All Forum Posts by: Ken Nyczaj

@Tom S. @Patrick Daniel

Appreciate the responses. 

Rental income makes sense. Cash flows well at this 4% rate and the refi rate of 5.5% amortizated over 25years.

My bank has said they do 75% LTV on the purchase price or appraised value, whichever is lower. Purchase price will be lower as I'm going for a discount. I've asked after a year of seasoning will they consider the appraised value since we will be repairing the property as we go- I got a maybe response.

I’ve read that many people prefer interest only on seller financing and I’m just tying to understand why...

@Steve Vaughan Thanks for the reply Steve. I believe he'd like to do a JV because it's near where I live and he's about 1 hour away. That way I or my business partner in the LLC can handle the property management for all the properties.

By breaking them up, we could always do the property management for him for a fee, but then that would entail being a PM for someone else and taking on whatever additional liability or costs that entails in Maryland.

It’s definitely sounds cleaner to break them up.

Working with an investor in Maryland who has multiple units for sale, could do seller financing on just one or bring in another person outside my LLC to try to buy everything to get the best discount possible. This outside investor doesn't want to loan on the properties but actually wants an equity stake.

How could that be structured? I'm in an LLC with one other person, and this outside investor is buying in his personal name. Would the LLC own 50% and him 50%, or each of us at 33 1/3? Is it an entity partnering with an individual?

Has anyone done this before? Thank you

Structuring a seller finance deal on a small MF property. Curious what the consensus is for how it should be structured and pros vs cons of the below example:

10% down and 4% interest only with balloon payment at 2 years or 5 years. Refinance with local portfolio lender at balloon payment and pay back the seller the principal amount.

Not sure if it is wise to be going 5 years interest only and building no equity in the property besides how much it appreciates and my down payment. Being that small MF in this area don't appreciate much, at 5 years I still won't have much equity.

Or:

10% down and 4% interest amortized over 30 years with 5 year balloon. Principal and interest payments for less cash flow, but at least I'm building some equity.

Thank you

@Dave Rav Thank you Dave, my one unfair advantage may be my optimism, and ability to forget about things that suck.

Yes my response rates are low, but there have been some very strong leads. I received an email this past weekend from another investor who owns a group of properties, some SF and some small MF who bought in the early 90’s who most likely owns at least a few free and clear. This opens the door up to not only negotiating a fair price and financing with a bank, but the possibility for seller financing as well.

With a total of about 2,000 mailers sent this year, I’ve had about 30 phone calls and of those 30 phone calls, 4 have been investors with equity who own multiple properties that are looking to sell eventually. 2 have been other investor/buyers asking me to send deals their way if I find anything. As of now, 0 deals have been closed, but that’s ok, I just found out about BP 7 months ago and really started to become obsessed 4 months ago. Before October of 2017, real estate investing had never been on my mind.

I’m going to view them this weekend and hopefully something comes of it. Stay tuned...

Curious if anyone adds their initial holding costs on buy and holds into their closing costs. I’m accounting 8% to vacancy each month, but it seems completing a rehab the first month or two after closing, additional holding costs should be added to cover PITI and other expenses. The 8% vacancy wouldn’t be enough to count for the initial upfront costs especially if it takes two months to rehab before the unit can be rented. Anyone have experience or suggestions on this? Thanks.

@Chrissy Parsons thank you for your response. yes I do have a full time job- outside sales selling capital construction equipment.

I’ve looked into purchasing a list. Lists seem to add on anywhere from 20 cents to 50 cents per lead which can practically double my costs. Plus I don’t need to keep refreshing lists every six months like some companies have mentioned they do.

I make my list, keep it in a spreadsheet and then mail merge. When someone calls they get transferred to a follow up list if they’re are a prospect not a suspect.

Only scrolling through parcels in neighborhoods I’d like  to invest in means I shouldn’t be missing any properties.

As for the time, yes it is time consuming. Eventually it will need to be outside sourced but for now I don’t see the need. It’s not like I’m wholesaling for a job, I have a well paying job, I’m marketing for buy and holds and fix and flips. Any excess will be wholesaled.

@Jack Butala thanks you for the encouragement jack. We will catch up after the weekend.

@Eric James good question. I am interest if @Jack Butala does mail out his actual offer price. I would rather negotiate in person. For the two sellers I’m building rapport with offer price has not come up so much. I’d rather get to know them, learn from them and negotiate after establishing a relationship. They are educated landlords so I feel it’s a better approach than to start throwing out offers. A distressed seller with equity is a different story, an offer may be negotiated on the phone.

@Ryan Blake yes. Sending letters to same individuals and building upon last list sending introduction letters to them. I’ve been scanning parcel by parcel for potential equity looking for sellers who bought in the 70’s, 80’s and 90’s. It is time consuming but I feel like if they don’t have equity you most likely won’t be able to buy a cash flowing property even with negotiating a short sale, at least in my area where average home values are over $200,000. Doing some driving for dollars too, but if you drive for dollars and it’s a distressed house (lawn not mowed, bad roof etc), but they don’t have equity, do you really have a deal?

@Eric James nothing yet. Absolutely going to increase next round. Maybe 1500 to 2000. I actually enjoy hunting for properties, and know at one point all the work will pay off. With one deal whether it be a buy-and-hold, flip or wholesale will make all the effort well worth it.

Here are the details on my third direct mail campaign:

- 1,000 professional letters with company logo as header and logo plus address as footer.

- In this message I explain what I can do for the seller- Clean Out Services, Donation of Belongings, Hire Moving Trucks, Removal of Unwanted Items. Also, no need to make any repairs, we buy as-is.

- Used A4 envelopes off Amazon, about 1,000 for $50. Paper is under 1 cent per sheet.

-Plus placed a business card in each envelope.

-Total cost is at 55 cents per mailer, 50 cents for first class stamp.

-Still did it in-house, but now I listen to BP Podcasts while doing the monotonous stuffing, sealing, stamping. No longer a complete brain drain since I'm learning while doing this simple tasks. Definitely took some time though, I'd say about 10 hours straight on a Saturday from 3am to 1pm, with short breaks here and there. Definitely giving up my social life at first, but that's ok until I get this marketing machine up and running.

-Results: So far still flirting with about 1% response rate from 1,000 pieces. Of that 1%, only 1 qualified lead who owns a few houses we are interested in. Older Investor who is looking to 1031 into some new properties and bought back in the 80's. Homes are owned free and clear.

-Results from all 3 campaigns: each campaign netted about a 1% response rate, but some of the leads have been quality. Two leads total have been quality- bought 20 to 30 years ago so high in equity, both sellers own multiple homes in our farm area that meet our criteria. Now it will just come down to building the rapport and negotiating at a price that nets our desired cash flow.

Thanks for reading. Will update in another month or so.