All Forum Posts by: Manuel Prado

Originally posted by @Luke Sass:

@Manuel Prado

I would get copies of the current leases and rent rolls to look for some sort of stable rental history. Careful using %’s if it’s in a low rent area you knight underestimate your repair costs.

Best of luck

Luke

Thanks for the advise here Luke. We have the rent roll and will get leases soon. We were thinking about asking for bank statement copies to corroborate rent roll with rent coming in.

Thanks again

Manny

Originally posted by @Mike Dymski:

I'd recommend using dollars rather than percentages for repairs and capex.  Those costs have nothing to do with the rent amount.  And then nail down your vacancy assumptions based on current economic conditions.  If that analysis generates a 30% predictable return, you have a good one.

Mike thanks for your feedback. It sounds like you would recommend going property by property and evaluating their conditions to get more in details on what the repairs and capex would look like? If, not would it be too much to ask to elaborate on that? How would you go about estimating vacancies?

Originally posted by @Kenneth Garrett:

@Manuel Prado

Great job landing this deal.  I agree with @Joseph M'Mwirichia are there tenants occupying the property and I like the 90 day guarantee of rents.  Are the tenants actually paying rent? What is the long range plan?  Are you going to rehab units or just take care of minor repairs.  I would ask for a record of repairs since they owned them to see If my repairs I have been budgeted are correct.  I always talk to tenants when I do walk throughs and ask them if they could have one thing fixed what would it be.  I then usually get more information then I asked for.  It’s a great due diligence tool.

Thanks for the help and the wonderful tip of asking the tenants what would be the one thing they would like to have repaired in their units. Wonderful tip sir. In regards to some of your questions: yes there are tenants occupying the properties. Long plan is to buy and hold, and slowly convert these regular rentals into rent to own type of rentals. Given that the homes are already occupied, the plan is for now to continue renting and not changing too much for the tenants due to so many stress that is going on for them and for us as well. Thus, the plan of converting them into rent to own would be dictated by where we go with the current real estate scenario. We walked through all the properties and have a list of things they have done to them. Most CAPEX items have been replaced within 5 or less years. Thanks again for your ideas.

Originally posted by @Joseph M'Mwirichia:

Great work Manuel! If they are already have tenants, you could consider a 90 day rental guarantee held in escrow at closing. Looks like you have a solid ROI though, so already good on the entry. Your strategy after you acquire the properties is where you'll probably need to build in contingencies.

Thanks for your ideas Joseph, I have never thought about asking for rental guarantee to be held in escrow. Definitely another tool to have in our toolbox. And  correct, I will be inheriting tenants. When you propose building contingencies after acquisition, what ideas first come to your mind?

What extra precautions would you consider now when buying SFHs for buy/hold?

We have a deal of 13 SFHs with a 30% ROI after taking the following allocations:

- 21% towards repairs/vacancy/capex,

- Paying taxes and insurance

- Paying mortgage (principal and interest)

- Paying for property management

- Extras like utilities in some, grass, etc.

I may be overthinking this given the uncertainty in today’s market, but what else would you consider if you were to buy 13 SFHs today?

Very thankful,

Manny

I like to invest for cashflow and Bay City allowed me to get out of my W-2. I have invested there for 5 years and continue to do so. Our key is in the pre-screening process so we can decrease the chances of evicting tenants. The maintenance is a big factor and taking care of repairs as soon as tenants say so is another big one. They usually want to stay and renew because they are treated well. I have heard lot of comments abut slumlords, then do the opposite and most likely tenants will want to stay. It takes us less than 20 days to fill a vacancy and we usually have to pick from 2-3 good candidates. Yes Midland is much stronger and high demand for rents, however we can buy 2-3 deals in Bay for what I could only buy 1 in Midland. I guess it depends on your criteria, I like cashflow, high ROI, and I am ok dealing with lower end tenants. Some investors prefer less ROI, less cashflow and less headaches. Either way works just fine for the right investor. What do you feel most comfortable investing in, what is your criteria? Once you have defined your guidelines then pick the right market where to invest and go for it! Happy investing!

Hey I may have someone who could work out for you. Depends on what area you need the attorney for. I don't want to get too personal, but is there an specific area you need the lawyer for? Entity formation, SEC, evictions?

Funding Date: 11-15-18

Property Address: 1608 S Hamilton. Saginaw, MI 48602

Loan Amount: $15,000

Property Value: $29,000

Loan to Value: ~50%

Interest Yield to Investor: 8 or 10% (8% on a 3-year term, or 10% on a 5-year term)

Interest Paid: Monthly

Loan Term: 3 or 5 years

Lien Position: First

Project: 1608 S Hamilton is a single-family home with great buy and hold potential. The home has 3 bedrooms and 2 baths that makes the ideal starter home for a family. This deal will be acquired at $6,250 and would need roof, paint throughout the interior, and flooring in bathroom and kitchen. After a month of rehab work, this house will be ready to be rented for $650-700 per month.

Exit Strategy: This home will be conventionally refinanced through a local bank or another private money partner. A straight sale of the property could also represent another viable exit strategy.

@Alex Craig One of the best strategies out there definitely. Thanks for the reminder Alex craig

@Curtis Worth It’s hard to say which one would work better. I have mixed them up and have had good success. I always start with postcard, yellow letter, travel postcard (thIs one catches lots of attention because Is hard now a days to receive a postcard of mackinaw Island for example), formal Company letter, yellow letter. You can send in intervals of 3-4 weeks between batches. If you’re by yourself I wouldn’t send more than 500 at a time. That phone would have to be ringing everyday so you can get leads, appointments, contracts signed, contracts assigned. Hit the same person 4-5 times with each of those letters. Re use the same mailing list twice or 3 times a year if possible(depending what type of list you use). The list where I find lots of motivated sellers is tax delinquent (“people who may owe 2k or more for more than a year or two)