All Forum Posts by: Josh James

How does this deal look?

This is a two story, 2 building multi. On site laundry facility, water is paid by owner, tenant pays electric, no gas, no pool, very good neighborhood, units are in decent shape. There are 8 1 bedroom units, and 16 two bedroom units. Rents range from $400/mo to $550/mo, taxes are $9800/yr, insurance I have no idea, Seller is asking $700k. 

I talked with a Realtor about getting the financials, and she said I needed to write an offer contract, and request them in the option period. That sounds kinda backwards to me? How can I make an offer if I do not know the occupancy, annual maintenance,  and other expenses? I will have no idea how much money I will be making or losing? Am I off the mark here, and the Realtor is right? I have not bought a multi before, so I am charting new territory.

Any advice would be appreciated, thanks!

I'm shooting from memory here, but two years until you have to re-up and pay again to maintain your inactive status. Which I think you can only maintain for a maximum of 5 years.
The people at the TREC office are pretty nice and helpful. Give them a call and make sure.

@Terrence Smith Pretty much. In the picture I have red text on a yellow background, "Josh Buys Houses (123) 456-7890" (not my real number). I imitated Danny Johnson's bandit signs. Then, in the text portion, it says the standard spiel about any house, any condition, get the cash you need, fast! Take a look at some of the other guys posting the ads, and they are all pretty similar. 

I will say though, that my 'bandit' signs are my best source of leads. I spent $500 of the profit from this deal on them. My city is very strict about their sign rules. So when I say bandit sign, I am only using them in places that I have legal permission to do so. 

After listening to a few podcasts, I am posting one of my success stories. This is a deal I did at the end of 2013. This was my first deal in quite a while. I had been holding rentals for several years, and was not making much money at it. After going several years without picking up a new deal, I decided I must be doing something wrong. That is when I found BP!

I began to educate myself here, and read plenty of books. I lined up my finances, started marketing, and looking for a deal... It. Took. Months. to find something I was comfortable with. 

I got a call from one of my Craigslist ads. A caller from out of town wanting to offload his sister's house. After some back and forth we settled on a price of $48k. The house was a 3/2, 1400 sq. ft. and comp'd conservatively at $78k ARV.

It was pretty close to a 'carpet and paint job' with a few minor other repairs. The roof had been replaced recently, but that was about all. It needed new interior doors, minor drywall work, and the kitchen cabinets were ugly, but in good condition. The guest bathroom needed the tile surround replaced because it was dated and damaged. The fence needed some planks replaced, and the gate rebuilt. Yard was out of control. The house was pretty dirty, and cluttered, the way it would look if someone had lived there a while without giving it a deep cleaning. After I walked the house, we inked the contract and were off to the title company.

Closing went well, there was a slight miscommunication over who paid title. I ended up paying, it was only $500, so we closed the deal in about two weeks. 

I got possession and started work immediately. Things were going great, as planned. Then, I get a knock at the door. The man says he is the roofing company, and has not been paid for the job he did on the house. He is requesting payment from me. He said the now-previous-owner was not talking to him, so that is why he stopped by the house. I gave the only information I had, and crossed my fingers. I never heard back from him. Needless to say, I was a little stressed, and got lucky! I certainly hadn't planned an extra roof in my budget!

The project went pretty smoothly from there on, with the only surprise being a refrigerant leak in the AC system. It was $400 to fix, and back to working like new. We removed a deteriorated concrete pad which was actually a planting bed that someone had filled in. We cleaned up the front yard, and mirrored the planting beds to both sides of the front entry. New countertops in the kitchen, and painted the existing cabinets. We scraped the popcorn ceiling throughout the house. Repainted every wall and the ceiling too. New carpet in the bedrooms and hall. Tile in the kitchen, dining, and laundry room. One final thorough cleaning, and it was ready for open house!

We completed repairs pretty close to on time. I had added a few things which put us over schedule and over budget, but I feel we got the value back in the end. We held our own open house, and had two offers the first week. We were able to sell without a realtor, and got $82k. From the day I signed the purchase contract, to closing day of the sale, we were just under 90 days. 

Here are the numbers:
$48,000 Purchase
$11,630 Repairs
$1,301 Buying Closing Costs
$550 Utilities
$403 Loan and Interest
$2,925 Selling Closing costs (we paid 2k of buyer's costs)
$64,799 Total Costs
$17,201 Profit

Before:


Deteriorated concrete pad, paint on the bricks, and overgrown and dying shrubs.


Hard to see the house from the street.

Some tile damage, and a very dated knob and drain set.


Yes, that is a pale green wall color. Oh, and when you open the upper cabinets you better hope you remembered to shut off the ceiling fan. 


We had gathered a lot of the stuff seller left behind. You can see my baby daughter in the carrier there too. We start 'em early. ;)


These holes were in several places in the house.



After:


At the time of this picture, we were in stage 4 drought restrictions, and not allowed to water unless by soaker-hose at certain times. So the 'grass' is actually all weeds, and there isn't much we can do about it.


There's the front door!

New guest bathroom shower tile. Clean!


New countertops, microwave, lights, and paint!


Standing in the living room, looking past the front door at the dining room. 

What do y'all think? Did I miss anything? Any questions?

@ Matt Good  I think the RE/Max shops are all independently owned kinda like a franchise. Talk with a broker to ask about their office specifically.  

@Jarrod Weaver undefined What do you think of starting out with a larger broker, and going out with a smaller local broker or independently a few years later? I am thinking of getting my license, and want a strong backing to make sure I don't step in anything while I'm new. 

I do not own a rental in Byers, but I have family that does! It is not a big place...

Once you serve the 3 day, they are in violation of the lease agreement, and they are on notice of it. At that point you do not have to accept any more money from them, and can continue the eviction process. Or you may accept the money, and they can stay. 

I am in Texas, so the process may be different, but this is what I would do. Hopefully some of it is relevant to you in SC. I suggest you go in person to the courthouse, with a notepad and a pencil. Ask to see the probate index. They should be recorded chronologically. You may be allowed to print the index, some clerks allow it, others do not. If not you can write down names, case numbers, and volumes and page numbers. You can then cross-index those names with the tax rolls to find property. 

Probates with guardianships may not be completely available to you because of laws protecting minors. 

Another idea is to subscribe to the newspaper or a legal publication for the county or area which will publish the dockets of the probate court, and sometimes the cases as they are opened.

Edit: The sole function of the clerk is to record documents as prescribed by law, and then make those available to the public. They are not paid to help the public find the documents, nor are they paid to help the public in any other way. Don't expect them to help you.

No, you may not interrupt the utilities. You might be able to do a lockout. 

Tenant holdover is handled by filing for eviction, and hopefully getting  writ of possession. This is done at the courthouse in the county/city where the property is located. Unless you are there in person and can attend the hearings, you will likely need to hire an attorney to handle it. 

@Pono Wright I also work in mineral title. I prepare qualified mineral title opinions in Texas and some other states for oil companies, businesses, and landowners. I would second Matt G. and Jerry W. They seem knowledgeable. I would also encourage you to contact a local real estate or title attorney to help you with drafting a good mineral reservation clause for your contracts and deeds.

I have not found a title company that will insure minerals either. A real estate/title attorney or landman may be able to provide you with a list of existing reservations and mineral conveyances affecting a tract, but you will probably have to pay them quite a bit for each one.

If you will be rehabbing, then you have time to seed and grow. I know there are watering restrictions, but you can always buy a little water. $50 should get you several hundred gallons. Do as Mark suggested and plant something winter hardy. Just make sure your contractors aren't trampling the yard!