All Forum Posts by: Nick Walters

Be careful with pro forma rents and other figures on the setup. These figures are usually engineered to make the deal look sweeter than it actually is. If you know what other 4-units are trading for in the area and you know what rental units command what price, you should be able to back into the maximum allowable offer that will make financial sense for you whatever terms you decide to set with the seller. Know the market, and you'll know where you need to be to close the deal. Good luck.

Paint the cabinets white (it looks pretty dark in there), change out the hardware. There isn't a lot of counter space so you could probably replace the counter tops with granite or Formica on the cheap. It also depends on who you're marketing this to and the neighborhood it's in. Good luck.

$100/month on marketing costs is pretty steep. Where are you planning on allocating these dollars? I would also factor in a 5% credit/vacancy loss. Have you verified the leases? Make sure that these aren't pro-forma figures and review the leases if you're in the dd period. Finally I know this is a smaller deal but check comps and rents in the area. Just throwing these figures on the back of a napkin and this is shooting off only a >3% cap rate. Is there upside in these rents or is everything squeezed out? Good luck.

How long did you have it listed for $1050? If you had it listed for a while at this rate, then it probably isn't worth this figure in the eyes of the lessee. Just remember that 80% of your ask is more than 100% of nothing. You also have to analyze what your total expenses including debt service will be. Can 850 cover your expenses? Good luck.

Hi Robin, nice to meet you on here. I am not as active on here as many other contributors, but your post caught my eye as I am in a similar boat as you.

My wife and I live in NYC, make good money and we are closing on our first single family investment property on Cape Cod (MA) in a couple of weeks. We will be renting it out primarily as a weekly summer rental and weekend rental in the "off season" where we aim to net $400-$500/month positive cash flow.

We bought this property off market through a friend of a friend who was going through a divorce. We acquired it just under market, but we considered this a heck of a deal because it was turnkey and it is located in a very highly desired neighborhood (Cotuit) where weekly rentals in the peak season (June-August) command upwards of $2,000-$2,500 per week for our type of property.

In terms of financing, we have a family friend on the Cape who was able to approve us in about an hour with our strong income and credit history. We financed 80% of the purchase price with a 10 year ARM at 3.3%. I definitely recommend you leverage your income and credit history (if it's clean of course) to increase your cash on cash returns if your risk tolerance is at a place that allows such leverage.

Good luck and let me know how things go for you.

So I just spoke to my attorney and he mentioned that if the seller has a mortgage on the property, that this seller-financed deal probably won't work because the current lender on the property may call their note. Is this accurate? How about assuming the mortgage sub-to?
Thanks in advance for the info

My wife and I have an opportunity to purchase a single family investment property on Cape Cod, MA and wanted some advice on how to proceed using seller financing. We would explore taking out a conventional mortgage but the seller wants to get rid of it quickly, doesn't want to list it, and wants to deal directly with us (she's a friend of a friend and going through a divorce). We only have about 10% cash for a down payment (purchase price will be ~325K) and I just started a new job so I don't think we could get favorable terms with how long I've been at my currently job.
If we can finance it through the seller for a term of 3-5 years which would give us time to be able to refinance within that time period, I think this would be beneficial to us. Purchase price would be pretty close to market but 30% below the peak in 2005. We'd like to keep this for the long term and use it as a summer rental property (very hot market on Cape Cod) and for our use when not rented.
I'd just like some advice on how to structure this deal and present it to the owner. Thanks in advance for any help you can provide.
Nick

Craig, there's no doubt that the big real estate and private equity shops have the upper hand when it comes to scooping up REOs in bulk for two reasons.

1. They are paying all cash for these assets.
2. More than likely, the asset managers at the largest banks in the country were B-School classmates with these guys and therefore have the inside track on all inventory coming online.

The small, local investor will gain an advantage by focusing on customer service with homeowners, identifying a need and providing a solution. Big banks can't provide that service.

Any recommendations for good reliable GCs on Cape Cod for SFR and Multis?
Thanks