All Forum Posts by: John Leavelle

@Eli N.

As part of your offer just require the foundation to be inspected.  If there are issues (which it sounds like there is) then negotiate to have it corrected by the Seller prior to closing.  Or get price credit if you take responsibility for fixing it.

@Carlos Rodrigues

I agree with @Account Closed about finding out Sellers motivation.

I have a few questions.  How long has the property been vacant and why?  What conditions is it in?  How much Rehab will be required?  Is the basement legal (appraised)?  How did you establish rent rates?  Did Seller provide past rent rates?  Or, did you estimate based on market rates?  What are expected operating expenses?  Gas leak!  Can you covert to all electric? I do have more.

Sorry for all the questions.  But, these are things you need to answer to be able to negotiate effectively with the Seller.

This is an income driven property acquisition.  It must be able to cash flow after you purchase it.  The Seller should understand that.  Since it is not currently providing income then the purchase price is extremely negotiable. And as suggested "Seller Finance" might provide a win - win situation.

Hope this helps gets you going in the right direction.  :)

@Lan Nguyen

Have you checked the last appraisal?  It should indicate 2 units or 3 units.  Do some research in county records to find what legal appraisal is.

Hello @Jeffrey Price

First, from one Air Force vet to another, welcome to the BP community and thank you for your  service.

Try J Scott's "Book on Estimating Rehabs". It's an excellent step by step guide to get you started (you can buy this book and others here on BP). Attend some local REI meet-ups and club meetings. There are plenty of networking opportunities at these events. Investors, Realtors, Lenders, Contractors all attend and are willing to help you. You can go to the BP menu and find the community tab. Then go to networking tab. You can search for events near you.

Also, post in different Forums here using specific keywords (I.e.  Looking for Realtor in Ft. Wayne, In).   People are watching for these type posts and will offer their help.  Good luck.

@Daniel G.

Ok, I have only been concentrating on small multi (2 - 4 unit) and small apartment (5 - 20 units). I would use the same criteria for larger properties I believe. Distressed properties with definite "Value Add" ability. High vacancy rate, below market rent rates, obvious rehab and upgrades needed, etc. If it's a poorly performing property it makes it easier to buy at a bigger discount. That seems to be the best method to achieve your goal. The rest depends on your turn around time. Of course you must be certain of the Cap Rate to get your projected Value after you improve the NOI. Just my two cents. :)

@Christopher Hui

I see three problems with your hypothesis. First, you cannot include your "rent payment" into the calculation because it is not income. You have already earned that money from your W-2 job. Secondly, you must include all costs associated with purchasing the property (Closing cost, inspections, fees, etc) in your total cash in. Lastly, you are missing a lot of Expenses in calculating NOI. Need to simplify your analysis approach. Hope that helps.

@Daniel G.

What type of property are you looking for? Single family, Multi family, Commercial? What strategy? Flip, Buy and Hold, BRRRR? I'm assuming B&H/BRRRR. There are too many variables to consider unless you provide the type of property and strategy intended.

@Ryan Van Fleet

Forgot to add this. This is considered a commercial property (5+ units), therefore, you should determine value based on income. Find out what the Cap Rate is for the area. Determine what the actual NOI is and divide by the Cap Rate (NOI/Cap Rate = Value).

@Ryan Van Fleet

This property sounds like what Fixer Jay (Jay P. DeCima) would call a leper property. Multiple distressed homes on a single lot that cannot be bank financed. His idea BRRRR situation. You might be able to work a Seller Finance deal out of this. You might look at it from the income side verses ARV and Comps for now. What are the current rents for the property? What are the market rent rates for each type unit? What is asking price? Try to get some idea of the rehab needed. Put together an offer based on conservative projected Income + rehab + ROI (12%?). Then negotiate a reasonable mortgage (low down payment, interest percentage, term length, no restrictions). Obviously you must make sure it has good cash flows by analyzing all expenses and mortgage payments.

Of course, do contact an appraiser as recommended.  Just an idea how to get the property.

@Lan Nguyen

You can edit your original post like @Michaela G. was saying.   Just delete the Redfin link information and photos.