All Forum Posts by: Ken D.

Since I got such great feedback from the community the least I can do is provide an update:

We sold our San Diego property in May, right before our tax exemption deadline. After several months of late hours, many calls, a few flights, trying to get in family time with cups of coffee in hand, while working a full time job we are currently in contract for a 6 unit building that is all 2bd/1bth units that are rented for ~$550/mo each for $220K. With $5-$10K into each unit I'll be able to get ~$700-800 a unit. Down the street the property manager I plan to use is renting similar sized units for this amount.

Assuming I ran all the numbers right for estimated expenses buying this property cash should provide me with over double the cash flow (had a mortgage on the sold property) , elimination of ~$300K of debt, and money left over to purchase more properties. I lose out on what ever appreciation that the sold property is still experiencing (~$17K in 2 months...  :/ ) but this new property will serve a great stepping stone for managing and purchasing larger OOS acquisitions hopefully while continuing to make money. 

There's info like capex's and deferred maintenance that are due that I haven't provided details on and reflected in the purchase price, so the deal is not as great as the rent and purchase numbers alone, but I don't think I'll loose money. Getting paid to learn is not so bad.

Next step, try and figure out how to scale efficiently...

Let the adventures begin!

@Terry Lao It's not explicit but I think the OP responded that she provides her preapproval letter for 5% conventional on all her offers in her response to Michael Plante in her third post...

I just realized SD probably means South Dakota to most on this site. San Diego, CA is the market I was talking about.

Oh man this can be frustrating...You can try auction websites. I was in a similar situation in the SD market in 2012 searching for a primary home when the market was turning around and everyone was trying to pick up a home. This was before I knew anything about running numbers and at the time was the only shot I had at purchasing a home with quickly rising prices. We were bidding on homes that regularly had 15 offers and one had 43 after being on the market 1 week with a 1 hour showing! We got lucky with a property on gohoming.com (I think hubzu now).

The key for us was that it was not listed in the local MLS so we didn't have all the other locals to compete with. Ad distribution is probably better these days with sites like auction.com but at the time the property was listed for LA county for some reason and we only had to compete with 2 other bidders (it was on zillow in the correct location). The nice thing was that it was ebay style bidding online so we could see the other offers and simply bid 1K at a time up to our limit. We bought the property for $50-75K less than offers we were putting on comparable homes in the area which weren't getting accepted.

There are many quirks with these type of auction websites. Gohoming specifically, required a lot of extra fees and requirements. Over $9K for a "Buyer's Premium" and $200 for a "technology fee", min down payment of 10%, requiring us to use their title company (which was the worst), very restricted property viewing window, sold as-is among other really annoying restrictions. How bad do you want it is the question. Here's a thread on bigger pockets to others using it in the same timeframe who opted to pass on Gohoming. It turned out to be a big win for us.

https://www.biggerpockets.com/forums/48/topics/727...

Like other's have mentioned above, providing a cover letter sometimes help. Offers were being filtered to top 5 or 10 offers and we were able to have opportunities to make best and last after the funneling. Our best and final just didn't cut it in the end with the amount of competition we were up against. Can't be certain but I like to think it helped make it to the next round in some of those situations. Think of it like applying for a job and adding a cover letter to a resume. It may not get you the job but helps get you noticed for the next round.

Good Luck!

Reviving thread because most responses are with regard to lending and liability risk, and... I'm in a bit of a catch 22 situation.

I'm in contract for a property I'm paying cash for. I've agreed to waive some exterior concrete work to come to agreement on a purchase price with seller completing several other repairs to the interior. I've also required the seller to provide occupancy permits for the property since it is fully tenanted. Here's the catch, borough inspections came back and said concrete stairs and concrete balconies need to be repaired before permits can be issued. I was expecting it to be simple patch work but it requires either capping stairs or replacing them fully which is a bit more than I was budgeting for.

I need the permits before I'm willing to close so I'm not stuck with a bunch of other unexpected cost to obtain occupancy permits and paying for repairs before closing is a bad idea based on previous posts and everyone else I spoken to. I've made a rookie mistake in accepting to do any repairs rather than negotiating price but what to do now? I think my options are:

1) to raise purchase price or deal with credits and have seller take care of all repair in order to get the occupancy permits. (not excited about this because the seller will not likely do quality repairs which defers maintenance to me)

2) add contract terms that require the seller to reimburse me for any paid repairs to the property if the deal falls apart for some reason. (seems like the better option but have never done anything like this before)

3) walk away due to inspection contingencies because repairs are over budget

I'd like to avoid too much discussion on option 3 although it may be the route to go primarily because it is an easy one and I'd like to explore options or negotiation ideas I hadn't though of yet. Thoughts?

I also compare various sources for market rents. It sounds like having a realtor who is also the future PM is the key. Fortunately I just found one! Hopefully things work out.

Advise is easier to give than to follow but I appreciate all of it none-the-less. Good luck on your new deal!

@Account Closed I agree that the agent doesn't have to be an investor themselves if they understand what is important to an investor. That being said there are different strategies for investing so what is probably most important is finding an agent that is on the same wavelength as you, understands what you are trying to achieve and how you are trying to achieve it. If you and the agent are on the same page it's easy to work with them and their expertise. Otherwise I've found it can be an uphill battle to find the right property even if they provide excellent advise for one strategy, simply because it doesn't work for the strategy in place (which may or may not be a good strategy).

Regarding lowball offers and chasing cheap properties in the slums, that is all relative. Often high price properties don't cash flow well. There are many markets where this is clearly the case. I think you're only wasting the agent's time if you have no intention or ability of closing. 10x $50K properties or 1x $500K property is the same amount of commission. One arguably takes more work than the other, but this goes back to finding the right agent that's on board with what you are trying to accomplish.

How do you run your numbers to place your offer? Do you assume the property is rentable and adjust your offer based on the inspection or have your agent/contractor/PM do a walk through and provide a repair estimate before your offer is placed? This is where I get hung up and feel like I'm not being efficient. I think the other steps are pretty clear and is similar to what I've been trying to do.

From what I've seen so far I agree. I visited in December. I liked what I saw and had a great time there despite it being below 10 def F for most of the trip (mind you I've lived in Southern CA for most my life). I think Pittsburgh has a lot to offer and still a lot of potential for further growth.