All Forum Posts by: Michael Zagorsky

First, my goal is just to learn more about note investing and tax liens to see if it's something worth presuming.  The thing is that I'm not seeing much online as far as good overall into to notes investing and tax liens.  I was wondering if anyone had some suggestions on good books/podcasts/etc on note investing/tax liens.  

Just checking in to see if anyone in Brevard Country was using lists or direct mail?

I've been working on a data mining project for country records that I could forseeably see turning in something wholesalers would be intrested in.  Just curious what sort of lists you've been targeting.  

Hi Wholesalers:

Wanted to check the etiquette of this:  We are wondering what the situation would be as far as reaching out to a wholesaler with the intent of finding a personal residence to owner occupy?

We have been thinking of purchasing something on >1.5 aces in the Palm Bay, FL area and was thinking working through a wholesaler and fixing it up on our own would make a ton of financial sense, but would want to respect a wholesaler's business model while still wanting to find something that was personally the home I want.

Anyone have thoughts?  

I don’t want to change the subject too much, but what excites you about multifamily? As you have said in your post, you have a six figure income, are you looking to replace/grow your current income? Early retirement? Net worth growth?

I say that because if you have a job you like and can generate a decent amount of cash, I am tempted to stay away from Multifamily and focus on SFRs or other properties that have a greater long term track record of appreciation. I’ve looked at multifamily buildings in my area that were well maintained where the asking price is not far off from what the owner paid in the 80’s. 

So here is my question.  My math was putting the value in the $190-$250 range to clear about an 11% Cap.  How did you get the higher number?

I wanted to share the story of the first offer I ever made (it was rejected) and get everyone's feedback.

I came across a 8-unit for sale (2 x 4 plex's) units in Palm Bay, FL on Craigslist and contacted the buyer.

Each of the two units consisted of two 1/1s and two 2/1s. Asking price was $399k with the option of owner financing with 25% down. Total gross rental income was around $58k/yr.

I spoke with the seller and at a high level she said the following:

* They lived about 2 hours way from the property and had owned the property since 1988.

* The wife was a financial planner, so there seemed to be a high degree of financial literary.

*They were looking to retire and cash out some rental properties.

* All tenants were on month-to-month leases and she has not raised the rent in several years. No evictions and all rent current, but some tenants were habitually late.

So here were the problems I was seeing in the property:

1. The seller would not allow an inspection of the property until an acceptable offer was made.

2. Roof was from 1998.

3. She was very vague about how old the HVACs and water heaters were. I pulled the city building permits for the property and couldn't find any permits for relevant work going as far back as 2004.

4. The city had installed sewers on the property several years ago and to pay for it, they had a special tax assessment that drove the total annual property taxes to over $10,000/yr combined for both properties for the next 8 years.

5. Because of the age of the roof, insurance was quoted to me at $8k/yr. The current owners didn't have property insurance on the buildings.

Financing:

My plan was to use a home equity loan on my personal residence to put 25% down and finance the rest with a conventional mortgage. However, after speaking to a mortgage broker, I was told that the high insurance and taxes would mean that I would not be able to qualify->debt-to-income.

As a result, here was my email to the seller with my offer:

Hope all is well. I wanted to let you know of some research on the property I have done and a comp that I found as I tried to find a fair market value for the properties.

First, while I want to say that I am still interested in the property, I need to be honest in saying that I'm seeing some problems with the numbers that I am not sure I can overcome to proceed with an offer. That said, I wanted to make you aware of what I'm seeing and if you're still interested we can see what we can do.

I pulled the building permits issued for the property since 2004 and did not see any building permits issued for HVAC systems. Therefore, I am proceeding with the assumption that all of the HVAC systems are in excess of 12 years old and are at the end of their lives (~$35,000 for all units to replace).

Also, I checked with an insurance broker and he said that the age of the roof and the fact that it predates the 2002 Florida building code will make insurance very expensive and that I should consider replacing the roof upon purchase--he was not even sure I could get a policy without a new roof. This means a lot more money that will need to be spent quickly to replace the roof.

In the area, I found a comparable property, 3614 Tree Ridge Ln NE, which was sold for $135k recently on the MLS. It is a quadplex with four 2/1 units that rent for about $675 a month each. I checked the building permits and it has new HVAC systems and other improvements in the past 3 years. Taxes are about $2,600/yr without a homestead exemption.

Related to financing, I spoke to a mortgage broker who said that I would not qualify for a traditional mortgage. This is due to the high insurance and taxes on the property and because the tenants are month-to-month I cannot count the rent as income in qualify the home for financing.

All of this to say that because of the high tax rates compared to other investment properties that have sold and potentially ~$50,000 of CapEx I am going to foreseeably need to pay for, I cannot offer that much money without it starting to look like investing my down payment in the stock market would be better.

I think $190,000 for the 8 units would be a fair market price. I may be able to get conventional financing for these units at this price assuming I can get an insurance policy in place. If not, would you be interested in financing the property with 25% down and the rest on a 15 year note at 3.875%? I have an 800+ credit score.

Please let me know your thoughts.

The sellers response was that they rejected my offer and were not interested in talking to me anymore.

Just wanted everyone's feedback on if they thought my offer was good and other things I should of considered in my thought process.  

I am looking at two 4-plex's in Palm Bay which gross about $58k a year in rent.  The owner is looking for $400k.  

The problem is that the current owner has them free and clear and does not carry any insurance on the structure.  Im going to need a mortgage and based on the Sq ft replacement cost I'm bring told by insurance agents I need to insure them for $800k combined, which will be $8-$10k a year and that really eats into my cash flow forcast from these.

Anyone have any idea of a how to get the insurance costs down to a number that would let this deal work out for me?

I'm looking at a 5 acre spot of land in central FL, mostly for personal use.  I live about 1.5 hours away.  The owner has a large storage unit that he has made into a small cabin and installed an RV hookup, though the rv parking area is dirt.  There is a well and power, but no septic.  

I was thinking if anyone has had luck being able get money renting out places like this on a short term basis?  

I'm trying to scrap the entire MLS of my local area's public MLS, which uses a FlexMLS Javascript site. I've tried Import.IO with no luck. Anyone every try anything in this space?

I was trying to compile an approximate list of properties that sold in my county that changed hands, likely due to a wholesaler and what the seller got paid.  I have a file of all real estate transactions and parties and was wondering if there were any key things I should look for to filter out these types of transactions.