All Forum Posts by: Lesley Resnick

Hi Bill, 

Could you take me through your numbers?  I am not sure I follow.

Rent = 800 x 6 = 4,800.  They are section 8 and increasing rents can be difficult.

P& I for the loan would cost you 4782.77 @ 10%.  10% is really cheap for a hard money loan.

You have not covered: tax, insurance, up keep,  vacancy, and you said you will cover some utilities.

If I am looking at this correctly, you should fire sale the property at $650 and get out.  You could stand to net $75k after transaction costs.

Has anyone done an FHA assumption? What are the costs and underwriting. I have an opportunity for a sfh, that is 2 years into an FHA. The rate is better than market, but will they approve the transfer with our a full loan documentation. The numbers work and it is a matter of should I assume the loan or originate a new one?

Hi Orange Park, 

Sorry to hear about your PET PROBLEM.

The real lesson is stay clear of the fuzzy stuff.  TILE is way to go.  Hit me up on the private email, I have a good contractor I can connect you with. 

I have been watching this market for a while and I am ready to jump in.  Here is how I see it.  In Jacksonville there is a 2+ year waiting list to get into section 8.  If someone waits 2 years to get a place and they trash it, they get thrown out of the program.  While I have not done one yet, I believe the threat of losing a free place to live will keep the tenants in line.  The cap rates are amazing and the places are CHEAP!   The state pays you directly on the 1st.  No collections or cash management issues.  Maintenance is going to be higher than other properties, but it would be worth it. 

I am planning on starting in 2016 or sooner if someone wants to partner on a project.

After Repair Value is a great metric for investors, but what does that have to do with the seller? It is a negotiation. There is no one right answer or magic bullet, it is more art than science.  What is something worth? Not a penny more than someone is willing to buy it for or sell it for.  

In my opinion the key to pricing is research and understanding the seller.

How long has been on the market?

Has it been under contract?

In pre foreclosure?

What is the seller's motivation for selling?

Based on the seller, you can make an offer that makes sense.  I am not sure the strategy of just offer 50% off everything is a very efficient use of ones time.  If I can not get the deal at a good price, I will move on.  There is always another deal.   

I believe the last dollar is the most expensive one.  I want to build a scalable business for myself and my clients that consistently provides above average returns.  Double and triples are my goal.   

There is often a gap in the market between what a flip strategy requires to be profitable and and buy and hold.  I prefer to buy my properties needing a little something, they tend to go at a discount.  The home owners think it is ugly and the flippers can't make anything on it.  Creates a nice opportunity gap.  

As far as your pricing, taking the comps and subtracting what it takes to make the property similar to the comped property.  Is a flawed approach.  You can not make a straight line assessment like that.  Sometime a deal works and sometimes it does not.  Unless the market supports the price, I would not advise my clients to offer 50% off the listing price.  You are going to insult them and they will most likely not even respond.    At that level, you are in the wholesale market of, "my hair is on fire" and I need to get rid of the property today.

Sounds like close out tile is the winner!

Durability and curb appeal.  I just need to remember to buy extra.

I am working on a fix and hold project and need to make some flooring decisions.  I generally use contractors or labor to do the work and I provide the materials.  No sense paying them to go and pick up the materials and charge me for it.

I have found at LOWES and Home deopt, regularly mark down tiles to well below a $1sq ft.  This is my preference, tile lasts and single tiles can be replaced.

I have been told that roll linoleum is a better way to go.  People have also advise me to use the peel and stick squares.

What is the best balance for short term cost and long term durability?   

At what level unit do people include a washer/dryer dishwasher?  I like to rent to families and that is often an important piece.  My goal is to provide a good value to my renters.  Do people buy new with a warranty or used and dump them when they break?

John, hit it on the heard.  The first question to ask is if you want to use leverage or not?  Depending on your appetite for risk and need for return, will drive your decision.  The cost of the money is secondary.  If you do not have the cash, then you would only have one option.  If you are trying to aggressively grow, leverage is the only option.  If you are more conservative, then cash may be the way.  Tax should always be considered in terms of effective rate.  You can take it as a deduction if you are an individual and as an expense if you are a corporation.  The net cost of money is historically low.