All Forum Posts by: Michael D'Egidio

Greetings BP Brethren!

I hope everyone has been having a prosperous and lucrative summer and is ready for fall! I had some questions concerning a possible deal I would be considering, but I think I'm painting myself into a corner being so new to the investing side of properties. My situation is like this:

I want to buy a 4-plex of condominums, each for between 55k-60k a piece. all are in the same building. Max rent allowable on each at the 1.1% lets me list rent for a condo in the middle reasonably for $638.00/month. there is also a $155.00 condo association fee tacked on the end that I'm not sure can be added to the monthly rent. so the proposed cash flow of each condo per month will roughly be $134.00/unit without even breaking into other expenditures, that is covering a conventional loan of 20% down and 349/month per unit mortgage for 30 years. so with all 4 units as one giant loan package, a conglomerate loan will be for 232,000 with 20% down leaving the mortgage payment of 1195/month for 30 years. tentative cash flow before expenses/mortgages will be 2,552.00 subtracting mortgage and association fee only. This leaves a cash flow of roughly $737.00/month not looking at any other expenses, vacancies, broken items, etc etc. do you think this deal is reasonable in that case? my other question is this.

Smaller scale. Say I buy one condo at 58k cash. at that proposed rent and and figure it will take me roughly 10 years to get that money back in full with no big return on investment, just breaking even really. recovering the 58k that was spent. what benefits are available to me while that process continues? per unit it will only be cash flowing about 483.00/month not including items breaking, repairs, etc etc. let me know your take on this. I'm really at a crossroads. The more I keep looking at the numbers, the more I'm thinking it's not that spiffy of a deal. If it's one motto learned very quickly within the BP community it's definately the numbers don't lie... I appreciate the thoughts guys! blessings!

Awesome! I tried to go through some threads, but just not looking in the right places. I appreciate the thread links!

Good day BP people!

Though I've been trying to kick off my investing career almost 2 years running, I'm afraid I keep finding investor trainers that are just really super flaky in their methods. I'll find a deal, work the numbers, bring it back asap and then I get zero feedback, or by the time they get back to me with the analysis the deal window is completely gone. I had reached out to a couple of national ads and had received some call backs and was wondering if anyone on the forum has worked with prior, dealt with before or presently working with RENATUS... any advice before preliminary contact would be greatly appreciated. thank you!

Howdy everybody,

I appreciate the food for thought and see so many people coming from so many different ways at so many different levels. This is why forum is such a great tool.

I just wanted to take a minute to apologize in coming across so complacent... Good Lord. Reading the time stamp on that message it looks like it was after the 3 complete reject on offers, with the 3 listing agents of each REO property asking me how dare I allow my buyers, or investors to make such ridiculous offers...

Now for just starting out in the business, I'm not very set on lighting the candle at both ends and burning bridges out of the gate. Like you guys had said there are so many individuals and effects that are going into a transaction, it's easier to tread lightly and become grounded before you start making waves.

I think when seeing a bigger picture, I really think I meant more about realistic expectations. Like all of you had confirmed it's all about the numbers and at the end of the day I'm there to work with someone regardless of their goals. Addressing false expectations and high false hopes makes matters only worse as the transaction progresses. I like to be honest, upfront and realistic with any clientele.

I have NEVER told a buyer or investor that their offer was unreasonable, ridiculous or low ball... I have the market data for you, I have the trends, research and raw results and present an open range. the decision is purely theirs, not mine. I've not been afraid about ever delivering a less than market value or LESS than ridiculously lower than market price offer. Realtors have got to be the most concentrated group where among the productive good ones you are just bound to bump into a few divas who take the whole damn thing personally. This rant was catapulted by an offer rejection yesterday morning with one of my absolutely favorite investors. They know the area they want to be in, they come prepared with all figures and documents and the meticulous work they put into each property is absolutely phenomenal. We went about 60k less than market value, taking into consideration of course all of the money they were going to put into it, not only upgrading, but completely remodeling. Every investor is different. Now out of the blue after the reject letter came from the bank I received some Realtor hate mail. I thought I may have been in the wrong allowing them to offer that low, like I really did my investor a dis service and I felt extremely bad.

I want to learn more than anything, if someone has a different system in acquiring the deals, or a routine they follow and aren't afraid to share, I would very much like to do so. Searching the MLS for "deals" is quite the pain. Many private sellers on the MLS would be highly unlikely to be a candidate for selling below market value and the REO have so many hoops and snags and can be very time consuming. At the end of the day it's all about improvement and preference. All of your comments and feedback will give me just that. I really appreciate your time in your responses.

Mike

Greetings BP Brethren!

I'm newer to the real estate business, I've been a Realtor now for the last 7 months. I've closed 4 deals, have 2 current listings and a whirlpool vortex of buyers... and half of them... investors. *sigh* haha just teasing. I do love me some investors. ;-)

I do love the flip sides of the transactions and really have zero issues when it comes to working with investors. It's a fantastic niche, but I believe there are some that just aren't able to grasp the actuality of the game. I have 2 current investors that haven't divulged how much they have really done in investing other than show me their certificates of organization and their pre-qual finance statements. I really do believe it's going to be their first deal a piece. I don't want to belittle them by straight calling them out, I have done the leg work and research and they are both different in terms of goals, strategies and areas, but I really find myself at a cross roads when the real information needs to be divulged. How can I best explain these issues?

1. Pricing: Just because it's a bank owned or short sale doesn't mean they're going to give the thing away. If you are looking at a basic home that's listed below market value I wouldn't expect an offer to be given more than 15-20% below current value. If the place isn't riddled with holes, has working heating and cooling components, you're not going to get by writing an offer at HALF price... and then exhale with frustration like you're super surprised... I mean, come on. you need to put some skin in the game and realize each and every flip isn't going to net you 50k...

2. Earnest Money Complaints: Many REO's are now asking for certified funds with the copy ahead of time submitted with the offer... I do not see the logic in arguing the basic process and requirements with the bank's stipulations. they own the damn thing. If they want a copy of the check up front, so be it. AND while we're at it investor sassy pants, it'd be highly recommended that you put more than the absolute bare minimum down as earnest money. let's say at LEAST 1-2% respectively. It is also not uncommon to see on cash offers banks asking for 10% down as earnest money. don't get your panties in a twist. this is what we're dealing with every day.

3. Inspections: Ok, common cliche is going to get thrown... takes money to make money... don't get cheap with the inspections. in the long run a $500 inspection that lets you out of a contract is going to save you 10k in useless repairs or damages you didn't know about before. Don't cry. it's a contact sport. get a helmet.

Please let me know if this is what a lot of Realtors are seeing from potential investors, and perhaps some help on the investor's side is what they find most helpful about having a good realtor on their team, and hopefully it's more than just the necessary evil to write up a contract. lol. happy investing folks! thanks for sticking through my rant.

Mike

I've tried getting to who he was representing, he's not budging, which only makes me think it's a crock all the more. but there's no other way he'd be looking at being on the line for these properties he's looking for without someone backing him up with coin. I'm giving him one last search on possible fix and flip deals and see where he spins next. But I believe the game is going to be ended soon.

Hi Ned!

This third party is representing buyers for sure, he is not an agent, no credentials of any sorts. The only thing he has on himself is an LLC. He says his buying contracts are through the investors and they have the agreements written up between them about fees, payments, etc. New Mexico is very lax on contract law so anything written on paper can count in court. Ever since I brought this up to him this morning, the tune has changed now. Apparently the investor went and moved on something else and now he wants to do a fix and flip deal and wants to close on a subject by the end of the month. we'll see what happens. at least now I'm not needed to waste time or money on travel, and he's in my neck of woods where he wants to purchase the properties, but eventually the cards are going to have to be out on the table, and when they do I'm going to expose this piece of work to the world.

I got you. yea, that's exactly what it sounds like. he's sending the guy contractual numbers with a ton of figures in the air. Based off the properties I'm sending him, the investor wants a medical or commercial building with tenants paying rent. how ideal and quaint. however he's getting upset now because everything I'm sending him is vacant. the spaces are lovely, but when leases are over, and the owner doesn't feel like chasing another lease, or the property value has increased enough to turn it over to another, then so be it. but don't get upset with me because we're stuck using public domain for "hot deals" you're right, I might as well be throwing him junk from craigslist.

Greetings BP Brothers and Sisters,

I am having a hell of a time working with a 3rd party who is representing a pair of investors, who in turn both have different real estate interests. It's really getting to the point where I think he is absolutely full of you know what... but then again he also sounds really young, so I don't want to discourage him from doing what he's doing. But he has zero tact, no social graces and is flippantly going back and forth with what is a priority or not.

First and foremost, is it popular for investors to use 3rd parties off the bat? I suppose this would be most common, since investors are out doing whatever and don't have the time or inclinations to be talking with a Realtor, property managers, builders, etc.just give them the figures, the return percentage and be done with it.

However, The 3rd party I'm speaking with is doing zero follow up or looking into the details of what I'm sending him. As a Realtor I can only get out so much information with the rest being left up to him to crunch the finer numbers and so forth. I really feel as if he's just using us for our MLS access to spot a potential deal and then in turn without signing any agreements to work with us can find a discounter or a buddy with a license to write up any deals. As a 3rd party he is collecting the money from the investors and so in turn he's the only one party to the contract and will have to pay any ROI dividends out of his own pocket. If you're a third party doing this I'm assuming you would be out and about talking to people, finding that to be more valuable to barking out orders.

This guy I'm working with is in a completely different MLS system than us, we're out of town. why use us to find property via public domain in lieu of getting a Realtor in that same MLS to give you the specifics? I'm thinking he's already burned the bridges locally, or he really doesn't know what the hell he's doing... any feedback or help would be greatly appreciated! thank you!

I appreciate the welcome Mehran!

I'm in it for the long haul, passion is a must. :-) cheers!

Mike