All Forum Posts by: Joseph Back

First thing I would say is to start with the end in mind. Talk to as many local lenders as possible before buying the deal so you know what you would qualify for. Also make sure you talk to all of these lenders about seasoning requirements. Many lenders will require you to own a property for 6-12 months before being able to do a cash-out refi. Some don't require this so make sure you know who they are and that you are approved for a loan at their bank. Regarding specific timing, usually it will take 30-45 days to get a refinance completed so figure out how long the renovations will take and then tack on 30-45 days.

I see you having two options. The first is to continue to look in the Albuquerque market even though it is an expensive market and going to be very hard to find deals. Start trying to network with more realtors and get on all of the local wholesalers buyer's list, then hope and pray you find a deal. The second option which I would recommend is to find a market nearby that has less competition and therefore more deals. Maybe look for some smaller cities within a 1 hour drive and start buying there. Going to be a lot easier to find deals that way.

We got started in wholesaling back in June and are now averaging 4-5 wholesale deals a month. I wouldn't say it requires a ton of overhead up front, our first 3 mailers cost about $10,000 all in and we closed about 6 deals resulting in ~$40,000 in assignment fees. I am not saying wholesaling isn't hard, it is definitely a fairly stressful long hours type job, but very doable if you are willing to work hard and stick with it. Furthermore, competition in wholesaling has picked up immensely in just the past 6 months so starting fresh today takes some creativity, can't just blast out 5,000 pieces to absentee owners. You have be hitting every possible facet and subset of potentially motivated sellers. For example, our company currently has 14 different lead generation strategies we utilize every week.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Lexington.

Purchase price: $210,000
Cash invested: $10,000

Purchased a 4-plex consisting of four 2BD/1.5BA units renting for ~$600 each. Current owner was charging below market rents, market rent being $750. Since seller was getting older I negotiated with him such that he owner financed $200,000 of the purchase price at a 6.0% interest rate on a 30 year amortization with a 5 year balloon. The deal worked great for both of us as he got a completely passive monthly income stream, and I was able to purchase a cash-flowing 4-plex for very low money down.

What made you interested in investing in this type of deal?

The ability to only put 5% down and avoid having to get approved for bank financing.

How did you find this deal and how did you negotiate it?

Cold called multi-family property owners in some areas of town I liked.

How did you finance this deal?

5% down cash of my own funds and the rest was owner financed.

How did you add value to the deal?

Upgrading exterior windows and siding to be able to raise rents.

What was the outcome?

Cashflowing 4-unit apartment building with only $10,000 invested total.

Lessons learned? Challenges?

It never hurts to ask.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Lexington.

Purchase price: $210,000
Cash invested: $10,000

Purchased a 4-plex consisting of four 2BD/1.5BA units renting for ~$600 each for $210,000. Current owner had taken care of property somewhat but was charging well below market rents, market rent is $750. Since seller was getting older I negotiated with him such that he owner financed $200,000 of the purchase price at a 6.0% interest rate one a 30 year amortization with a 5 year balloon. The deal worked great for both of us as he got a completely passive monthly income stream, and I was able to purchase a cash-flowing apartment building for very low money down. Current plan is to make some upgrades to the property to get rents up and then refinance it on a 30 year fixed Fannie/Freddie loan and hopefully be able to pull all of my original investment out.

What made you interested in investing in this type of deal?

The ability to only put 5% down and avoid having to get approved for bank financing.

How did you find this deal and how did you negotiate it?

Cold called multi-family property owners in some areas of town I liked.

How did you finance this deal?

5% down cash of my own funds and the rest was owner financed.

How did you add value to the deal?

Upgrading exterior windows and siding to be able to raise rents.

What was the outcome?

Cashflowing 4-unit apartment building with only $10,000 invested total.

Lessons learned? Challenges?

It never hurts to ask.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

We use Yellow Letter HQ's postcard with Google Street View. It is a really cool postcard because the company automatically puts a google street view picture of the property on the postcard, make is feel much more personal and gets much higher response rate.

@Matt Honeyford We found ourselves in a very similar boat at the beginning of this year. Realized we had paid over $100,000 to wholesalers the previous year and wanted to avoid that high cost this year. Our solution was to start doing some direct mail to absentee landlords this past February to see if we could source these deals direct. The mailing was pretty successful in providing us with some good deals as well as paid for itself as we conducted a few wholesale deals ourselves to pay for the cost of the mailer. Since then we have scaled up the advertising to about 5,000 mail pieces a month along with putting out bandit signs, launching a SEO optimized website to drive leads and starting to cold call motivated sellers direct. The result is we now have a 6 figure in profit wholesale business that provides us with the cream of the crop deals that we can choose to buy ourselves or wholesale for a quick profit. I would highly recommend doing an absentee mailer of 5,000 pieces or so just to test it out. The smaller/less competitive of a market you are in the better. 

Currently use a Google Voice number, free and allows you to create a different local number to use for all of your property management dealings. I have it set up to forward the call to my number so I can answer as well as have it record all calls in case tenant ever wants to say they didn't say something I will have record of it.

Have you checked out any subject-to or 203k loans. Both allow you to get money from bank for repairs. 203k is through FHA and has some hoops to jump through but could be exactly what you need. Subject-to loans are usually offered by local banks and will allow you to get loan for what the property would appraise for after repairs, basically you tell appraiser everything you plan to repair and he factors that into appraisal allowing you to get loan for those repairs.

I have been to a few conferences and unfortunately most are chocked full of newby investors without a single deal under their belt and a speaker who is just trying to sell you on an expensive education/coaching package. The exception to this was the Multi-Family Mastery Conference by Jake & Gino I went to down in Nashville. Blown away by some of the people their, investors with 1,000+ units sitting on either side of me. Don't know when their next conference is but would definitely recommend it, ton of great speakers, content and networking with no selling of any education/coaching package.