All Forum Posts by: Kyle Tolbert

I am currently in a seller/finance situation now.

Recently I just sold my property for $1.4M to my tenant. It's a duplex in San Jose, CA. I used to live in one and rent out the other one to the recent tenant. The tenant paid me $700k so I can pay off my loan and I carry $700k Mortgage note with 8% interest rate.

In the mean time, I rent the property back from them while I am looking for another investment property.

It's a win win situation for both of us because he doesn't have good credit and not enough income on paper to qualify for a loan.

To sum it all up, you need to put everything in a contract, hire a good real estate lawyer to draft up the note and contract. In addition, you need to hire a note servicing company to open an escrow account so the buyer can deposit the money into the account monthly.

Kyle

Hello,

I just sold one of my property and carry a note "$750K" with 8% interest rate. So the buyer is paying me $5,500 a month for 30 years. I just had the notes for couple of months.

Does this count as my income, just incase I need to buy another property?

Thanks

I just finished my brand new 2400 sq ft, 4/3 house, San Jose CA, built from ground up. The price is not included the existing land.

~$450k

Soil engineer $5k

Structure Engineer 10k

Architecture $20k

Planning department $5k

School Fee $6k

Permit Fee $7k

Extra time for inspection 2K

Foundation/Framing $140k 

Electrical $20k

Plumbing $15k

Stucco $25k

Roof $15k

Insulation and sheet rock $25

Paint $8k

Flooring $10k

AC/Heat Cental Air $25k

General contractor for bathroom/kitchen/crown molding/ trace ceiling/led lights/cosmetic and custom design $40k

Custom milguard windows/sliding door/doors/title hardwood floor/cabinet/quart/ all the finished material $50

Land scape and clean up $15k

The price above I hired each contractors to do each Job because they are specialized in their job. So technically I am the main contractors for my house. Took me a little bit longer to build my house, because I vest each contractors careful ly before I hire them. They are a little bit expensive but I know for sure I will pass inspection everytime. If not then I will deduct $100/day if doesn't fix. Don't worry about the taking project on your own because the inspector will be on your side making sure the contractors doing their jobs, that's why you paid them to inspect your house. My house was first time go for every step until the HERTZ test take like a month to schedule an appointment and the contractor mess up because he doesn't have the right calibration but it was a quick fix the inspector overlooked it and ask me to fix it and correct the numbers on the report.

Start to finished 13months!

Hello,

I am new the this site and found it's very helpful advises from some of the experience and professional real estate investors.

Base on my research, the cap rate for San Jose rental is between 3.5-4% (NOI) for the past 2 years (2016-2017). Anyways there is deal came to me from a friend "broker". A single family home selling at $1.5 mil, east side San Jose, but nicer neighborhood, currently rental at $7,500 a month (4/3) & (3/3). The house was recently remodel and built, so not much of maintained need to be done. The currently cap rate for this property is at ~5%, which is a very good deal. But of course there's a catch to this good deal. Part of the extension was built with no permit "very nicely/professional done", that's reason why the owner was able to rent it as 2 separate units and collecting $7,500/month. I looked at the tax return and it stated at $7,500/month, and the tenants always pay on time base on the bank statement which I am very surprised the seller willing to show it to me. I have not seems or feel anything fishy about this deal. I did pull the permit at the city and of course everything described as accurate. There's no complaint about the property online reasearch.

Please let me know what do you guys think about this deal.

Thanks in advance.

Hello Kimber,

Welcome to the real estate investor world. Not the bash you, but the number seems too good to be true. The average rental in that area actually little bit lower than you expected, plus the turn over rate is higher as well due to tenants creditability. Base on your calculation, $6K x12 = $72K/YR, then minus 12K/Yr(Tax, Ins, Mx) = $60K/yr then divided $783K, looking at cap rate (NOI) 7.6% which is high compare to the bay area cap rate.

Usually high cap rate (8-12%) = high turn over tenants (Crappy tenants) lower appreciation.

Lower cap rate (3.5 - 4%) = Quality tenants and high appreciation.

Been an investor in/out of CA for the past 10 years, I will always pick bay area.

GOOD LUCK!

Hi Eric,

Welcome to the real estate investor world. It's the power of holding and build equity in the long run. I am an investor myself and have lots of connections with real estate agents/brokers in the South Bay if you are interested shoot me a PM, we can chat on what you are looking for.

Here are some basic questions you need to ask yourself first;

Budget

What is your minimum CAP RATE (NOI)

Location

Fixer

Current rental

How long are you going to hold the property

Kyle