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All Forum Posts by: Michael Landrum

Michael Landrum has started 8 posts and replied 20 times.

Hello, I am doing some research about self-storage construction. As with any research for any type of real estate, there is a lot to be considered but my specific question is: does anyone here know of any companies that they would recommend for self-storage new construction? Whether it’s a company that just drops supplies and leaves the building to you or a turn-key self-storage construction company..either way, anyone know of a complaint you would recommend?

Post: Help Me Structure This Deal

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2
@Jaysen Medhurst, THANK YOU for the input. — The ARV is problematic because it is very difficult to find comps for a duplex this big in the 5,000 resident rural town that I live in. Admittedly, this is a possible red flag...if anyone knows how to estimate an ARV in a situation like this, I’m all ears. — The $250 number is AFTER taxes and insurance (either being paid by her already in her current mortgage, or by me which I will roll into the $1300 monthly payment) and after landlord utilities. —She said she called the bank and asked about the due on sale clause and about assuming the loan and told me that there is no due-on-sale and also gave me the packet from the bank (Carrongton bank...I’ve never heard of it before) that included the application to assume the loan.

Post: Help Me Structure This Deal

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2

Hi, I am in the middle of negotiations with a pretty motivated seller who is looking to sell me her duplex, but can’t seem to figure out the best win-win scenario for this one. 

The situation: The seller is pretty motivated because she doesn’t want to manage this property. She used to live in the duplex but has now moved into a 55+ mobile home park where she wants to live happily ever after, and with no debt. I am a pretty motivated buyer because I’m starting out in real estate, looking for buy and hold small multis! I have one duplex already and am currently in the middle of a flip that I’m using to build up some more cash.

The duplex being sold here includes 2 large 3-bedroom units that are functionally in good shape, but cosmetically outdated. The only serious problem with the property is gutters and siding that will both need replaced. (Lack of attention to the gutters led to damaged siding) One last thing about this deal, the current mortgage on this property IS assignable, has no due on sale clause and the seller has told me that she is more than willing to carry the note, so long as it’s not more than, say, 10 yrs. Now, speaking of the seller, we all know we’re in the business of solving problems and so let me explain this sellers “problem”...(I asked her what she is hoping for out if this deal and this is what she said)

She is looking for: $130,000 because she wants to pay off her current mortgage on the duplex (just under $100,000) and a personal loan that she took out in order to buy her new mobile home that she’s currently living in (about $25,000) as well as roll her portion of closing costs into that $130,000. 

I’m looking for: 

Walking into this property for no money (because my funds are tied up in the flip right now) and making sure that income from the duplex, AT LEAST covers the mortgage and $250 per month for reserves. I’m willing to, initially, receive no cash flow if I’m into this thing for no money.

Here’s the numbers and my current proposition for her, and where I need your input: Currently, the property brings in $1550. The sellers combined monthly payment (duplex +personal loan) is $1300 and so if she carries the note, my payments need to be at least $1300 because remember, her whole point in selling is to not have to worry about her debt. Now that would leave me with $250 for my reserve-savings.(which is what I want). Current proposition: I want to offer her $130,000..$0 down, 0% interest, amort. over 8 yrs. (I know 0 down and 0 interest sounds outrageous, but beyond that please consider my specific question that follows) my specific question is this: if I pay my mortgage with her off faster than she pays her loans off, how would I go about helping her payoff the rest of her loan amounts. I would be saving the interest upfront, for the first 8 yrs, and then refinance for the amount she still owes or something? Or am I just going to need to restructure the deal so that my payments to her are amortized in such a way that we are both paying down things at the same rate? Idk, honestly I i feel like im tying myself in mental knots and I have a feeling I a overthinking thing overthinking because thawed in reach im reaching out here. Hopefully some one can be straighten me out! :)

Post: How to Brrrr with no comps

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2

@Jaysen Medhurst All of that makes a ton of sense and is very helpful. First of all, thank you for pointing out that this is likely a very thin deal. Secondly, I suppose I could just order an appraisal before I commit to purchasing the place because I'm dealing directly with the seller and we are cooperating well with each other and so if I come out of pocket to order an appraisal that shouldn't be an issue at all. Third (and probably most importantly), THANK YOU for your surprise/confusion at my comment about the due-on-sale clause. It is my understanding that the risk of the banks actually enforcing that clause is extremely minimal, and while I did explain that to the seller, I should NEVER try and "help her over that hurdle" because to do so would, in all actuality, be an effort to persuade her to skirt a clear clause in her contract with her bank. I DO NOT want to be an investor that cuts corners or excercises ANY illegitimate/shady business practices, no matter how common it may seem among other investors and my hope/effort to cause the seller to take the risk of triggering that clause is embarrassingly shameful of me and I appreciate you pointing out the simple fact that if she sells to me, "she has to pay off her mortgage and there's no getting around that." Thank you! 

Lastly, I'm not sure exactly what more details you are looking for but would be more than happy to provide any info I can. The idea of her carrying a note for the down payment is interesting, but I think that would assume that she has the $30,000 or so to front that down payment....and that is very doubtful. Overall, I am getting the feeling that this likely is a bit of a slim deal, but I want the experience as much as any potential income. My wife suggested maybe we could move in there, and while financially that would be a valid option, practically its a bit of a stretch. Anyway, thank you again and please let me know what other details I could provide because I am interested in what other advice you may have to offer.

Post: How to Brrrr with no comps

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2

Hi BP world. I am a relatively new investor and am trying to take down a deal that I need some clever sigggestions on. The seller needs $130000 because she wants to pay off two mortgages and live happily ever after with her debt-free retirement life. Here’s my problem...it seems to me that if I put any cash into this deal, the return just won’t be there. The rent won’t be high enough to justify the 20% I would have to put down conventionally. The only thing the place needs is new siding and some cosmetic updates inside BUT if I go to brrrr it, there are NO comps in my tiny rural (5000-6000 residents) area and so I’m worried I won’t get the refinance. She said she would love to carry the note, which would likely lead to a solid nooney down option for me, but I can’t seem to help her over the hurdle of the due on sale clause that she’s worried about. I won’t twist her arm in that my but I just think she still doesn’t understand how minimal her risk is there. Anyway, I guess my questions are 1) does anyone else have a creative idea on how I can get in with low-no money AND stilll get her the $130000 she needs. And 2) what do you do when you want to refinance a solid, beautiful, profitable property that has no comps? Anything helps, thank y’all!

Post: My first BRRRR.... From purchase to refinance

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2

So helpful to watch this story unfold! As a beginning investor, thank you. 

I also just wanted to say that it seems like you've done an excrement job at adjusting as you go. Again, I'm a beginner, so i know my words don't hold a whole lot of weight but I have heard more savvy investors talk about the importance of knowing how to call an audible and adapt to situations and so on, so... well done!

Post: First time deal advice?

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2

So, finally got a chance to talk to the potential private lender. He said that he would be interested in maybe lending some money, BUT for this particular deal, he doesn't think it would be in my best interest. He gave me a good suggestion that I am going to heed so we'll see where it goes from here. Tyler Wehrung, your advice to approach it as an opportunity for him rather than a favor for myself was excellent advice that helped me so much, and the potential lender saw it that way. Also, I had my numbers ready to answer any of his question. Thanks again!!

Post: First time deal advice?

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2
Excellent advice from both of you! Thank you so much. I'll post a follow up to let you know how it goes after I talk with him.

Post: First time deal advice?

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2
Hey bp! :) I've been learning as much as I can about real estate for the past year or so and finally have the opportunity to do my first legit deal. I will try not to make this a post about the details of the deal because I understand there is a separate forum category for that. In order to make this deal work best, i will probably need to ask for a private money loan from a mentor who has been very supportive in my real estate plans, but i have never brought up the topic of possibly borrowing money from him. I will likely be bringing the topic up with him as soon as I can this week and am just looking for some general pointers on how to approach the topic with him. Anything I need to think about, watch out for, or keep in mind as I chat with him? thanks in advance

Post: Probate Scenario. please help

Michael LandrumPosted
  • raymond, WA
  • Posts 20
  • Votes 2
Originally posted by @Natalie Schanne:

Michael Landrum - Consider the reasons why your cousin cannot qualify for a loan. Do you want to risk paying for her to live in your house for free while you cash out your brother?

Evaluate if the house is worth more than $45000 or if that's fair. If it's worth more, why wouldn't you sell it on the open market?

Option 1) Get a 20,000-22500 loan to pay off your brother's stake and get the title in your name, then sign an official installment sale (lease to own) contract with your cousin. She must give you a downpayment (more than a normal security deposit). She must give you monthly rent on the first (schedule your mortgage loan payment on the 10th).

If she defaults on paying you, serve her notice and evict her. Keep the downpayment. Sell the house.

Option 2) Convince your brother to go half and half with you on the lease to own contract. You each get paid 50% of the agreed 'rent' monthly. $45000 over 5 years without interest is $750/mo. Over 7 years is about $600/mo. Charge 5% interest minimum.

Option 3) Apologize to your cousin and list the house for sale. Pocket half the money with your brother. Call it a day.

 Thank you for clarifying my options. I'll probably be going with option #1.