All Forum Posts by: Joe G.

In my experience, those large cuts are normally due to findings during inspections from past potential buyers. For instance, a person offers a lowball offer to the agent and justifies it with a sewer/well inspection report stating that the property needs new drain fields or well. They decline the offer then cut the price and disclose the inspection findings. I suggest contacting the agent or using yours to get the skinny on the deal. The agent only remarks in the MLS will probably provide some insight into the reductions.

Don't want to hijack, but I am looking for the same in Maryland as well. I have done the Google-due-diligence, but I am looking for anyone that has direct experience. I am afraid if I ask the company from references, I am not going to get any unhappy customers LOL.

Do you happen to know the reason for the sale? In my experience, understanding the seller's goals can give you some insight into crafting the best owner financing structure. Also, educating the seller on the benefits of holding paper has helped me in the past as well.

I usually offer three options: 1) cash offer with significant discount on purchase price, 2) seller financing with a 10-20% down payment (they will usually counter with a larger downpayment, but then you know where their head is at on the matter), and 3) a creative offer based on what I think their motivation is for the sale. 

Motivation isn't always distressed. I have made offers based on people telling me things like "I would love to get monthly payments from you that will pay for my RV trip across the country, but I need to pay the inheritance taxes and I want to buy the RV". I offered the downpayment of the tax, the RV downpayment, and $1,000 on top. 

If the property is represented by an agent and I am giving them discounted offers to take to their seller I always offer to give them both sides of the transaction. This usually means they will make more if the seller takes the deal. Win for everyone.

As far as specifics on the final offer terms, if you are buying from an investor you should ask them what they are going to do with the proceeds and then see if you can offer an interest rate that is better for the investor that is also safer being backed by the property. I try to get between 5 and 7.5% on seller financed deals. With the lower rates being coupled with larger downpayments. I always ask for 30 year loans and usually get offered 10-20 year amort, but we all know that we are going to refinance in a few years anyway, so I always ensure there are no prepayment penalties (learned this one the hard way).

Hope my thoughts help you get the juices flowing.

A few thoughts: 

I would book them on those respective lines. Although they are paid at closing, I wouldn't consider them as closing costs -- it just happens that some operational costs were paid at closing. This will be very helpful in analyzing actuals year over year and updating your proforma. Capturing these costs accurately will also help if evaluating operational costs (such as insurance) down the line to see if you can shed some of those costs and increase the value of the investment or improve cash flow. Good Luck!

A few thoughts --

Have you found any duplexes in your area that are in need of some repairs? It sounds like you could qualify for conventional owner-occupied financing, move in, do the work, rent out the other side and repair your unit as well. 

Then you can advertise and get a lease lined up for when you move.

Two considerations: 1) If you want to refinance and get out of your personal name the local bank will probably want to see some seasoning on the lease which you may not have on the side that you living since you are leasing and running. It's OK, you can find another strategy or wait 6 more months to get the leases seasoned after you move.

2) When you are running the numbers (I am assuming you want cash flow) remember to include management costs. You can save on that while you are living there -- but if you plan on holding onto the property and moving away -- you will want to plan for the management fees in your original proforma.

Good Luck!

I suggest using Word to search for an invoice template. There are tons of them that look great and are easy to use.

Maryland is typically $1,000 EMD (if you have proof of funds or prequalification) at contract execution being held by either Agent or Title Company for conventional sales. I have seen some hard deposit terms being accepted in final and best offer situations over the typical EMDs. These are refundable based on inspections unless the contract strickly prohibits it. Maryland uses a statewide form for most transactions.

I might suggest offering a hard deposit at contract acceptance with an additional deposit to be made at the end of the due diligence period. If you get the property tied-up and don't like the due diligence, think of the hard deposit as a "Lease Option" payment and try to JV or assign the contract to another buyer in the area.

@Robert Schumacher

I will leave the color choice to the professional designers. I use Home Depot as they are closest to me and I found the following link to be extremely helpful in determining the "bang for the buck" in the different types of paint. I included a Lowes link as well to be fair... LOL

https://contentgrid.homedepot-static.com/hdus/en_U...

https://www.lowes.com/projects/paint-stain-and-wal...

@Joe Aref Congratulations on being in that position! You truly deserve a round of applause.

The power of leverage is so HUGE! People like you understand how to use it responsibly by not fully leveraging the properties in the event of a market change. 

It looks like you are in a position to use conventional products with lower rates that will let you pull out up to 75-80% of the total value of the property. Remember that the SFH will be based on comps or an appraisal while the commercial buildings will be based on their performance.

You hold the power as these properties are free and clear which will allow lenders to compete for these low risk vehicles.

As a first step, I would start to build professional-looking proformas for the commercial properties with actuals from prior years so that you are prepared for the lender questions. It might be worth it to hire a RE CPA firm that will give you the product that you need. I wouldn't commit to any appraisals / comps for the SFHs until you identify the lender to avoid paying for the appraisal more than once.

Good Luck!

@Tyler Smith Welcome to BP and the world of REI! I listen to many books on Audible. It also allows me to choose which books I need in written format for further notes and evaluation without paying full retail for them until I know.