All Forum Posts by: Steve D.

Peter,
your analysis doesn't mention if the price includes any rehab. From looking at the pictures, it appears you certainly have costs to get the older homes marketable and if you intend to get a rental rate on the higher scale, while also minimizing your maintenance risks, you will no doubt have interior rehab costs.
personally, the numbers as you present don't make me too excited, especially with lower end neighborhoods where your vacancy rates are higher as well as maintenance costs.
If this is your first deal, take it slow and be careful.

Joe,

Don't follow your gut, follow the numbers.

According to my calculations you will be lucky to net around $1100 per year, but I made assumptions on your property taxes at $500 annually and insurance to be around $200 annually.

further, 1k for appliances, painting and cosmetic is tight, even if you do it yourself. You may find other surprises and best to estimate higher. Don't forget you will have some holding costs and getting it rented immediately will depend on how many units are vacant in the complex as well as your rental price.

Best to forecast your numbers for income on the lower side and your expenses on the higher side.

I wouldn't assume the HOA would drop since your info is word of mouth and these days HOA's are increasing due to large number of vacant units. Surely as others said, the HOA fees are what kills this deal, in my opinion.

The BP site has some great analytical tools...I suggest you download some and use to analyze your deals.

Good luck!

Joseph, I agree with you. My fear is too much press and hype will bring more ill-prepared investors into the arena and drive up prices. Might be like watching an episode of 'Storage Wars' :). Saavy investors like us will have to wait and pick up their pieces. OK by me if that becomes the rules of the game.

While there isn't much contained in this story most of this group doesn't already know, I felt compelled to share.
It should be of particular interest to those of you working the Atlanta market, but the story can applied be across the US. We are seeing more and more stories of this nature and I can't help but think (and fear?) it will also lead to more investors jumping in;albiet haphazardly...but could impact prices. Suppose that is good and bad depending on your perspective.

here is the link:

http://www.nytimes.com/2012/02/01/business/economy/in-atlanta-housing-woes-reflect-nations-economic-pain.html?pagewanted=1&_r=1&ref=business

Adam,
I think there are many variables to consider....they are: how much time you have to adequately manage the properties yourself, the quality of the PM you use, the type of properties and tenants you are attracting and how much margin you have to work with. For me, I am fortunate to have 2 very good PM companies. But I 'manage' them as well with pro-active calls to 'check in' and let them know I am interested in being involved and helping. If they sense you don't care then I think that attitude would resonate with the way they manage. They also know I'm constantly on the hunt to buy more properties and see me as one of their partners and an ability to expand their income.
I work full time and earn high income, it's well worth it to me. think of it this way-if you have a monthly rent roll of $10,000 and pay a PM 10% to manage the day-to-day, then for me I couldn't hire a person to do this exclusively for me at that price and my time is worth more than that. Perhaps it's a luxury, but again, consider the key factors I mention above.

lastly, many books are recommended on this excellent site, one I believe in strongly and not mentioned before is "Broken Windows".

go make some money :)

if possible, try to buy bundles of properties if available from any burned out landlords. If you bundle them in the one loan, it still counts as one mortgage despite the number of houses.

I am also having success with BB&T. Primary key is building a relationship with the VP of Commercial Lending or City Manager at the bank. Of course it is all predicated on my personal gaurantee and worthiness, but loans are in the LLC. I call or write my banker at least once a month, even if just to say hello, so that I give him confidence in what I'm doing. A good banker should be part of your 'team'. If you are buttoned up and professional, they will listen to you.

Hi Rich,
you have to remember the time zone differences---we were sleeping when you posted your request....I'm an expat living in Seoul, South Korea. I love BP and the community, especially as an 'out of town' investor in the US.

I am in process of rehabbing a commercial building in a historic area and I decided I would do this one utilizing state and federal grant assistance. It's a real hassle, and adds to the up front costs, but in the end, after the tax credits and small grants I will come out with same costs as not going by the guidelines. You really need to do the proper research (I hired a consultant specializing in the process and applying for the money) to ensure you are not in violation of any historic requirements as well as not leaving money on the table. I am excited about this project as it will be a real jewel when done.

Danny,
I just closed one a few months ago with BoA...amazing. I used a very strong local attorney for the facilitation. The factors that helped me close the deal were # of days on market (+180) and my detailed report on the necessary repairs/upgrades to make the house marketable. Strong, professional documentation on my end made it hard for bank to counter. ARV on this house was about 40k with a mortgage balance of 68k (yes!)...I paid $7,500.
I'll keep pursuing these deals but expect them to get more complicated...but everything I am reading in my market is that shorts will be more prevelant than foreclosures.