All Forum Posts by: Mike Smith

@Charles Carillo, @Jeremy Pace, @Joe Villeneuve, @Natalie Lopez 

Thank you all for your input, it helps a lot. I was so focused on my numbers I wasn't thinking about how to present my offer in a way that appeals to the buyer.

Once I get a look inside I'll put together an estimation for renovations and see what kind of offer will work for me and the seller.

I have my eye on a quad that has been on the market for about 90 days. I have not made any contact with the seller yet. The list price is pretty low for the area (Oregon), but values here are so high and rents are so low that the cash flow is still going to be questionable. The listing indicates the seller is willing to provide financing.

The units are all occupied and current rents are well below market value, but I'd probably need to do some minor renovations to bring the rents up to market.

I can finance the property on my own without any trouble, but if I buy it I'd want to renovate the units to bring the rents up. In a perfect world I could have the seller finance it for a few years while I renovate the units one at a time, then refinance into a conventional loan. 

In that same perfect world I'd get the seller to accept an offer about 15% less than his asking price.

The property is on the MLS and two years ago the seller put it on the market. He did not lower the list price and ultimately took it off the market after six months. Based on that I don't get the impression he's desperate to sell.

Being that this isn't a perfect world, which would you prioritize in this scenario? Lower price or seller financing? I don't want to torpedo the deal by asking too much from a seller that is only somewhat motivated.

I like mortgage brokers because they shop for the best deal from multiple lenders. I am in the process of getting a loan from Melissa Puttkammer with Mortgage First Corporation. I don't know that she has any special expertise in house hacking or working with investors, but her customer service has been outstanding. I strongly recommend her.

It sounds like you've been renting it for awhile but only recently realized your cash flow is negative. Is it actually costing $150 out of your pocket or is that an unrealized/assumed loss due to capex and vacancy budgeting? 

As long as it's rented you're growing equity that someone else is paying for. Obviously negative cash flow is not ideal, but it may not also be a disaster if you can cover it until you're able to sell.

I just registered!

I'm not satisfied with the bank I use for personal banking, so I'm trying to decide where to open accounts for my investing. I will not be using an LLC or any kind of formal business to start with, but I might use LLCs down the road. For now they will just be personal accounts that I use strictly for investments. Any advice on what I should look for?

I have a couple suggestions that haven't been mentioned. 

Range by David Epstein - Explains why experts are usually not as good at solving problems, even within their own field, as a group of people with a broader field of knowledge. It's not intended to be a business book, but I think it's helpful in deciding how to go about building a team. 

American Icon by Bryce G. Hoffman - An in depth review of how CEO Alan Mulally turned around the Ford Motor Company in the middle of the financial crisis. It's fascinating and has some good lessons about leadership and team building.

My next book is Long-Distance Real Estate Investing by David Greene.

I'm a full-time cop and while I haven't actually bought my first property yet, I've been doing the research and don't see any reason that my job would interfere with investing. In fact, since I work 12 hours shifts, I only work half the month and have more free days than people working a typical 9-5. I don't plan on trying to become a full-time investor, I want to stick to investments that are relatively passive.

It sounds like you're going to have drama no matter what. If the deal works at fair market value, you should go for it. You might even be able to get the judge to order her to sell it to you. And the benefit to her, besides the fact she's going to lose it either way, is that she won't have to pay an agent commission to sell it to you.

@Anthoney Hanks thanks for the welcome, and the advice. I'd definitely consider 2-4 unit properties, maybe even prefer them over SFH. I haven't seen any listed on the sites I've been checking, but as I do more research I'm finding more options for off-MLS properties so I will keep that in mind.