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All Forum Posts by: John Leavelle

John Leavelle has started 2 posts and replied 1399 times.

Post: How to find Multi-Family Properties

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Eric Lierz

Have you tried Redfin, Realtor, Loopnet, or Zillow websites? Also check on Craigslist. Find your local REI meet-up group. They will be able to help you. :)

Post: What would you pay for this Minneapolis 4-plex?

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@James Miernicki

I would like to see more information on the market for the area. Any comps? What are the market rent rates? Do you know GRM or Cap Rate for the area? Although it is not a commercial property it might help get you a starting place for valuation.

Has the Seller posted a purchase price?  As Brent said we need more information to provide a rational reply.

Post: Buy or pass on this town home.

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Dusty Ackerman

One month Vacancy, Skip, or a big CapEx will sink you. Not to mention all the little miscellaneous expenses (Pest control, Legal, Accounting, leasing, etc). Looks like negative Cash Flow to me.

RUN A WAY

Post: Income vs CMA approach...am I overpaying?

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Eric Zdanowski

This is not a commercial or multi family property.  It is a Single Family Residence.  Cap Rate Valuation cannot apply.  As @John Kesner states the market value will be based on comps.  Any bank you use would turn you down for what he is asking.

He is trying to take advantage of you or whoever ends up buying.  Stick to you guns do not allow him to use that method of valuation.  If he doesn't like the reasonable price you offer based on comps, then, walk-a-way.

Post: Multi-Family Deal (Cincinnati, OH)

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Paul Lachaud

Have you walked the property yet to see what kind of condition it is in?  Any immediate Rehab needed? Paint, flooring, cabinets, etc.  If so use it plus the below market rent rates to justify a low initial offer.  A 20% discount would not be out of line.  He is a rental property owner.  He should understand you need to be able to Cash Flow in order for you to purchase the property.  Does he own the property outright or is there still an outstanding mortgage?  If he has a lot of equity then he may be able to accommodate a more manageable purchase price.

Post: Help on bulk house purchase

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Austin S.

Like @Aaron Gordy I cover all possible expenses that can occur.  

Credit losses (Uncollected rent and skips), Pest Control, Legal, Accounting, Leasing, HOA fees. That can add another 5-10% to your expenses.

I go into a purchase expecting 55% in expenses.  If they occur then I'm ready.  If they don't then I made a bigger profit for that year.

Looks like you will be cash flowing about $95 per unit with your last post. If you throw in any of the expenses we mentioned, then, your Cash Flow would be minimum.  Just food for thought.  :)

Post: Help on bulk house purchase

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Austin S.

The main thing that jumps out at me is you say some houses are in rough condition (need roofs, old, bad neighborhoods, etc.) yet you do not account for CapEx in your analysis. If you are including it in your repair/maint. number it is too low. I would recommend CapEx alone to be 10%. Repair/maint. 5 - 8%.

Not sure what you are saying cash flow is (the numbers and columns don't quite line up on my screen), but, CapEx will have an impact to your bottom line.

Post: creative financing ideas for a triplex deal rochster/ upstate ny

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

Hello @Susan Clark

See if he will do Seller Finance.  Terms can be very flexible and easily designed to make it a win - win. Low down payment, make interest only payments with ballon payment after X years.  No restrictions (I.e. Due on Sale clause) or appraisal inspection required.

First try to find comps for that area to make sure $75K is a good purchase price (preferably it should be low).  Confirm area rental market rates so you know if increases are possible.

Have you completed an initial Cash Flow analysis based on his income/expense data?  Post the numbers here if you would like a double check on it.

You say you possibly increase profitability. How? Renovation and upgrades? I would make sure you can go through the property with a general contractor to identify all Rehab and future CapEx requirements. It will help you get a discount on the property.

Later you can refi to a conventional bank loan with 30 yr mortgage and low interest rate.  You must make sure you do not overpay for the property.  The bank will require an appraisal and will only give you a loan of 70 - 80% of the appraised value.  Example:  Appraised Value is $100,000.  Loan would be $70K - 80K.  Obviously if appraisal came in at $75K then the loan would only be 52.5K - 60K.  You see your dilemma.

Bottom line.  Verify market price for the property and rent rates.  I'm sure you can make it would.   Hope this helps.  :)

Post: 17 unit property in south Georgia

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Christopher Hall

Is there any immediate rehab needed after purchase? I did not see any CapEx in your expense list. What condition is roofs in? How about plumbing and HVAC systems? You will need to build reserves for these.

Also, I am old school and live in a small town.  My hand shake and my word is my bond.  However, I am also a businessman (as you should be).  Surely the current owner filed tax returns.  They will show proof of income.  Request copies of the last 3 years.

Post: Multi-Family Deal (Cincinnati, OH)

John LeavellePosted
  • Investor
  • La Vernia, TX
  • Posts 1,405
  • Votes 864

@Paul Lachaud

I agree to what has been said in regards to raising the rents so much.  You will be justified in bringing them up to the minimum $500.  However, going to $575 needs to be done over time.  And you would need good sound reasoning to get that, such as, renovations and upgrades.

In the meantime you could look at sub metering or using a RUBS to improve your Cash Flow.