All Forum Posts by: Kyle Houlahan

@Sam Bates - Great points, Sam!

I think my biggest issue will be checking the net worth box. One of my partners is a PI lawyer and the other is a real estate agent and CEO of a nightlife event marketing company. Both do very well. However, the three of us combined still dont have a net worth of $2mm.

I'll have to talk with a few lenders and see how important our net worth is for funding. If its vital to the deal then we may have to aim a bit lower for our first property.

I agree that a yield play is my best bet, but I would plan to strategically update the property in order to force appreciation and increase value. I think this would be a good strategy for a 2-4 year holding period, at the end of which I would sell the property, completely updated, for a premium.

Another thing that I'm considering is the market right now. Property prices are insane in most metro areas. Hopefully in a year or two things have settled down a bit.

@Yonah Weiss - Correct. In my experience, most property managers monthly fee is around 10% of monthly rental income for SFR properties.

Glad to hear CRE is a bit less.

@Kyle Lewis - Thanks, Kyle!

That Fannie Mae loan seems to be right along the lines of what I'm looking for. I'll just have to talk to some local lenders. I've been told the smaller banks are much better to work with for CRE loans.

Called my contact at Chase and she said they have zero appetite for commercial loans at this time.

Regarding an LLC, my best bet may be to form a parent LLC and then for each property I acquire, create a subsidiary LLC to take ownership. This will help reduce liability from one property to the next, as well as give me the option to have different members for each property and avoid comingling of funds.

I agree that finding a good property management company is key. When that time comes, I'll be sure to do plenty of research. Is the standard rate typically 10% for CRE as well?

Looking for a bit of guidance on how to get started in multi-family rentals. I'm targeting a 10-20 unit apartment building within the next year or two. I think $1mm-$2.5mm range would be a realistic purchase price. 

I intend to have 1-2 partners to put up the capital for the down payment, operating costs, etc.,

1. Should we create an LLC or trust to purchase the property under? Pros and Cons of each?

2. What are some of the hurdles when obtaining funding for a deal like this? Assuming we can put up the capital for the down payment (80% LTV is the standard ceiling I believe) and our personal finances are good (credit score/ DTI, etc.), is there anything else that would instantly kill our chances of getting a loan?

3. I'll be searching for properties that are already rented and will find a local property management company to handle the day-to-day operations. What other considerations should be made in terms of tenants, cap rate, renovations, etc.?

I have a family friend who is willing to provide me with a hard money loan to finance my next fix and flip property. We have verbally agreed on the terms of the loan, but neither of us are sure of how to begin the process.

I have found a property, but in order to make an offer on the property I will need to show proof of funds. Is this as simple as providing a bank statement from the hard money lender?

Once an offer is accepted, do I just need to work with a title company and have the lender wire the funds to be held in escrow until close? I assume at the time of closing the escrow funds would be disbursed to the seller and the mortgage would be recorded in the lenders name. Will the title company take care of the Promissory note as well?

Trying to get a better understanding as to what exactly is required in this process. Both the lender and I are eager to move forward, but could use some guidance from someone with experience.

So a family friend acquired a 2,200+ sq ft. manufactured home on a 1.7 acre lot in Plant City, Florida. He has renovated majority of the inside of the property and has had a new A/C unit installed. The lot needs some clean-up and landscaping, but nothing major.

The owner reached out to me and mentioned that he was interested in selling the property and would let it go for $90k. From the comps that I pulled, I'm thinking the property could sell anywhere from $120k-$160k. 

Two issues though.

1. I have not been able to find a lender who provides investor financing on a trailer. I could scrape up the cash to purchase it outright, but I really don't want to extend myself that much.

2. I have no idea how difficult it is to sell a trailer. Can the average buyer get financing for a manufactured home pretty easy? Does anyone have any experience in selling mobile homes/trailers? If I was confident that I could sell the property relatively quickly, then I would be more inclined to just purchase it in cash.

@Steve Vaughan I completely agree. He most certainly helped solidify my decision that this property was a good purchase and the property manager he introduced me to is going to oversee the entire rehab being done, which may provide to be a very valuable relationship regarding future projects. 

I'm just going to continue to pursue this property through him, learning as much as I can along the way. When it comes time to sell the property, he and I can work something out to make it worth his time. Ultimately I want to sell it in my name and handle majority of the work, just to gain the experience.

@Sara Tremeear We will be working for the same brokerage when it comes time to sell the property, and he is somewhat of a friend of mine, so I wouldn't expect him to ask for a whole lot considering I will be paying it directly from my pocket. Now if I was purchasing a property, then the commission split would be a different story.

If a colleague/friend of yours was helping guide you through the sale of your own personal property, would you offer to pay them $10k? That's kind of how I look at it.

The agent is a friend of a friend. Our relationship is a bit different than a client that walks through the doors. This is the second property I've purchased and from my experience selling my last house, I personally felt like the agent did not do a whole lot to earn the $6k she made. In this case, you're talking almost $20k in commission when I go to sell this property. Regardless of what the "norm" is, I can't justify paying an agent $20k to list my house on the MLS, send over the lock box code to a half dozen agents so that they can show the property, and then go through the standard paperwork involved for closing. I understand there is risk involved and some situations require much more time and effort than others, but almost $40k in commission to the buyer and seller's agents is a bit much. I'm very surprised that the commission rates don't drastically decrease as the sales price of properties get up to the $500k+ range.

Sounds like a lot of other's haven't had an issue with selling their own property, so I'll go that route. This will be months down the road, so by that time I should be comfortable selling it on my own anyways. I can always go to my broker for advice on a specific situation if need be.

I did mention possibly splitting the commission when we first started this process, but we didn't talk much about it. I agree that just dropping the transaction and pursuing it on my own isn't the route to go, for multiple reasons. I think I'm going to propose that we follow through with the purchase of this property, with all commission going to him, but in return he teaches me the ins and outs of the buying process and he agrees to help me sell this property for a minimal flat fee, say $1k, instead of the typical 2.5%-3% commission. This would save me about $15-$20k at the time of sale.

From what I've been told, listing your own property for sale as an agent can make it a little harder to get full asking price for it since buyers will look at the fact that you're saving about 3% in commission. Anyone have any experience selling their own property?