All Forum Posts by: Neil Polehn

It sounds like you are looking at rehab type property and focusing on those costs? I set this up more as a way to screen a batch of SFH or MFH properties on the MLS, so I didnt create anything specifically for rehab costs.

For expenses I use the tax rate (2.25% in Austin for example), HOA, Insurance, property mang fees (8%), and mort P&I. I assume 25% down for the loan and manually enter the rental income and sales prices the rest is formula based.

It then runs COC, ROI, 1% rule of thumb, NOI, Cash Flow. Just private message me your email and I will send you a copy of it. Nothing fancy, but it helps me go through the MLS quickly and learn about a new area.

Neil

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Hello All,

What ratios do you use when you are analyzing properties? I created an excel spreadsheet and calculates cash flow, NOI, ROI, Cap rate, and the %1 rule quickly so I can process properties on the MLS as rapidly as possible and make sure the deal works before I invest time. Does anyone else use other ratios?

Thanks,

Neil

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Hello ALl,

I am bidding on a house that has multiple offers and I need a contractor to give me ballpark estimate on the costs to remove walls and upgrade the kitchen/bathroom. It's a boxy 1960s style house and I want to open it up and remove at least two walls, but I dont know which ones are load bearing so i need help.

I would pay the contractor for the estimate and use them to do the work. I am remote to the location so ideally someone who doesnt need tons of supervision. The seller is closing bids Monday morning so we have to work fast. Thanks so much!

Neil

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Scottsdale, Arizona

Hello ALl,

Neil

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One question. How far out of Austin would you say is a reasonable commute distance? Not sure how bad rush our traffic is getting in our of the city. Thanks-

Neil

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Thanks everyone that is really helpful. It sounds like it's time to do the grind and pound on the MLS.

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Hello All,

I am looking for deals in areas that are in easy commute distance to Austin, but don't really know the submarkets around it that well. Does anyone have any experience in the areas around Austin, which might be cheaper now but could appreciation as the Austin tech expansion continues? Any recommendation in some of the surrounding towns?

Thanks-

Neil

1 Vote

Here are the details of my deal in Austin to see if bidding made sense.

"Recently remodeled home + guest apartment on oversized corner cul-de-sac lot! In the main home, you'll find 3 beds/2 full baths (approx. 1655 sf). Guest apartment at back of house was built in 2018, adding the kitchen +
living room, bedroom + full bath (total apartment approx. 475 SF)." Since its a corner lot the guest house has it's own entrance on the other street.

Price $395,000 (priced a bit low prob to start bidding war). 25% down for lowest conventional financing rate. Rents are estimated to be about 2600 (1700 main house + 900 guest unit) and after expenses, including PM, it will be about $500 net.

We bid $446K and they wanted to rent it back, so we offered a low rate of $30 a day for that and flexibility if they needed to extend. We also waived the appreciation protection with the higher price, so a risk of me needing to pay more cash out to cover any difference in value. The numbers still worked at 446 for me, so i made my bid and won. Through not the highest bid, we offered the best overall value for them.

Austin is appreciating market with many tech companies to provide high paying jobs and growth. Also, a university and mild weather. The goal is appreciation with a protective positive cash flow.

It just had a clean inspection and the deal is moving forward and it feels nice to be in the game again, Thanks

Neil

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Hello Patrick,

I respectfully disagree in that for me it's all about numbers, so if they work at list + 10% (399 list & my offer was 446) and you feel good about the deal, it can still make you money. This property is in Austin Tx and it's a very hot market, but what I love about it is all the tech companies who are building new facilities or expanding existing ones. I am just getting back into RE after being burned on a remote deal few years ago, so i want this one to be solid and as simple as possible to get my mojo back.

It's a SFR with a guest unit on a corner lot, so the guest unit has a private entrance and a conservative estimate of cash flow is $500 a month net. Its very hard to find a "hidden deal" there so most deals will have competition, but the protection from recession and positive cash flow mean I can sit on this for a few years. They just bought it in 2018 and upgraded and converted it so i get the benefit of 50K in remodeling plus the guest unit.
I will put all the numbers up when I have a moment to come up for air, so you can see the details. thanks
Neil

Originally posted by @Patrick Britton:

@Neil Polehn I think I'm gonna say something here that a lot of others must be thinking but nobody has said just yet: If your offer defeated 15 others there's no way that your numbers are actually truly and honestly accurate or reasonable. Presumably, at least a handful of those 15 others were investors and it's reasonable to assume that a couple of those are more experienced investors. If those people walked away, so should you. If you're looking for a general rule of thumb, here is one: The only people who should ever get into a bidding war are people who intend on living in the house. for them it's not necessarily a financial investment but an emotional one.

Let those who let their emotions run their lives be the first to overpay.

However, I would hope that you still have an inspection contingency and after having a home inspection you can attempt to renegotiate.

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Great advice I ended up doing exactly what you said; making the other parts of the offer as clean as possible. The only other thing was the bidding ended up coming down to the price + appraisal waver. The other bidder offered way more then I did, but didn't agree to a appraisal waver if the value didnt come in right for him and I waved the appraisal protection and assumed that risk.

Originally posted by @Joe Splitrock:

Just like any war, everyone ends up loosing something. Either you lose the deal or you win at a premium. My advice is run your numbers, find your top price that works and stick to it. If your top price is $300K and someone else bid $301K, that has no bearing on you changing your top price. The entire purpose of a bidding war is to use emotional response to get you to do irrational things.

Rather than compete on price, I like to adjust the terms to make the offer stand out:

- No inspection contingency

- No financing contingency (ability to close with cash required)

- Large down payment so they know I am serious. In may area people put $500 as earnest money, we do $5000

- Fast closing - usually requires cash offers

Using these four tactics, I have had my lower offers accepted. People think it is all about price, but that is not always what is most important to the seller.

1 Vote

All Forum Posts by: Neil Polehn

Neil Polehn has started 22 posts and replied 50 times.

Post: Ratios used in your deal analysis? I created a spreadsheet...

Post: Ratios used in your deal analysis? I created a spreadsheet...

Post: Need a Contract in Scottsdale for Rehab Estimate ASAP

Post: Need a Contract in Scottsdale for Rehab Estimate ASAP

Post: Thoughts on areas around Austin?

Post: Thoughts on areas around Austin?

Post: Thoughts on areas around Austin?

Post: Rules of Thumb for a Bidding War?

Post: Rules of Thumb for a Bidding War?

Post: Rules of Thumb for a Bidding War?