All Forum Posts by: Mark Duhamel

@Lynnette E.

I have been thinking about the possibility of getting a 0% interest rate from him. I could pay very close to market, still cashflow, and give him a guaranteed no hassle income stream for as many years as he wants. We could put in a ballon at 10 years or later as well. $660k with $60k down at 0% with a 30yr schedule is $1667 a month. That puts me in the green and the interest savings are an incredible wealth builder as well!

@Jeff Stephens

That is a great article, well done!

Based on your points in the article I think I may have some things working in my advantage:

I am going to have some more conversations with him regarding capital gains and the lump sum of money that he would get. I believe in the past he has only sold a property to buy another and may not be thinking about the tax implication of selling outright.

Also, I know he is not a stocks guy and has no retirement accounts, all of his wealth is in his real estate. I know he isn’t going to 1031 exchange because he wants to decrease his workload, the whole point of selling this property.

Additionally, although he says he doesn’t necessarily need to replace the income that was generated from the property, I’m thinking a consistent monthly payment with absolutely no work for him and no stress of managing the property anymore may be appealing.

I need to sit down and look at the numbers and come up with an offer that is advantageous to us, but also fair to him.

@Mason Hickman

Thank you for the reply Mason, those are some things I thought of as well, self managing for a bit to help with cashflow early on could be a good trade off.

I went high on vacancy because I try to plan worst case, but you are probably right that it’s a smidge inflated.

Hello all,

I am looking for a little insight from some people much smarter than I regarding an opportunity presented to my wife and I.

I am looking into purchasing our first rental property and it is an off-market property from a family member. It’s a 3 family located in MA and market value is probably right about $700k based on comps. Current rents are $5235, but has the potential to be $5700+. The property is currently full and is in good functioning condition with many new updates and no major issues at this time. It does not meet the 1% rule at market price obviously.

This family member has said he is willing to work with us on a deal, but obviously he still deserves fair value of some sort. He is 68yo and looking to downsize/simplify. He has only a small mortgage of about $60k on the property. He has other cash flowing properties and lives a frugal lifestyle so he does not seem too concerned about replacing the income from this property or have much plan for the proceeds of this sale.

It all sounds great but the problem is this: unless we purchase the property for around $500k, it just doesn’t cashflow enough with a conventional mortgage. Here are my expense numbers with various purchase prices:

Expenses: (Mortgage numbers assume 20% down)

700k Purchase: $2609.36 (30yr 3.8%)

650k Purchase: $2422.00 (30yr 3.8%)

600k Purchase: $2236.60 (30yr 3.8%)

500k Purchase: $1863.83 (30yr 3.8%)

Vacancy: (12%) $628.20

Property management: (12%) $628.20 /month

Tax: $584 /month

Cap Ex: (10%): $523.50

Water: $800 quarterly $267 /month

Maintenance: (5%): $261.75 /month

Lawn Care/Snow removal: $200 /month

Home Insurance: $125 /month

*Electricity and Gas are paid for by tenants with separate meters.

So even at the unrealistically low purchase price of $500k the total expense would be $5081.48, a cashflow of under $100 per door at current rents and a really bad CoC Return. I could probably live with that, but even with his desire to help us out I can't imagine him accepting $200k under market value for the property.

However, this does not take into account the instant equity of being able to purchase the property at least some amount below market value. If it’s worth $700k and I hypothetically pay $600k is it worth having slightly negative cashflow in exchange for $100k of instant equity?

Any insights on how to make this deal work for both parties?

My current thought is an owner finance deal would be the only way to do it, I could payoff his remaining mortgage with the down payment and then finance the rest through him with a ballon payment in 3-5 years in hopes that it could cash flow at that point?

Sorry for the novel, but it’s a lot of info and I really need some sound advice!

Thanks in advance for any help/ guidance!

@Flash Alexander

I’ll report back after a month and let you know the results

@Flash Alexander

I saw that Reddit post as well. I think a $1k trial may be the way to go.

@Dean M.

Here’s an option I’m looking at...still trying to decide if it’s legit or too good to be true.

https://myloan.doctor/hcf-high-yield-cd-account/

Hello all,

I have been looking at this new CD for a few months now. My research says it’s legitimate, can’t find anything saying otherwise online. Anyone using this? A 1 month CD returning 6% seems too good to be true but I’d love to park some of my savings ($20k ish)in there and collect $100 in interest every month.

Here’s a link

https://myloan.doctor/hcf-high-yield-cd-account/

Would love to hear from anyone who has used or anyone who has thoughts on it.

Thanks!

I ended refinancing the loan. I got a 4.02% rate for 5 years. It’s a huge savings over the life of the loan and keeps my money available for bigger and better things.

@Charlie MacPherson

I agree with the west side of Brockton being a good area, it’s where I live :)

I am comfortable with Brockton, I know which neighborhoods are crime infested and which are safe. Being a patrolman in the City has given me this insight which gives me an advantage in the City, as far as crime rates go.

I love the the Middleboro area, I will definitely take a look down that way as well!