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All Forum Posts by: Juan Carlos

Juan Carlos has started 6 posts and replied 10 times.

Post: Syndication - Limited Investors

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good day BP community!

We have a potential investment with a Syndication for a 10-unit apartment renovated for short-term rentals. We are coming into the Syndication as Limited Partner by adding capital to the fund.

We have two potential scenarios that want to share and welcome any knowledge/advise on the financial/accounting side of this.

Property Incentives:

- 10.5% ROI for the first 5 yrs

- Full investment Payback on year 5

- Tax-free cash-flow

- % Ownership for the life of the property

Juan went into the investment with a Personal Loan of $100k @ 15%/80yr due to be payed in 4yrs (with no Prepayment Penalty) while Carlos went into the investment with hard cash of $50k.

Which one is the best scenario? Any tax deductible benefits for any?

Thanks for your input.
The Brothers

Post: Potential Deal Scenario

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

BP Community,

I am looking for your input on a potential deal. I am interest in buying a single family home to Fix & Flip or BRRRR. I will House Hack while rehab is taking place with a roommate to help out with the Holding Cost. The information below was provided by a Loan Officer for my Closing Cost as the Buyer/Borrower and Title Company for the Seller's Closing Cost.

Loan Information

$185,000 = Loan Amount

$9,250 = Conventional Loan Down Payment (5%)

$4,980 = Estimated Closing Cost: (Processing Fees, Underwriting Fees, Appraisal, Appraisal Review Fee, Title Insurance Services, Settlement Fee, Administrative Fee, Courier Fee, Owner's Title Insurance, Lender's Title Insurance, Recording Fees, City/County/Stamps, & State Tax/Stamps)

$2,120 = Estimated Prepaid/ Estimated Reserve Cost: (Daily Interest, Home Insurance, & Property Taxes)

$16,350 = Total Cash at Closing from Borrower

$1,000 = Estimated Monthly Mortgage Payment: (P&I, Hazard & Mortgage Insurance, & Real Estate Taxes)

Seller Closing Cost

$0 = Agents Commissions: (No REA involved in this transaction per Seller's request)

$900 = Total Cash at Closing from Seller: (Estimated Doc. Prep., Release Tracking, Title/ESCROW Service & Doc. Prep., Wire Fee, Grantor's Tax)

Fix & Flip Cost (Using BP Fix & Flip Calculator)

$177,900 = Max. Offer Allowed (Estimated ARV = $260,000)

$185,000 = Purchase Costs: (Purchase Closing Costs = Offer, Estimated Closing Cost, & Estimated Prepaid/ Estimated Reserve Cost)

$45,000 = Estimated Rehab Costs: (Repair Cost & Holding Cost for 6 month)

$12,000 = Sales Costs: (REA Commission & Sale Closing Costs)

Potential Offers

1) Since no REA are in this deal, settle with Seller for $185,000 and Seller will pay for all closing costs ($8,000 = Buyer's & Seller's). 

2) If Seller does not want to pay for Buyer closing cost, then offer $177,900 to account for $7,100 of Buyer's Closing Costs.

3) Any other?

This property will be the first so I am not trying to hit a Home Run deal right off the bat. Open to any suggestions.

Thanks,

The Brothers

Post: Absorption Rate Calculation

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good day BP community!

We were trying to clarify how to calculate the absorption rate for a market and looking through the forum for some guidance and found this old post by Robert Autorino seven years ago that did not get answered. We  have been looking through the web as well and came across a couple of different formulas and wanted to verify with you all on how to go about it.

"Hi All,

I'm in the process of evaluating some areas that I tend to invest in, however I'm not too sure of what my #'s are showing me,for the fact that it seems there is a rate of home sales of 1.60 days, giving me an absorption rate of 40.0.

Can someone help check my numbers below and let me know if my calculations are correct or make sense please? Any help would be great!

THE DATA:

  • 1. Time Frame = 243 days (total days from January 1, 2013 to Sept 1, 2013)
  • 2. Number of Sold Homes = 152 (from January 1, 2013 to Sept 1, 2013)
  • 3. Number of Active Homes = 25 (at the end of Sept 1, 2013)

MY CALCULATIONS:

  • Rate of Home Sales = 1.60 – 1 home is sold every 1.6 days. This number is found by taking 243/152 (Time Frame/Number of Sold Homes)
  • Absorption Rate = 40 Days??. Found by taking 25 x 1.60 (Number of Active Homes x Rate of Home Sales)"

Is he correct?

First formula we came across is:

Absorption Rate = # of sold/# of (days or months)

= 152/243 = 0.63 (sales/day)

Monthly Supply (Time it takes for a property to sell) = # of listing/Absorption Rate

=25/0.63 = 39.7 = 40 (days) <--- which matches his number

Second formulas we came across is:

Absorption Rate = # of sold/# total listing (sold & active)

= 152/(25+152) = 0.86 = 86% (sold in the period of time analyzed)

Monthly Supply (Time it takes for a property to sell) = # of listing/# of sold

=25/152 = 0.16 = 0.16*243 = 38.9 = 39 (days)

Which one of all is the correct way to analyze a market using Absorption Rate?

Thanks,

The Brothers

Post: Is the closing cost paid the same way in every state?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

@Steve Morris Thanks for the clarification! As @Kyle J. mentioned, it is part of the closing cost. That makes sense!

In regards to the buyer's agent commission, is that something an agent discloses out front or is that something you negotiated once an offer has been accepted?

Post: Is the closing cost paid the same way in every state?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good Day BP community!

I hope everything is doing great. So as the title entails, we have a question about the closing cost of a property. Today I was talking to a friend of mine that used to work as a real state agent, and I asked her about the percentage of closing cost in Buffalo, NY. And she said I did not need to worry about it as a buyer, that the seller covers it. And used this example:

“If you buy a house for 100,000, 3% out of that 100,000 goes to buyers agent, 3% percent out of that goes to sellers agent. So the seller then proceeds on 94% of the sale price.

Sale price:

Buyers agent commission: 3,000

Sellers agent commission: 3,000

Seller proceeds: 94,000

It’s not an additional fee, it’s included in sale price and that’s how it works everywhere.”

So we’re just wondering how accurate that is? Because from what we’ve read in books and learned from Brandon’s webinars. The buyer pays the closing cost, which is usually 1-2% of the purchase price.

Thanks,

The Brothers

Post: Experiences networking through BP

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good day BP community,

I hope you are all doing well. As pro members, we are wondering how your experience was when contacting experts through the BP network. How many experts (i.e. real estate agents) did you contact before getting a response? Any advice is welcome.

Thanks,

The Brothers

Post: How to select a niche and strategy?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good day everyone,

Thanks for taking the time to reply. We appreciate all the input from each and every one of you and understand both points of views. Becoming an expert in one niche and strategy might have its advantages, but might also limit the amount of good deals you can find. Basically it boils down to the individual's goals and preference. Thanks to all! 

Good luck in your future investments.

The Brothers

Post: How to select a niche and strategy?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Good day @Joe Villeneuve! After listening to numerous experts they have suggested, for newbies, to focus on one niche & strategy and master it before expanding to others.

Post: How to select a niche and strategy?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

@Julio Garcia thanks for your input. That is an interesting technique. We will have to try it out. Thanks again!

Post: How to select a niche and strategy?

Juan Carlos
Pro Member
Posted
  • New to Real Estate
  • Posts 10
  • Votes 4

Hello BP community,

My brother and I are newbies wanting to get into real state investing, and our goal is to buy our first property by Dec-Jan. We have been educating ourselves by reading Brandon's books, attending his webinars, and reading some of the discussions posted here. While researching properties and doing analysis we have found ourselves wandering off into different types of niches and strategies. So we are curious to see what was your personal experience when initially picking your niche and strategy, and what made you decide to stick to that particular one? 

Thanks

The Brothers