All Forum Posts by: Mary Cronin

Kind of random thoughts here ... 

How about an LOI? (Letter of Intent)

How bad is the damage? 

Maybe you can get a no money down deal, but the repairs can be expensive. Is there a loan on the property (requiring monthly payments)? 

If not, maybe you can buy with no payments due until rehab is complete and property rented (though expect a time limit on this)

FWIW

Look up the 1% rule. Rent looks too low to create any cashflow. Looks more like a flip if you think the value is higher than the purchase price.

A long time ago, I attended a Dave Lindahl training (multifamily or commercial - don't remember which) where he said "make an offer on every property you analyze" so stop practicing and make an offer. 
 

BTW it sold for $225k 3 days ago. 

You mentioned trust - if deceased owner owned property in a trust, then there is probably a successor trustee. A successor trustee can sell it. 

If you really don't want to own it, you could consider a "sandwich lease option" if the trustee is agreeable... You lease from owner, then lease to a tenant (thus sandwich - you're between owner and tenant). BUT one normally doesn't do a lease option if you have to put much money into it to make it livable (roof?). 

Either way, you'll have to cure the default. (either by paying or by negotiating some alternative (tacking missing payments on loan?). )

Hi Vince - I'm in Stockton but don't invest here. With the current prices and impending tax changes (wealth tax?), CA makes little sense. 

Rather than rent an apartment in TX why not buy one? Find a realtor in Fort Worth that works with investors (BP network on menu) and see what's available. But be sure to learn to run the numbers on any property you're considering. 

Good luck,

Is this a house hack? You won't be collecting rent while you're living there. Does house need any rehab? (Or more likely, updating.) At what cost? 

How did you come up with the $120k price and $125k FMV? What are the comps?

If you can find a FSBO or off market, seller won't have real estate commissions and can sell at a lower price.

I guess I'm not sure what you're asking. Is this a good deal? Who knows. Depends on location, condition, comparables, etc, etc, etc. 

FWIW, 

Mary

I live in Stockton but am not investing here. 

Prices are high vis-a-vis incomes unless you're a Bay Area commuter. But a commuter trades some housing expense for the home and instead have $400 up in commute costs (plus wear & tear on vehicle and lost time, say 2 hours each way - pre COVID - better than 2 hours until normal commute resumes). 

I agree there are rough areas, but far fewer than media suggests. But I note that foreclosures are increasing. 

Overall, a nice place to live, unless you're in one of the bad areas, but rents seem outrageously high and city council adopted the state's rent control law - limits rent increases to 5% per annum. 

Maybe good for rehabbing former rentals into SFRs for owners. E-mail me with any questions. 

I don't know about the arbitrage part. Your master lease specifies the lease payment which has a minimum of the mortgage payment (though the master tenant should control both the mortgage payment and the insurance payment to make sure they get paid). As long as income is higher than the lease payment, I guess you would have your arbitrage?

Expenses on MF are usually close to 50% - if theses are pro forma you need to find real numbers. 

I've heard the adage: own nothing, control everything

Though in practice, I've only met one person who managed it. Many years ago I worked in a law firm whose client did that. He was of middle eastern persuasion and had divorced his wife 20 years earlier, but they still shared the house - he had one wing, she had the other. She and their children (all adults) owned all the property he had acquired over 40 years of investing and to all intents and purposes he was judgment proof. BUT he managed all of it. It was used for security for loans and I don't know what else.

Short of being in a culture that allowed that I don't know how one would. Do you trust anyone enough to title all your property in their name but have control of it?

I suppose if you look at Donald Trump, probably most of his property is in LLCs, LLPs, Corporations and who knows what else.

I suppose that it helps to have assets. (The gentleman above went from $200. to $200M in about 25 years.)