All Forum Posts by: Nathan Lenahan

@Ronald Rohde

Units are between 800-1200 sq ft. Almost all are 2/1s with the remaining 4 units being 3/2s.

Rents have been in the high 600s/low 700s for the last few refreshed units.

Appreciate the thoughts here. 

As a follow up I closed on the property with my partner today.  I used 30K of my own cash and the remainder was an assortment of personal loans, lines of credit and money from my spouse.  

Despite @Caleb Heimsoth's sentiments of "It doesn’t sound like you’re in a position to buy something Like this" it can be done.  And done right. I knew we would have to be creative and push the limits and I feel great about where we landed. 

We used a small regional bank and they didn't care about the source of capital as long as (1) it wasn't collateralized by the property and (2) it didn't push my personal DTI past 43%. Both were very manageable.

Here are the numbers:

# of Units: 35
Purchase price: $1.15M
Down Payment required: 20%
Renovation Funds: $350K
Total loan amount: $1.2M
Loan terms: 5.25 APR, 5 yr term, 25 year amortization
Average Current Rent: $523 per month
Forecasted rent after renovations: $726 per month
As-is Cash on Cash return: 18.09%
As-is IRR (assuming refi after year 2): 48.62%

We are very excited to jump in and get renovations going!  

  

Hey there BP!! 

Has anyone had luck using private money for a down payment on a property?  I'm in north Texas (DFW) area and am trying to figure out my options to raise the cash to close on a deal.

Here is my situation:

Just got a 35 unit complex under contract with a partner.  I need to bring 130K to the table but don't have that much in cash at the moment (I'm starting to build up cash reserves again after a business deal went sideways).  I have great credit (750+) and very strong income.  We have deal terms with a local bank that is familiar with the property (4.5%, 25 yr AM, 5 yr term). The property will cash flow ~4200 month as is.   

I could go get a few personal loans to cover the down payment but I'm concerned it would put the deal in jeopardy from a credit/financing standpoint.  

Any thoughts on options here that are more off the books from the bank's perspective? 

Thanks!

It took almost 4 full months to get them out.  We filed a relief of stay but that never really came into play because the judge threw out the bankruptcy because it was frivolous and not completed according to the standard expected.  It took us a few hours between the time the judge dismissed the bankruptcy and we got the constable to the property.  They residents were a little surprised to find us in their house when they got home.   Turns out they were hoarders too which made it a long day to empty the house to the curb  (I bought it at auction sight unseen).

Ultimately it was a great learning experience and I ended up flipping the property pretty quickly once I gained possession.  The funniest/craziest part was watching the gentlemen literally carry out buckets of money and cash to his vehicle. One bankers bag probably had about $15k in it.   Sometimes I just don't understand people.  

I am definitely interested.  Text or email work for me.  Thanks!

@Andrew Herrig is spot on.  True deals are becoming more and more difficult to find and when you do find them there is typically some known or assumed major issue i.e. significant foundation repair, title issues, legal issues, occupied etc.  

The last two deals we have done in 70% range have had major title issues and foundation issues.  Continue to talk to people and develop a track record.  Most wholesalers will be leery of a brand new investor with no track record and will send their best deals to trusted buyers first.  We have had some luck every once in a while finding properties on homesearch.com as well. 

We have had some luck with Preston National and Southwest Bank.  I know Preston National does the construction side and is merging with another bank that focuses on the permanent financing...I think they might be a good fit.  

Good luck!

NARPM is a great resource and professional organization for property managers. PMs that you find on the site tend to care just a little more about the profession and doing things right.  

Make sure you take the time to understand all fees associated with any PM you speak with. The most typical ones being the monthly management fee and leasing fee.  

Here are some other fees you may see:

1. Setup Fee
2. Marketing Fee
3. Maintenance markup fee
4. Releasing Fee
5. Trip Charges

A PM should make you feel comfortable and be able to demonstrate a track record of success.  Good luck with your search!

@Jorge Lancerio I would do your own due diligence as described above through craigslist, rentometer, and zillow/trulia. 

If they are a good PM company there should be no charge for a CRA.  Typically PM companies offer this free as a foot in the door to facilitate sales and grow their business.  

Denison and Sherman are both pretty good secondary markets that are affordable with decent schools.  

I would also suggest looking on the south side of the metroplex in areas like Cleburne, Joshua, Keene that are cheap, safe and should see more growth because of the new Chisolm Trail Parkway that was just completed last year.

At 130K price point you should be able to find properties in a lot of areas.  On the north side we tend to send people towards HEB (Haltom City, Euless, Bedford), solid working class areas with convenient access to the airport and both Fort Worth and Dallas. 

Arlington is also solid with a large number of employers like GM & Lockheed right there.