All Forum Posts by: Account Closed

Hello to everyone,

I have an investment that I'm considering and would appreciate some feedback from someone who may have been in a similar spot.

Here are the details:

6plex, close to schools, transit and all the good stuff.  Smaller town with high rents and very low vacancy.

The current multi family is owned by a housing foundation in a smaller town (40,000 people) that has been subsidizing rents for seniors.  They will no longer will have this multi family subsidized and now must sell.  They have a clause in the contract that will forbid any rent increases or evictions for one year.   All of the people who currently live there are over 70 years old.  If one where to buy, evict, reno and rent, it will be a fantastic deal with a cap rate at 11.37% and a cash on cash return at 22.49%.  Of course those numbers are no brainers if it was a smooth transition, but im concerned with the optics.  Holding for one year at its current status wont cash flow, but that is of little concern.  Currently the unit is rather old (1970) and dated, so it will require a solid reno, which will "justify" the eviction.  In B.C. you can evict if a reno is required, renoviction.

Here are the after reno numbers in CND dollars:

Aquisition costs:

• Purchase 460k
• Closing costs 9k
• Down payment 115k (25%)
• 3.1% rate on a 30 year Am (no other loan cost)

Monthly expenses:

• Management fee (use local handy man on hourly basis, handle rents and tennants on my own) $150/month
• Property tax $336/month
• Repairs and maintaince $435/month 
• Insurance $120/month
• Reserve $300/month

Rent Roll:

• Rent 1k per unit, 6k/month
• Vacancy 5% ($300/month)

Reno cost:

• Renos 30k

ARV:

• 650k (conservative)

ROI:

• Cash flow $2,885.00
• CoC 22.49% (including reno costs)
• ROI 27.07%
• Cap rate 11.37%

Looking for input, thoughts or similar experiances.  Of course the clause and then subsiquent eviction is my main concern.

Thanks to all who will provide their wisdom.

Jason

I have owned a mobile home for the last year.  It has provided awesome cash flow.  The park is changing the rules and I can no longer sublease.  So  I need to sell the home. 

I've found several interested parties who all need financing.  I am willing to provide the financing.  What are your opinions on doing a rent-to-own route versus selling the home using a deed of trust? 

We are leaning toward the deed of trust route right now.  We are selling the home for $35K.  Your thoughts on how much  the down payment needs to be?  Is requiring 7% interest way too low? Should I be expecting a higher interest rate? 

Two of the parties are fine taking seven years to fully pay off the home.  

Your thoughts and advice on this type of deal is appreciated!

So I received a call for help on this scenario.   Trying to figure out how it could work. 

Borrower faces foreclosure sale next week.  He needs $19,000 to bring his first position loan current.   He is living in the house.   He owes about $178k on a 30 year fixed at 3.74%  and reports there are no other loans or liens on the property.   Approximate value of the home is $800k.   Houses in neighborhood in central California where houses are selling for $650k- $1M.    

He doesn't want to sell the house.  I'm not a registered lender so max I could charge is 10%, so the risks are definitely not worth the reward, but maybe we could do a joint venture or figure out a way for me to get paid?   He is willing to payout a considerable amount as he is about to loose $600k in equity.   Maybe he gives me a quick claim deed, that I don't file, we do a wrap, and he buys me out in 1 year?   Or he employs me to do some consulting work for him, and secures the amount due with the house?   

He ultimately wants to keep the house, and not repurchase it because he is grandfathered in with very low property taxes.  

Time is of the essence.  Ideas? 

Hey BP!

I'm want to get into rehabbing & flipping. I understand that when everything is said & done, you'll need to have someone stage the home & even before that someone to decide on layout of the home. I've been thinking of getting into interior design myself. But I was wondering if there are alternatives to getting an actual degree in interior design? Are there short-term online classes you can take? Or should I try to hookup with someone already into interior design? 

It's so cringe worthy to read how uninformed many are on this subject.

I have to bow out of this because is heading towards more of an emotional discussion rather than logical.

Best of luck to all.

The internet is not going down, and sky net is not going to come take your data. Your more likely to misplace your cellphone, wallet, or kids, than you are to lose data now of days.. welcome to the cloud!

If you think keeping money in your backyard keeps you financially safe, just remember how that did not workout in Greece. People's money came worthless overnight. They started trading hand written IOUs for food. If things go truly south, you may as well invest in dry goods, it will be worth more.

Cryptocurrency is not regulated at this point, until then it provides a free way for anyone to move money between countries tax free; convert illegal gains from criminal enterprises, legally hide business profits as it's not recognized as money... That's trillions of dollars moving around. It's here to stay, that's for sure... Just like the Internet in 1990's, people are going to make and lose a lot of money. The internet also got reborn in the 2000's, and has been working just fine ever since. 

We've already gotten past stage 1 of Cryptocurrency, it's now solidifying into stage 2 as a framework used by many, at some point the Government will start regulating it in some way, then things will smooth out and people will talk about the days people made and lost mad money with Cryptocurrency!

Anthony Gayden I like your point about having both as well as appreciation but I do think it has a lot to do with what Rob Drum mentioned about leverage. Stan Hill I'm 32, there are so many facets in real estate that I'm just trying to narrow down my focus. I honestly believe that the way to build massive wealth the fastest is by having your own business. Then at that point using earnings to hold real estate. The CEO where I work as an example holds real estate but he purchased it through the earnings of his business. One idea I have is to house flip or use the @Michael Quarles training to wholetail. And during this time get a go back to get an MS in real estate development that is offered at my alma mater. I am currently in a partnership for a house flip but I am only a private lender for the deal.

There's a lot of people investing in Bitcoin and other digital currencies. Few people have no clue what is or how it works, I was just reading today that the cannabis growers that will be trading BILLIONS of dollars in CA, cannot deposit those funds in traditional banks, therefore; many will be using Bitcoins and other digital currency. 

There's always going to be pros and cons of everything. What if you have a bunch of money in Bitcoins and North Korea sets off a nuclear bomb that takes out satellites and shuts down all communication, computers, etc. then Bitcoins aren't going to be too accessible will they?  

I don't know much about digital currency, but will watch this thread to hear thoughts from those in IT.