All Forum Posts by: Mitch Messer

Hey @Alan Scott Hobbs, Augusta is one of our target markets!

What kind of partner are you looking for?

If you've got the deal expertise, a money partner would bring the funds for you to close deals.

If you've got your own money, an experienced operator would help you source and underwrite deals.

OK, I would urge you to be very, very careful here...

Certain operating expenses are paid monthly from lender escrow, so it's easy to assume that any costs not paid this way are somehow "optional."

They are not!

Vacancy, property management, repairs, maintenance, and capital expenditures are all MANDATORY expenses. If your financial analysis doesn't accurately capture them all, you are headed for DISASTER!

I say this because this is exactly what happened to me in 2007. I didn't know my financials, so when the real estate market turned ugly I only then discovered that I had been negatively cash-flowing for years without knowing it.

Had I known better, I would have improved the cash flow for those properties I could, and dumped the losers I couldn't fix. Instead, the whole mess came crashing down around my ears!

Also, you mentioned this is a condo. That means that even at $150/mo cash flow, you're just one association fee increase (or special assessment) away from losing money every month!

Beware!

Hey @Joseph Ducharme, congratulations on finding a great cash flow deal!

Metro Charleston is one of the markets that interests us as well.

If you'd be willing to share, what cash flow and cash-on-cash return are you projecting to earn?

1. Seller financing - Find a seller (I recommend a #TiredLandlord) looking to exit who happens to own their property free and clear. Arrange to pay them a reasonable down payment and monthly payments.

2. Buying subject to existing mortgage (AKA "sub2") - Find a motivated seller with a mortgage. Agree to take over making their monthly loan payments in exchange for the deed. (But don't even think of doing this one without getting proper training and solid paperwork!)

Happy hunting!

 @Shefali Golvelker Specifically, how much cash flow and what cash-on-cash return are you seeking?

Also, are you looking to acquire via a 1031 exchange? That would be the most tax-efficient solution.

I see TWO major concerns with getting preforeclosure data from aggregators like PropStream:

1. You've got to pay them for it, whereas the data itself is publicly available!

2. There's always a delay getting the data from the source. Even a 1-week delay could lose you deals in jurisdictions like Georgia where you've only got 4 weeks to make a deal before the house goes to auction.

Hey @Josh Darley, my sincere condolences to you and your dad. My mother-in-law suffered a massive stroke in 2018 that required her to leave her home.

Two thoughts for you:

1. If you liquidate your dad's home, the Big Enemy to pulling out all of his ~$100K in equity will be frictional costs (agent's commission, buyer negotiation, holding costs, etc.). If instead the house could be rented now with minimal work, you might consider offering it as a lease-purchase. Find a tenant who wants to own but who needs a year or two to qualify. Collect a reasonable non-refundable earnest money deposit up front (say $10-15K), and charge them above-market rent for the opportunity. When they do eventually purchase, you pay ZERO commission, and there's no negotiation, since the purchase price would be established up front. Also, minimal holding costs!

2. Consider lending the ~$100K equity in private loans secured by real estate. If you were to keep the house as a regular (not lease-purchase) rental, you say you'd earn maybe $800/mo in cash flow. That's a return of about 9.6% on his equity. Private lenders can get 12% pretty easily in this market.

Hope this helps get your wheels turning!

Hi @Mary Pastoral, congratulations on getting your deal under contract!

However...

Have you already completed your inspection? If so, you should already have as pretty good idea of which capital expenses you will face in the future. You don't want to have to guess. If any of the "Big Five" systems (HVAC, plumbing, roof, electrical, water heater) haven't been updated recently, they still should be budgeted, even if you expense them later.

Also, if you're primarily buying for cash flow, then this seems like a whole lot of work for just 7.75% CoCR! We typically aim for 10% at minimum.

Is it too late to re-negotiate price? 

@Walter Parker I currently originate private loans in GA and PA, and I'm looking to do so in SC and OK this year.

I just reached out to you on LinkedIn. I don't message here on BP. 

@Sarah Young I couldn't find you on LinkedIn, but if you're considering alternate funding sources, let's chat! My BP profile explains how to reach me.

No worries: It's a fairly universal distinction across the U.S., including Columbus, OH.

An assessor ("auditor" in OH - https://property.franklincountyauditor.com/_web/search/commo...) determines value and enforces the millage rate; the commissioner ("treasurer" in OH - https://treapropsearch.franklincountyohio.gov/) issues the tax bills and collects payments.