All Forum Posts by: Nate Gelinas

Thanks Bill: actually already did a search on BP and scoured through the first 10 pages or so and didn't really find much that addressed my question specifically. I did however find and read through the thread you mentioned. I guess I am more interested in know the smaller steps to actually completing an owner financed deal, more the "infrastructure" and components of the process and have not found a great source for that thus far.

Hey guys, I have looked around and have been unable to find any in depth books/articles etc on how to go about structuring an owner financed property.

Can anyone point me to a good book or article about this or be willing to map it out for me? What are the necessary things to consider when creating one?

Thanks for any assistance.

Ok thanks Joel.

Also just to clarify, would someone mind listing what is typically calculated in the 50% "rule"?

My understanding was that it includes taxes, insurance, and the operating costs (repairs, utilities, etc). Am I missing anything?

Additionally, would someone assign a (rough) estimate to what percentage each category in the 50% rule is assigned?

Thanks!

Thanks for all the input guys. Again to reiterate: I am NOT looking to purchase this specific property, just looking to apply what I learned in that book.

I am however looking to purchase a multi unit, and have found a similar one but with much better numbers. The owner is also open to owner financing.

Joel Owens, I might drop you a call sometime. My GF lives in atlanta, and I am stationed at benning.

Ok, thanks for that clarification.

And ya I agree about the experience, I would probably not be willing to get my feet wet with it unless it were 11+. Thanks!

I am not sure if it is a good deal; I have yet to compare it with other income producing multi family property in the area. However I would be inclined to pass as I feel for the risk I should be getting closer to an 11 or 12% cap.

Additionally most seasoned investors have suggested that after giving conservative estimates on operating expenses, if my cash flow is not $100 per door, then there are better deals out there.

In order to make this work the price would need to come down a fair amount. I could review the property operating data and see if there is a deficiency in management somewhere that I could exploit to improve my numbers.

I could also make an offer based on his ACTUAL vacancy rates (he currently is only at 75% occupancy), so I could formulate an offer with an acceptable cap rate and cash flow that only takes into account the current income stream, rather than the gross scheduled.

Any other suggestions or critiques of my thought process?

Hello, I just finished reading Gallinelli's book on cash flow and other financial measures. I am not considering this property as a purchase; just looking to put some of the basic metrics taught in the book in my own practical application. Just looking for someone to review my processes for me. Thanks!

All numbers annualized.

Givens-
8 unit apartment complex
Ask: $220k
Rent per unit: $5100
Gross scheduled income: $40800

My calcs-
Gross effective income: $38760 (assumes 5% vacancy and collection loss)
Operating expenses/NOI: $19380 (assuming standard 50% "rule"
PI: $14052 (30 year fixed @ 7% with 20% down)
Cash flow: $5328 ($55 per door monthly)
Cap rate: 8.8%
Also does not meet 2% rule (1.54%)

Have I looked at this accurately?

As a military guy, this sounds ridiculous. Any time a guy says he is unable to communicate via a certain method, but is slotted internet time, you can be sure that he is most likely full of it.

In addition to what the previous posters have said, setting up an LLC really doesnt take much time or money at all. I set up my second one today in under 20 minutes. Its a great method of asset protection, with very little risk.

Mitch Kronowit, can you expand a little on how you set up your landlord/tenant relationship with your tenants to that degree of privacy? Not trying to hijack the topic but I am very curious how you manage that.

Welcome Eric. My girl is about to start work as an accountant at Deloitte. Hopefully she doesnt get burned out too fast!

I am pretty new as well, been reading a ton on here and am at around 25 real estate books read in the past few months. Hope your stay is as productive as mine has been thus far.

What are your two degrees in?