All Forum Posts by: Michael H.

Mindy Jensen I do believe she is of sound mind. She's been self managing these for the last 6 years, mostly by herself but with a little help from a tenant. I did ask her about her kids. She has a 57 and 61 year old. I definitely want to address them with her. I want to do the right thing by all. There's a win win for all here I believe. We'll see though. There's no way I would do this without an attorney. Thank you for checking me in all these areas. It's important.

Thank you Sam R. That's a good option.

Lots and lots to share for sure.

I appreciate the advice on looking at each one individually. I checked rent-o-meter and the rents can go up a minimum of $150 a unit and up to $250 a unit. With 10 units it appears to be a good value add. All tenants pay their own utilities, mow their grass, and snow removal.

She wants $900,000 - $1,000,000. I am going to try to talk her to $850k based on the fact she'd have to pay real estate agent a minimum of $45k. But anyway, here are the #'s for $900k with her current rents @ $7925. It looks like the rents could even go over $1100 a month now.

Purchase Price - $900,000         / $850,000

Down Payment - $90,000          / $850,000

Interest rate - 4.5%                   / 5%?

Full rent - $7925                       / $9000 (max for all could go over $10k at current market)

Taxes - annually - $7934          / Monthly - $661

Insurance - she pays $340 monthly

Management - $555 monthly   / $630

Cap Ex - $531 monthly

Vacancy - $634 monthly         /$720

Annual Gross income - $95,100           / $108,000 (at $9k a month)

Annual Expenditures - $32,662           

$900,000 purchase price with current rent Cap Rate - 6.94%  rent at $9k 8%  - rent at $10k 9%

$850,000 ...... Cap Rate 7.35% - rent at $9k 8.64% - rent at $10k 9.84%

One big question is the exit strategy on the owner finance. Any thoughts on that?

I am meeting with an 82 yr old lady in a couple days to begin discussions of owner financing her five paid for duplexes. She's had them over 20 years. She's been managing them for the most part for the last 6 years. She does have a tenant that helps collect rent and does some repairs she pays $300 a month. She told me some of the work she has done and sounds like they're in pretty good shape. It would appear rent is low but my only current source for rent comps is Zillow. If Zillow is correct, she's low by $2000 a month on the 10 units.

She thinks they are worth $900,000 - $1,000,000. A 10% cap rate puts the price at $850,000. I am thinking of offering her 8-10% down, maybe a 4.5-5.0% interest rate, on 30 year term. The higher interest rate because limited amount down. The 30 year term allows the cash flow to be $1000 more a month.

With her being 82, what's the exit strategy when she passes? Is it possible to pass those payments on to her 57 and 61 yr old children to maybe avoid some inheritance taxes? I could also offer to refinance in 5-10 years and pay them off.

What advice do you have for me?

Thanks

I usually don't have a typical home inspection done. I have one cover the major stuff. I use a roofer, plumber, electrician, engineer for any foundation issues ($160 cash), termite, and get a drain line inspection. A home inspector is typically about $400. I find them to be generalists and when they find a problem they refer you to somebody else anyway. I'll typically run $500 or so to bring those professionals out. $250 is the drain line and the inspector wouldn't do that anyway. As for an appraiser I've always been told it's a waste of my money because every bank and appraiser is different.

@Samantha Soto did you find one you're working with for the cash out and one you would recommend? I'm looking for the same. I plan on calling some of the others mentioned as well but I always like good referrals. Thanks

I'd ask #1 and # 2 to waive the appraisal contingency and buy and allow a courtesy inspection. If neither will do that I'd go with the cash offer. Better to close the deal with a net 69 than risk it falling apart and possibly have to putting it back on the market and get even less.

Chris Dawson has a zip code chart that I use.

Do you know if there is a way to find out if the bank that foreclosed on them started the eviction process?

Welcome to BP. There's some great info here. How did you purchase and rehab your Waldo home and keep it as a rental? Cash or financing? How are you looking for houses?