

Just starting out I would keep them in my personal name and get a good liability insurance policy to protect yourself. When you get more properties you can form an llc and move the properties in there. You wouldn't use as s Corp unless you're earning salary type income from say a consulting business.

I'm not a lawyer, theses are just my preferences.

Is the property in the bay area? I'm surprised you could actually find a property that cheap anywhere near there. Personally if I have a gain that large I like to lock it in. I would subdivide and hold onto the lot, sell the house using a 1031 exchange and roll the profits into a market that hasn't seen that much appreciation.

Those loans were all fairly straightforward 20% down 30 year fixed conforming loans. Prospect sold them right after origination.

I bought properties 6-10 from homepath using one of their approved lenders, prospect mortgage in Atlanta. I'm not sure where all they lend but they can probably refer you to the homepath lender in the area you are interested in.

They expanded it to 20 properties in 2012 but I was using commercial financing by then.

I saw this report today and I'm really unclear how it helps. If an experienced real estate investor has good rentals with strong cash flows there is plenty of 70-75% ltv money available from small commercial bank lenders. What is Blackstone offering that's any better?

Looks like a good deal to me. The expenses you have seem conservative at about 60% of gross rent so NOI of about $3300/month or about $40k a year. 10 cap on the purchase price, about a 9 cap if the $50k in rehab turns out to be a good number.

The gas explosion sounds bad but I don't think it would hurt your ability to rent them. Does zoning allow you to rebuild the duplex at some point in the future?

When you get the inspection report, keep in mind you don't have to deal with it all right away. On my buildings I divided it up into things I wanted to take care of immediately/needed to be done to get it 100% occupied. The rest can be future projects.

I applaud you for being conservative but you're way over-estimating expenses. I have many sfr rentals in GA and I don't pay lawn care, pest control or any utilities on any of them.

Also you seem to be way overestimating reserves.

On a low end property like that I'd estimate maybe $700 for taxes $400 for insurance. But I also think $1000 sounds way high for rent.

There's also probably cheaper ways to finance it than a 8% personal loan.

Are any utilities paid by landlord? Are the units all occupied? How old is it?

Using the 50% rule, assuming $700x8= $5600 gross rent gives you noi of $2800. $280k at a 10 cap.

Do you have a good relationship with a small bank to borrow from for this? Probably need 20-25% down.

I've been looking into a couple of these in my county and it looks like to me that they actually go through the legal process of notifying and foreclosing on their note and then just quit claim their interest to whoever buys it at auction.

Makes sense from their perspective, saves them the cost of taking possession of the property, removing occupants, boarding up, winterizing.

I've driven by the ones I'm interested in and they don't appear to be occupied. It makes sense that at least some of the people would move out when they get the foreclosure notice.

My attorney's checking title on them before I bid.

This sounds similar to a deal I bought last spring. It is 20 units but rent for less than half yours. I paid $445k for $9100 gross monthly rent. This is an older building though and we've done a lot of work to it.

2 things to watch out for.

If utilities are landlord paid make sure you know what they'll be. On my place they've averaged 20% of gross rents in the past... We've made repairs so hopefully they won't be quite that bad in the future.

If it's old enough watch out for asbestos. I spent $20k to remediate asbestos.