All Forum Posts by: Paul D.

Hello BP!

Been doing my research and finally putting the books down to go out and look at a property I have been scoping for the last year and notice a price drop within the last 6 months. The Property is located in North Jersey ( where I live). Its about 20 minutes where I live now and this new location would be 5 minutes from where I work which would be a plus. It is a Multi Family home (Duplex). I want to follow the BRRR strategy. Start off by buying a duplex build out the one side as I live in it and once it is presentable and really nice for a tenant try to find one to live there start paying some of the mortgage and then move into the other unit. Then as time goes on put money into the place build it up like the first unit and do the same thing. With all that said a little about the property and the situation.

     The property listed from June ( which I wrote down the information on my watch board I have in my room) I went on Zillow the other day and noticed the drop in the price. It dropped 10k from June to August. Then just recently it dropped another 13k (November). So Since June it has dropped a total of  23k. What would any of you  think of this? Little about the house; Looking from the outside of it it is definitely the sh*ttiest looking house on the block lol, but I see a house with the most potential on the block. It just looks like its needs some loving and lot of cosmetic work. I am hoping that is all it needs.

If I offer considering all the checkpoints are clear and I have a good feeling about the foundation and structure and what not, would that be considered as "buying right" as everyone says or buying at an discount. I remember reading in all the real estate books they said you want to go in and buy right. Finding homes that you can find a 20% discount on. Now I know that price drop isn't 20%, but say I offer now lower than what the asking price is than I can be close to that 20%. Am I wrong or right? Just looking for some useful information and a guidance as if I am thinking the right way.

      I called up and set up a meet with the seller this week. Are there any critical questions I should have prepared and also what are some things I should be looking at when I am there? Once again guys I am new at this, this is a first property and I am doing it all on my own so its kind of scary, but I am not letting that fear get to me. Just trying to gather as much information As I can going into this and hoping for the best. I have read pretty much all the BP books and listen to all the podcasts daily ha. I love this stuff and really hoping I can get my first deal. 

I highly appreciate and give future thanks to anyone giving their time to this post. Thank you so much I will respond if I have any questions. 

One last thing, I noticed that it was under contract and then put back on the market as well last month. Is that something that I should be aware of and ask about? would that be a red flag possibly or could it be anything. 

Thanks BP!

Paul 

ah ok. Makes plenty of sense. So cashflow and CoCROI are basically the two main numbers I want to look at in a deal and make sure they are meeting my expected goals is what you are saying. Are there any guides you follow as of analyzing deals and any numbers you run that you try to stay close to or any numbers that give you red flags as of not to take the deal?

Javier

First off good luck on your business plan and venture I hope it all turns out into a huge total success story. I am too seeking out my first deal and reason why I am writing is because you have a similar plan as I do. Only thing I keep battling with myself is if I want to go in with an FHA loan or try to raise money through private lending with a conventional down payment (mainly because mortgage will be less and there will be mortgage insurance which will be cutting into the cashflow and i figure its a good head start to building equity into the investment). I have a significant amount of money saved up, but not exactly enough for a small multi-family conventional loan.

     I am also going back in forth between a duplex and a quad. The  quad seems more profitable with cashflow, but the expenses are more and me just starting out I have no experience so I don't know what to expect and if I would be able to manage it. Maybe I'm over thinking? Idk. The duplex I am leaning towards more just because it seems easier to manage and good way to start out. 

   But yes house hacking seems like the way I might take my first investment. I figure as I am living in my unit I can upgrade it a little put some sweat equity into it and after 12 months hopefully get a refinance then repeat this process by getting into a mother property maybe even a triplex or a 4 plex and just sticking to a system and repeating the process. 

Best of luck to you Javier!   

Paul  

I have this question here as I am trying to figure out how to go about this top:

What are the 3 most efficient ways to collect rent? 

What are 3 ways NOT to go about collecting rent?

Thanks!

Hey BP!

      I was thinking about paying for the BP rental calculator.Is it worth it? I want to start getting some experience and practice running numbers on potential deals and get myself ready for when the time is right to make an offer. Is this tool very effective what are your thoughts about this feature?

Also in order for me to run accurate numbers do I need full access to MLS or Zillow? What are some of the best ways to get numbers to plug into the calculator or to analyze deals on properties?

Thank you!

 Oh ok got it! Well when I read up on the book @Brandon Turner talks about when you make an offer throw in an offer with a 20% discount so that way when you are buying, you are "buying right" and buying wit equity into the property right away. Maybe I am reading this information wrong and he meant something else, but I do remember reading that you want to buy 80% of what the price is of the property. 

Thank you for your answer. Yes it helped. So when I find these houses online are you saying to go out and look at them? What if they have a family in them already? When I analyze the deal are all these numbers there? How do I know when a house looks good enough with numbers to even go look at it? Do I do the 50% rule and the 2% test? Just all these questions and thoughts in my head ha. 

Thanks again!

 Hey Grant, yeah I am sorry for leaving that information down. I typed this up as I was leaving for work ad totally skipped the rest off what I was going to write.

Also when I analyze a deal I was thinking when I look at the asking price. The asking Price thats posted on the property I was thinking that I am offering a price that is 20% less than the asking price. "buying right"? I know numbers can vary depending on the market. The new price I would figure a way to come up with a conventional down payment and get a 80% loan. Then I figure out the rehab and work on the house so that in the first year the house will give me a 10% increase in value through "forced appreciation and sweat equity". I also want to clear at least $200 per door of cashflow that I will escrow and reinvest into the property. I am looking to buy and hold.And as the years go buy and the debt is being paid down I hope to have increasing appreciation of the property. Am I thinking on the right path? 

Good Morning BP!

       After putting down @Brandon Turner's "The Book on Rental Property Investing" (3rd time reading this awesome book) a question popped in my head and I knew I should jump on here immediately as I want to be more proactive with my studying and taking steps forward to investing and taking action. So my question is this:

I want to start analyzing deals just to do it and use it as practice to sharpen up my analyzing skills. When I read and I go over my plan it seems so easy to me and that I can do it, but once I go on MLS or zillow and All i Have is this picture and small description of the home, I get into this "paralysis by analysis" phase and everything gets all confusing then numbers start to scare me and then I just give up. Im not giving up though now, the best way is to figure this out and I would greatly appreciate if anyone has any advice for this and if they went through the same thing.

My issue are these:

• How do i figure out what to plug in for my rehab costs?
• How do I come up with a number for my expenses?
• What number do I come up with for painting interior or exterior? 
• How do I estimate a number for my closing costs?
• How do I estimate expense for capital expenditures in the rent?

When I am reading the book the numbers are spit out so easily but I am just curious of how are those numbers are brought up? Yes I know this is all part of the "analyzing and figuring it out" but I am just looking on some type of direction to start moving so I can practice analyzing deals. I would like to spend an hour a day just practicing and coming up with numbers and figuring out CoCROI.

Do clarify exactly my target market I am interested in Analyzing small multi-family (NJ) homes possibly a duplex since its my first investment and I am trying to gain much experience as I can. Also correct me if I am wrong going about analyzing a down payment. 

Thanks so much guys!

Wow! You guys are awesome. This thread helps out so much and clarifies a lot for me.  @Roy N.  you are exactly right. Im sorry for posting the wrong terminology, but yes PRIVATE FINANCING is more what I'm looking to get into. I do not want to go commercial with my first investment. I want small multi-family (2-4) and was thinking how I can get some people that I know involved and make sure I give them a fair return and how I would go about doing that. 

     Also figuring numbers out and putting that into my calculation as I am looking into deals. Im trying to overcome this fear I have read so many books and I want to start taking paths of action. Thank you guys once again I appreciate this so much I wish everyone the best of luck. I admire everyone who is involved with real estate and hope to be able to be involved and share my story and experience as well. 

Also thank you @Alina Trigub and @Steeve Breton

@Brian Adams thanks for your suggestion I checked out your podcast today on way to work. Inspiration!