All Forum Posts by: John Wanberg

Great thought Todd!  Unfortunately not an option for my wife and I.  We have mobility issues so we would need an accessible house, which this one is not. 

Thanks for the advice everyone - it has helped me go back and consider why the deal is making me uneasy.  @Bill S., I am also a huge fan of buying with a bit of equity to make sure that I have multiple exit strategies, and I don't think this deal would provide it.  Although I do think I can probably push the rents a bit higher, the amount of capital I would need to tie up would cripple my liquidity moving forward, and for a deal that is less than a 1%er...

@Jean Bolger - we should talk, but I agree with you that this is still pretty over priced. 

I did a similar deal with a 75% cash out refinance, but qualified for a conventional loan.  I ended up going through e-lend (really cheap, pretty good service) as a consolidator, but that only worked because I am just getting started and my debt/income ratio is not an issue.

Carlos, first, I am not a tax accountant.  In my experience however, sellers are motivated to delay sales if they think they can pay fewer taxes by booking the income the following year.  This can happen as a result of an income tax bracket (they might be planning on making less next year than this year), capital gains rules (if they have held the property for a shorter period of time), or planned losses (they can use losses to offset gains on this property and balance their tax burden). 

I don't believe that you need to accept their offer to delay.  If they have accepted all terms of your offer, their side of the contract (read it to double check) requires them to honor what they signed.  You could ask for further concessions prior to agreeing.

Another potentially interesting strategy is to see how much equity the owner has in the property, and to see if they would be willing to do seller financing.  This could let you buy the property immediately, with the current owner acting as the bank.  You would then pay them off slowly.  It can avoid the closing costs and hassle of dealing with a bank to do the loan.  Search "owner financing" on the forums for more info.

I live in the North Aurora market near Denver, which has been really, really hot over the past few years. With that said, I have been shopping this year to try and buy another rental property. The MLS has been pretty tight, but occasionally yields some interesting deals. Based on for-sale signs in the neighborhood, and the fact that in my area people have been having trouble raising rents beyond their current values (they can't find people that income qualify!), it seems to me like the market might cool slightly.

Today I stumbled across this deal, and am considering throwing in an offer. What makes it interesting is that instead of being a simple SFH, it has a carriage house in back that functionally makes the property a duplex. Main house is a 1500sf 3bed (1 non-conforming), 1.5 bath with a detached one car garage... C neighborhood, not great schools. Carriage house is about 800sf, call it a 1bed/1bath. Separate electrical, same water. Rent for the main house is likely $1400/mo, carriage house is currently rented for $725/mo. Just about everything is up to snuff, so it needs little to no repairs. Ask on it is $285k.

Going through the rounds, the cash on cash return makes sense with a lower offer and 75% financing, although I wouldn't consider it to be a huge score. Up until now I have mostly bought distressed properties that I can put a lot of sweat equity into and BRRRR. It makes me a bit nervous to tie up so much of my capital (I do not have a huge portfolio) to pay 25% down, and doing a BRRRR is out of the question on this one. No possibility of owner financing, they need to get their money back out - but they are motivated because they have had a bad experience (and put waaayyyy too much money into it).

So here is my question.  Early in an investing career, is it wise to stretch a bit and buy a rental that cash-flows decently well (15% cash on cash)... heading into the winter in a year where the market might cool, but rental rates will likely stay fairly steady? 

@Thomas Rutkowski, the high cash value life insurance is a pretty fascinating vehicle that most people don't explore.  I bought a pretty sizable policy after my wife and I had major health issues, which made a conventional term policy overly expensive.  It provides an interesting blend of benefits: life insurance to hedge against your death (only relevant if you have family), a cash value that you can borrow against (and is guaranteed never to go down, despite market downturns...so you can hop in during a down market with your own private funding mechanism!), and return on your investment (good policies can be around 5%).

Because I was young, I started with a over-funded policy that was insurance heavy (NOT what Thomas recommended) to build the payout value and take care of my wife if I die, and will convert my policy in the next year to a insurance light, cash heavy allocation that will become self funding within 10 years through dividends paid on the policy.  This strategy let me build up the insurance value early, and then maintain the payout as I switch to using it as a cash reserve.  It is not the right vehicle for everyone, but I thought it was pretty compelling. 

Yep - definitely interested.  I agree that there are still deals to be had - I have been door knocking pre-forclosures and distressed properties, and also trying to get some creative financing probate deals going...

At the moment I am planning on attending the meetup - see you there!

Is this still alive? I'm 27, looking to expand more in SFR, and have my primary residence + 1 BRRRR that has been awesome. I have been making offers pretty consistently this year, but think the numbers in Denver are a bit inflated right now. Looking at small/medium commercial now, the market seems to be much less organized there.

Any of you going to the BP meetup Monday?

Thank you Curt!

Given that the new Dodd-Frank regulations are absurdly long - I wanted to check and see if anyone is aware of seller financing limitations from the buyer side.  I know that if you are the seller, and want to seller finance more than 3 properties a year to owner occupants, you need to involve an originator.  But is there a limitation on the number of properties that you can BUY from sellers who are willing to do carry-back financing?

So let's say I have 10 leads willing to do seller carry-back sales this year, all at different rates (do they need to be tied to an index if each individual seller is only doing 1 sale?), with different amortization periods... Is there any legal or regulatory restriction on me closing all 10 deals? What about 100 deals?