All Forum Posts by: Joseph High

@Ralph Noyes

I work for a property management company here in Nashville. Our policy for the winter months is exactly what you're thinking of. We either extend the lease of our current tenant or place a tenant in there for 6-months. Although the tenant might not be paying market rent, it beats having the place sit vacant for 3+ months (unless they've trashed the place and you really don't want them there anymore). 

 I'd encourage you to look into stats about home sales for your area during those winter months. Your local Realtor association should put out monthly statistics for home sales. In Nashville, there has been a big drop off in both the volume of sales and the median sales price during the winter months. 

Highly recommend that you have professional photos done of the property after the tenant has moved out. If you look on Zillow or any other site, I see far too many properties with iPhone pictures (sorry Apple, I know that you've invested a lot into your camera quality). Professional pictures will instantly make your property stand out. 

What does your lease say about showings? How long of notice do you have to give your tenant before you can do a showing at the property? 

@Antonio Cucciniello

I'm an investment analyst in the Nashville market and I'm seeing a similar story. The asking price is so high on the vast majority of properties. The properties that make sense numbers wise usually don't last very long. This has been mentioned before, but some of our most promising properties are all off market. I found a group of 10 duplexes that were 2 miles from my house. I looked up rent/sales comps in the MLS to see what the cash flow would be on those duplexes and I think they're a pretty attractive investment.

@Henry Catalan

Thanks for the advice - Those are great ideas to get some cash out of the deal if I can't own the property myself. I was talking to someone in my office about drafting the following terms:

1. 1. 5% Down Payment 
2. 2. 5% Owner Financing (No interest, just principal payments)
3. 3. 5 Year Repayment (Will refinance in 5 years with a conventional loan and pay off the seller)

I have identified a property that is in my neighborhood that I would like to purchase. The original owner passed away several year ago and the house transferred over to his son who lives in another state. He only visits the house once every couple weeks and is losing around $3,000 a year in property taxes and home insurance. Since the property is paid off, he is no longer able to deduct the mortgage insurance on the property. 

Currently, I don't have the capital to buy it a market price while utilizing traditional financing. He could sell it for more at market price. However, if he were to sell it at market price he would have to pay a Realtor, take time and money to clean the property up, and then let the property continue to sit vacant while he's waiting for it to sell. 

How do I structure the terms of the offer such that he sees the value of selling it to me at a below market price? My intention is that make it a win-win for the both of us, not just one of us. 

@Amber Saulsbury Glad to help - looking forward to hearing how this deal works out!

@Amber Saulsbury: As with many things in finance, it depends. I'm in the Nashville market, but it really depends on what type of strategy you are looking at. Are you talking about value-add or a core product? I've been advised by a multi-family investor who is located in Nashville to look at things sub-market by sub-market. A cap rate for a general metropolitan area is helpful, but there's more to consider than just that broad overview. Look at the strategies (or lack thereof) employed in the purchase of properties of those cap rates. Are they looking for consistent cash flow or are they looking to lease up the property and have stronger appreciation? That being said, I've seen as low as 3% in Nashville, but also 7%+.

@Kevin Wright Looking forward to learning alongside you!

@Daisy Ferreiras 

Hi Daisy - First, I just wanted to say congrats on getting out there and closing your first deal! That takes some guts! I'm looking at getting into my first deal, but it's a little scary!

Second, I noticed that in your time analysis, there wasn't an appreciation factor for the home. As a general rule of thumb, a conservative amount of appreciation for the United States as a whole is 3% per year. (Don't just take that number and run with it, I'd encourage you to do your own research for your area.) Since your home is in an opportunity zone, it does have a greater potential for appreciation. 

Third, may I ask why you used all cash for the purchase? One of the great things about real estate is that leveraging does wonders for your returns. However, as we've seen before, leveraging can get out of control(see 2007-2008), but the more cash you put in a deal, your returns generally speaking will suffer. 

All in all, good on you for getting into your first deal! Looking forward to hearing more as this develops and feel free to ask me any questions if you have any.

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Hello there! I just recently began working as a real analyst for a property management company here in Nashville. Unfortunately I will not be able to make it tonight, but would love to kept in the loop for the next meeting. Looking forward to connecting with y'all!