All Forum Posts by: Michael Tucker

Look forward to connecting with you, hopefully you've already checked out the Ultimate Beginners Guide to get started!

BP! It's me again,

I have a rental in rural King George, VA. My tenant currently wants to move out early due to some hardships. We've tentatively agreed for her move out date to be in August so I can begin advertising now.

I'd like to get more involved in Real Estate investing. My house has about $200K left on the loan and maybe $40-60K in equity not including closing costs. I moved out of the home back in Sept 2015 and it rented in December of 2015. I've owned it since 2012.

Is my rental worth more to me as a rental/leveraging asset? Or should I take the potential cash, build up my savings and try and re-invest the rest? The home was purchased on a no money down loan  as a starter home, so there isn't a lot of room in cash flow currently (~$200 after mortgage and titlhes). I think I could get $100 or more in rent at least if I put it back on the market. 

What are your thoughts?

welcome welcome welcome!

@Charles McCabe I forgot to tag you in my previous response. 

Big UPs to you @Gary Brown. Good luck and Godspeed in your endeavours.

Thanks @Nick B I'll do that. Do I need an agent to close this deal if it's worth pursuing?

I'm not sure, he stated all the rooms are the same, but he charges different rates for his tenants and they know it but don't have a problem. Units that have more people on the lease, he charges more for. That's all the info I gleaned. 

BP Fam,

I was feeling ambitious looking for leads in random places and came across a 15-unit multi-family. I decided to cold call it with a handy dandy downloaded wholesale leadsheet from BP. After attempting to go through my leadsheet, I spoke to an older gentleman claiming to sell the property for almost an hour. He stated that he purchased the property when he was 21 (apparently he's had it for about 40 years) and wouldn't have ever sold the place if he had any heirs to leave it to as he and his wife begin retirement. 

The owner purchased the apartments located less than 2 miles to a booming military base in the DC/MD/VA area. I've done some work there and can see the appeal of the growing area to accommodate the growing number of commuters.

Full Disclosure: I only own one rental property and while I would love to get in on a Multi-Family/Apartment I have no idea to properly vet the place. The owner won't provide any documentation for me to check, the information I've pulled from the county site didn't match what he initially told me over the phone. 

He did offer seller financing $1.2M, at today's interest rates (~3.5%), with a $250k down payment or an all-cash/full payment offer of  $1M. (He stated the county assessed it for ~$1M, but I found the closest matching parcel to what he described at less than $870k.) I tried to call back to get a little more information to run a better assessment but the only thing I got is that all the units are 2BR/2BA with a "den or study" that the tenant(s) could use as they see fit, and if there was an additional person, there was an additional charge. 

Tenants pay all the utilities (except water since the property is on a well), there's a vacant commercial space on the grounds, all on month to month leases. He says the place is full, that he has a cap rate of ~12% and has an income of $15-17k monthly. 

He has also offered to help mentor me in running the property if I go with seller financing since he doesn't want the place back in foreclosure.

Based on my assumptions (and I had to make a lot): 

Actual CapRate - 5.36%

CoCROI - 3.66% (not including coin operated laundry)

Gross Income - $11,475, (15 Units, Rented at $850 each, 10% vacancy)

Monthly Operating Expenses - ~$6k (Repairs, Prop Mgmt, Taxes, Insurance [No clue what to put here estimated $416/month?], Replacement Reserve, Pest Control, Accounting and Legal [No idea how much legal would cost per month]

The Dilemmas:

Aside from having very little experience in multi-families, i recognize this as a unique opportunity that I'd like to pursue if it makes sense. I have 0 available cash, but I do have a rental (with a tenant that plans to leave in the summer) that probably has about $50K in equity. Without partnering, what could I do with my rental to come up with cash for a down payment if this is worth pursuing. If I could get north of $100k I think I could make something work.

From what I've gathered from the site, it looks like I should get some "pro forma" information from the seller right? I'm assuming since he's older he might want to do things old school. The owner told me once I put down a deposit with a lawyer in escrow, I could get all the information I wanted. What other information should I have to make an appropriate analysis BEFORE a deposit?

So what should I do?:

BP...I have no idea where to go (aside from praying). I obviously don't want to take this gentleman's word alone, any advice on what to do next? 

Do I need an agent to help me with this? Should I pay more than what the place is assessed for? What should I offer to the seller? Is seller financing the way to go?  I also haven't visited the property yet since I didn't think this was a good deal.

I'm ready to take the jump if everything makes sense, but I can't begin the process of pulling out a down payment just to investigate the place further. I've went back and forth on this for a couple of weeks and after talking with the owner twice, I realize i need a little help so I turned to you BP.

Apologize for the length of the post, hopefully it has enough information and its posted in the appropriate section. 

Thanks,

MT

you don't necessarily need cash in hand if you plan to wholesale the property, but if you plan to purchase homes for yourself then you need to have some financing in line. You may need to find more information about wholesaling in your area. If you meet someone, offer your services to find and submit property leads in exchange for mentoring and a finder's fee until you get the hang of it. Or strike out on your own!

I'm new to probates as well. But I think the next step is to research the properties and also look into the property representatives to find out if the executors of the estate are contactable. (i.e. Are their addresses and phone number different than the property of interest)

After that, contacting the representatives via a mailing campaign could be done. But take care to be professional and respectful. The people being dealt with have likely gone through a lot, so an approach to helping the family vice, "I just want to buy your property dirt cheap" may be best. Search the forums for more information on probate properties. It's what I did to learn more. 

Let meet know how it goes.