All Forum Posts by: Michael Lee

Hello and welcome here Jamie!  I might be saying something that makes you mad but that is not my intention.  First of all, one of those types is a short term investment and the other is more long term.    You should work along with your goals and stick with pursuing that.  Do whichever is similar to your goals.  With the way this economy is going, a Buy and Fix and Flip might be the best be the best way to go if its location is good and desirable.  If that property is fairly rural and is not as desirable as a typical place "for sale" location, it might be better to rent it and plan on holding on to it for a while.  

We live on opposite location in the US.  I live just outside of Dallas , Texas.  They're probably quite a bit different and hard for me to visualize our geography is probably  quite a bit different.  If your investment location is in a growth area, you never know about the future development and  how it might drive the value up.  A zoning change could be to your advantage.  You might be able to subdivide and sell to builders. 

How did you come up with ARV figure? If you decide to sell it, don't wait very long and get that profit money in your pocket. According to a Mentor that has taught me very much says that your 1st offer usually is the best/highest. In the future you might look at apartment complexes as a good way to go. One thing I like about that is having many units at one address. Another item is the cap rate. Positive cash flow from day 1 you own and is critical too.

Good luck to you!

Hello and welcome to this site Todd!  Please understand that a any negative statement I may make is not meant to be an insult of you.  You did not say why 3 of those units were not leased.  I will assume there no problems with those.   You can use the contingency for each unit separately or one total amount which is more commonly done. As you know what that represents it does not really matter, it's up to you.  Each unit's contingency can vary depending on what each needs.  sell those units and work your way up.

Do not count on anything happening, good or bad.  Base your decisions based on current events.  Do not count on anything that is based on the future.  There   Just do not do anything based on the future or something that might happen.  The more units you own, the less a vacancy will hurt you.

Good luck to you!

Hello and welcome to this site Alma!  Please forgive me but I may tell you something you do not agree with but nothing is said to insult you.  I owned a flooring company for about 5 years before I had some medical problems that left me bedridden for about 71/2 years.  That being said I think I know a good solution to your flooring issue. You did not say if you are going to hire professional installers or do it yourself.  At the very least, I would would talk to a professional installer and get their opinion on the flooring product.  I would definitely suggest a "wood flooring" on the stairs instead of carpet for the cleaning reason.  Do not take a cheap route.

What you might do on the stairs is to install a different color from the same product you end up using everywhere else. If you end up using a product that contains real wood you might be required to let the flooring "acclimate" for a few days before the area where it will be installed.  Just to let you know an additional thing you need to do is to keep some of the material used in case you have a repair later and using the same material assures you on the color whether it is still available or not.

You are going to love this next statement.  A single unit rental has a 59/50 of not losing your money.  The more units, the better chance you'll have of making them succeed and any unexpected vacancy will not be so painful.  Just hope their is strong demand and you do not have a dis-occupancy that is unexpected.  If you ever get a notice of a move out be ready to turnover that unit and get it move in ready as soon as you can to minimize the down time.

I do understand the "house hacking" loan but 3 or 4 unit house would have decreased the pain of a vacancy.  A Partnership on an apartment complex of 30 or more units would greatly enhance your endeavor to make it and also afford to hire a Property Management Company that would do the daily operations.  Save twice what you think a turnover should cost in a reserve account used for repairs and turnovers.

Good luck to you!

Hello and welcome to this site Sangam! you might not like all my answers but they are not made to insult you. I tend to be opinionated and I hope you believe in what I have to say. Most lenders require your personal name to get loan, especially Banks. The next answer depends on your goals. Unless you need help with a low down payment, a traditional loan is better than a FHA insured loan. There are many ingredients to make a multifamily purchase a good one. As you have probably heard that the location is very important.

With multifamily (apartments) starting out with a positive cash flow is one of the most important.  Do you already have access to that $400K?  If you do, you can invest in a $1.2M property.  Investing in a MF home (1 to 4 units) is very risky.  The turnover expense is usually higher than you think.  Demand is important in either way you decide to go.  The same goes for access, parking available, on-site and off-site amenities, exterior looks plus landscaping, nearby schools, floor plan design, area retail, and more.

You may have heard that you need experience before purchasing but that is a myth.  I have learned very much about real estate investing.  I have been bedridden for over 7 years including reading a book about every 2 weeks.  The bulk of my experience was in construction management and I held a real estate broker license in Texas for about 30 years. I was born and raised in Dallas, Texas.

I'm now 61 years old and have been involved in real estate for about 35 years. When forced to close a loan personally and then transferred to another entity after giving them what they need. Just make sure the will allow that. A FHA loan may have more fees and a higher payment because of their charge for like property tax and insurance. They also may charge you a fee and stricter loan requirements.

Good luck to you!

Hello and thank you for being on this site Dane!  I tend to be a little opinionated but none of this is meant to hurt you.  The first thing I will say is that houses are very risky investments in Buy and Hold deals.  I hope there is great demand for it.  I like that you think of it as a long term investment.  To reduce your risk down and own you need 15 to 20 or more of these if you are aiming to quit your job and living off real estate investments  and they will all have different addresses.

They will probably cost more than you think it will cost to do a turnover. If you already have a Tenant I would wait to replace the roof to take advantage of the best time of the year to do this and hopefully a little cheaper.  Put as much as you can in the reserve account so you can easier do anything necessary.

Positive cash flow is more important than the location.  I'm probably the the only one you have heard say that.  Don't get me wrong because the location is important when purchasing real estate.  The cash flow you get from that one house might help you but it probably is not enough to pay all your bills and that is fine if y'all both have good jobs that you like and just want to supplement your income.

Who the hell am I?  You are reading a letter from a 61 year old that has about 30 years of experience in construction management and had a real estate broker license in Texas for about 30 years too and my dad had a broker license when I graduated college (with honors) with a business degree that emphasized real estate and he did mostly commercial deals that I learned from.

Good luck to you!

Hello and welcome to this site Benjamin!  You did not state the building sites descriptions but I will try my best answer. I would recommend a 30 year amortized loan and pay it off early. If it's is really a good deal, financing will not be a problem.  Not knowing the building type makes it hard to answer your question about deferred maintenance and the age of them.  Does that effect its financial statements?  

Is the existing Owner hiding anything?  Make sure the sales contract includes a contingency clause that allows you to use your own appraiser and also allows you to walk away and you get sent any fee that has not been earned including any deposit you made nor any penalty, if the appraisal comes in too low or does not support the sales price.

One way to make more money is to offer the existing Tenants, if they have reliable history on their lease obligations, a "lease option" furnished by you.  A Bank may have the lowest interest rate charged but does look at your worthiness the most to qualify.

Owner financing may be the best way to go.  It's maybe the most negotiable.  If you do not have enough of a deposit required, you could be provided a 2nd note of that amount and has a shorter pay-back period like 5 or 10 years

The other options included but limited to Seller Financing, Hard Money lending, formation of a Partnership, or a FHA insured loan through a national Bank, or a local Bank. Did the current owner give you actual detailed, monthly financial statement on a and not a Proforma.

Require at least the last 12 months income and expense statements.  Review the actual leases and are the existing Tenants paying average rents for that area?  Think of it like a long term investment.  The most of financing that these projects can get and will be payed by rents, not out of your pocket.

Demand a visual of all apartments, do not accept any excuses.  What is their location?  Is there anything bad about that area?  You might get a General Contractor give you the expected cost of the deferred maintenance and do not rely on what the owner says.  I would hesitantly take anything said by the Agent.

Good luck to you!

Hello again  Nicholas!  You can Email me or contact me through this site because I am on it just about everyday.  I do not think I mentioned to you but I am currently bedridden due to some medical problems, which means I am pretty available all day long.  Just avoid 11:00am until noon and between 3:00 to 4:00pm.  You might have to leave a message the first time because I might think you are a sales call and I usually will not answer because of it.  I am happy that you might reach out to me.

Thanks!

Hello and welcome to this site Nicholas!  Other possibles for your team is a CPA or Tax Consultant and maybe a General Contractor. A lender that might do more than one of your loans and he should give you a pre-qualification letter and give a copy of that to the seller with your offers.  I would never invest out of driving distance (about an hour) unless it was a Turnkey provider like Memphis Invest or Maverick Investment Group.

All good areas are harder to find a deal.  You just need to be available to move anytime to get in the area away from your current living place.  Have an Inspector who you will work with regularly.  There are a few reasons why I would invest out of my state.  One of them is having a relative that lives there and you know that they will help you.  Another reason is I do that is it is in some city you regularly travel to for other business-related things.

Try to keep your traveling expenses to a minimum.  If you intend on a Buy and Hold deals I would consider apartments over houses.  Not only is it #1 right now you have several units at one address.  Not knowing your age and any family that you are responsible to effects my ability to give you thorough answers.

I agree that real estate is a Team business. It's also a numbers game which means to make many offers on a regular basis. I tend to think that SFH's bought as rentals is very risky. You do not need any experience to buy apartments. That is a myth. The only way to purchase a SFH in this economy is Fix and Flip or Quick Flip. Another way I will support purchasing SFH's is to have a General Contractor that lives where you are buying out of state and you feel they are trustworthy, experienced and communicates well.

Be careful when paying for work done except for maybe an upfront fee for materials.  Do not make their final payment until all punch-out work is done and make them sign a full Lien Waiver before making that final payment.  Be clear up-front  on your method of payments and know that they understand it as well as the scope of work.  The more units you own will make the dis-occupancy less painful.

The best way to get owner-financing, is to show then how much more the'll make as well as spreading out their income and how the possible income tax liability would probably be less which can be delayed as long as the loan has a balance.  The worst you can get from them is "no".  Get use to hearing that and do not take a "no" personally.

Good luck to you!  Do not be afraid to ask for that option.  If they need the cash like on the down payment you can please them with  a second note that satisfies their needs and goes away sooner for you.

Good luck to you! 

Hello again Tia!  Just because your Dad is cash broke he can take care of the owner's cash needs is to create a 2nd loan for it.  I can't help you by naming any names.

Hello Mike!  Coppell is popular for any reasons.  Just one is good reason is because it's cheap.  I see bad stuff about California everyday.