All Forum Posts by: Kimberly Vallance

I have a house under contract. I am trying to get a loan...current mortgage broker says 40 days to close. Seller is refusing to go through unless we can close by September 10th. I really like the house for a rental. it's in one of the best school districts in the state. I've got a good inspection on the house coupled with an independent contractor walk-thru and estimate of costs. I've got a $10k pad in my budget. The numbers indicate I'd have about $500 in monthly cash flow based on a conventional mortgage. I am closing on a rental i am selling on 8/25 and planned to 1031 the proceeds into this rental. the qualified intermediary is in place and agents and title companies notified so all paperwork is in place.

@Reinaldo Lopez

Thank you for the website link. I'll definitely have a look!

@Vaibhav Puranik

Thank you for your response. I understand the points you made. I was looking at it as another opening for negotiating. The seller came back this morning that he's selling the house as-is. So, I won't get anything more, but the deal is still a good one - I did double check, triple check, then checked again that it would be good even if they went this direction. It just means that I need to reinvest all cash into the house for the next 2 years, then I'll be able to start setting aside $100+ each month for another 2 years. Every 2 years, I'll be able to double the cash I take out or put aside over and above what I set apart for the various expenses that are bound to come up. As you said, getting a successful and good deal is more important than getting every last penny out of the seller. Also, I'm building a relationship with this agent. He's been pretty spot on in every conversation, so I need to consider that, too. Losing the deal over $3k is not just losing that rental property, but also likely to damage my credibility and relationship with this agent.

How much does your inspection as a buyer impact your investments? I have offered on a house at a really good price about $10k below asking price and about $20k below market average for the neighborhood. 

My inspection came back with a couple of items that need to be addressed - the roof has less than 5 years remaining, the windows all have broken seals and many are missing screens, and the front steps made of wood are all warped and loose. I've spoken with my regular handyman, a handyman-mainly-roofs-only guy, the inspector, and my agent. All four had different expectations of what the repair costs would be, of course. My original list of repairs or consideration had my agent hyperventilating due to potential to lose the deal. Now, some of what was on there was there more for bargaining items than because I was adamant they stay on there. 

At the advice of the agent and the inspector, I reduced my list down to the true Must-Haves - things involving safety, for the most part. The total was about 25% of the original list. The agent indicated he was much relieved and more confident that I would get repairs, consideration, or a mix. I'm still about $10k below my max for this house to work, so I'm mostly okay with this, but I wanted to find out how other investors have handled this part of the process. 

Please share your stories and experiences so I, and others, can learn from you.

@Ryan Cleary

Ryan, thank you for your input. Here in the Detroit area, nothing is seeing 10% CoC. However, I am buying for appreciation. Thank you for your information and double check head's up.

This is the first property I've been comfortable enough to consider offering on that I haven't seen in person. Due to my current situation, I cannot walk-through anything that I'm not 100% sure I have in the bag. I am pretty comfortable trusting my contractor and his eyes - he's the one doing the walk-through for me. I've seen his work - both personally managed and working on his own. I'm also ok with my current buyer's agent - he's also an investor as is his broker. this property wasn't even on my list, but they were seeing a house down the block and they saw the sign. he got my guy in, and wowzer! so, pretty good all around! I'll have a professional inspector walk-through, the city requires one of their inspector's to sign off on it, and another friend has already asked to look through it from her perspective (everyone else is a guy - sorry, but women see things differently).

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Hello all,

please tear this apart. am i missing something that would turn what seems a pretty nice deal upside down? it's been on the market for 2 weeks and they've dropped the price by 10k. it's now right at average for the area. add in the roof and driveway issues, and i shaved off 10k more which should be more than enough to address both items in this area.

Please tear this analysis apart - what did i forget to account for or consider? i couldn't make it work to cash flow a minimum of $100/door until i remembered i don't have to take a traditional loan. so i re-worked it with a 10/1ARM in mind. I used the details from my contractor to create a rough work up of what needs attention. I used the details from comps and rent expectations from my realtor, zillow, and a local properties for rent flyer thing. (the 'tree house' i referenced in my title and description is a tree hit by lightening recently that is very near power lines. the city has stated that buyer must have tree removed within 10 days of closing. I got a rough quote from a tree removal company then added a small cushion for my estimate.)

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@Jaysen Medhurst

Thank you for your detailed response - it helps me out a very great deal! I'll be off now to do more homework to find/confirm the answers.

first - the title is wrong: there's 12 doors, 8 buildings.

next - i've run the numbers at current rent roll and estimated repairs plus cushion (because, really, how often does a rehab exactly match estimate at purchase?). the result was negaive 400/month cashflow. then i ran the numbers at average rent for the area with same rehab budget. the result was positive 800/month cashflow. the reality will be something in the middle, right? 

also, i'll likely loose those tenants due to rent increase and rehab logistics. there is currently 1 vacant unit in the duplex, but everything else is rented. six units have been rented to the same tenants for 2-8 years. the other two units for about 8 months each. I'll have to review the leases for rent increase language. 

i'll have to carry the units while under repair, most likely, then rent the out asap-to the 'right' tenants (i.e. one's that can pay the rent and take some care of the property). the carrying cost is not currently in my budget here - should i estimate that and add it to the repair estimate for this analysis?

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@Sue K. - yep! i have made it a rule to always treat my tenants the way i want to be treated. 

convo went much better than expected. i was seemingly more bothered than they were. i had been up front with them about selling to gain the funds for a down payment on an apartment complex. (which fell through, but i'm going to improve my net worth anyway - just thru a different vehicle(s)) i'm still bummed they weren't able to buy it - i've done 2 other rent-to-own deals.

i'm working to find another house for them to move into - they've decided they like the sfr vs the apartment scene (esp. right now). i have 15 on my handyman's list to walkthrough for me. i have more possibilities coming in almost daily. i know i will find more deals - they just might not be in time to get these tenants into something else of mine. i have proven, though, that i can find great tenants for my properties.