All Forum Posts by: Michael Roy

My question isn't location specific, although I reside in Texas so I'm always curious to hear about my particular market. I am just asking, generally, if there are any local investors in a market that seems fairly relegated to institutional investors at this point.

Is there anyone out there actively trying to purchase properties in opportunity zones? I know that there are a lot of institutional investors looking for $5m minimum deals, but I was wondering if there are local investors looking for smaller investments to take advantage of the opportunity zones.

Multifamily makes more money, but is 100x the headache. 

@Hunter Perkinson Someone once told me, "Manage your regrets and don't always try to hit a homerun."

@Sorin T Have you ever thought of leasing these out as Section 8 (government housing)? For C class multifamily units, if the area allows for it, can be a very profitable and secure source of income. The only thing you really need is basic info from the state on what the inspection requirements are for section 8 housing (these are usually very simple, i.e. smoke detectors, working utilities, etc.) and a point-man who can go to the section 8 offices and tell people about the units you have. The latter is the hardest and most crucial part. Find someone that needs cash, is personable, and can relate well to low-income individuals. Pay them a commission for each person they bring to you. It is the most secure source of rental income and the tenants are usually very good because they can never get back on section 8 if they ever get kicked off. 

Something to think about.

http://www.myorangeclerk.com/enu/Pages/additional-services/online-foreclosure-sales.aspx

Hey Melissa,

Just google "________ County courthouse sales" and the county clerks site should come up to give you information about foreclosures. Some counties give the information for free, some charge for it. If you're going to pay for it, don't get scammed; buy it directly from the city. Below is the link for Orange County (verify that its the actual county's website, because it is a .com)

To answer your questions if its legit, absolutely (some of the time). Where I live, here are the rules on foreclosure sales: You must be present to bid on the property, which usually happens on the courthouse steps of any city. There is no due diligence period, so you never know whats wrong with the property unless you find an inside source who knows about the property. Some properties sell for WELL below market value, and so sell for at or above market value (it just depends on what property and how many people show up for the sale). Finally, here's the kicker: You usually have to pay 100% cash up front for the property, which is why properties can often go for so cheap; most people don't have cash to buy it outright. The best scenario would be to have a line of credit with a lender at a good rate so you can go buy any property that's within your line of credit. Or, if you have cash, buy the property, and go try to finance it with a lender after you purchase it.

Good luck to you!

You absolutely need to build a relationship with a conventional banker. Preferably someone at the place your currently bank at, assuming you have a long-standing reputation there as a customer. Your cash, credit worthiness, and relationship with banker will help you secure your first few deal, but you will need to build a track record if you want to grow your operations. This means that you need to sell a few deals to show that you not only know how to buy, but how to make money on the back end as well.

I would recommend that you do not use a hard money lender. The loans are more expensive which cuts into the return on your property. They are also going to be less forgiving than a conventional lender that you have built a relationship with.

If you're serious about investing, start building a relationship. You can certainly move quickly once you establish a good position, but establishing that position takes some time. Meet with a banker that you get along with, someone who seems willing to give you a chance. If you bring a banker a good deal, they might say yes, they might say no. But if you bring a banker who knows you by name, knows your hobbies, etc. and trusts you, the chance of getting a loan approved at a fair price is much higher than the former situation.

Good luck to you!

P.S. Find a spreadsheet that you can use to bring to bankers that will outline your deal. A banker will be much more quick to trust your intellect if you can bring numbers to the table and explain them. Dont just tell them that you want to buy it for XXX, put XX into it, and you'll sell it for XXXXX. Do your homework, talk about different return scenarios, and which you think is most likely and why. Tell the banker why their loan is protected.  

You are allowed to accept anyone as your tenant. As far as accepting the rent, taking security deposit, 1st months and last months rent is not uncommon. Have a "special provisions" section in the lease and write out that the tenant must pay 1st and last month's rent by the commencement date.

I would absolutely run a background check/credit report on this person. Get their written consent to do so, and run it. It's only $20 or so. This will help you verify if they will be a sustainable, paying tenant or if they have a history of financial woes. 

Would need to know the NOI, but based on 80% occupancy, $500/door rent, and assuming you profit 40% of revenue, I think your assessment is close at 20-25k/door. This seems like a fine deal.

At 80% occupancy, I would see if there are any general improvements that can be done to the apartments that would increase vacancy 5-10%. THEN, instead of trying to capture that 5-10%, increase rent 10%. Your vacancy may drop or remain stagnant, but revenue will increase. 

The bank wouldn't have financed the whole amount, but they probably financed 80-90% and assuming it was paid on for 2 years, then the balance is 75-85% of original amount, which would allow for you to offer $27-30k/door which I think works. A bank generally won't sell below the balance amount unless the committee has ordered they get it off the books. Finding out if that is the case is hard. 

Good luck to you. Hope it works out. Sounds like a fun deal.