All Forum Posts by: Rael Mussell

My partner and I are new to REI and we're in Canton and Ypsilanti. We're looking to join a few of the local clubs as well. We haven't made a purchase yet as we're still looking for a good Multifamily to begin with.

So I just found out about loopnet -- That's a definite big help!

Lots of commercial real estate listed there.

So my partner and I really want our first play to be a multifamily unit.

Duplex, Triplex, Quad -- whatever.

Problem is I can't seem to find Multifamilies for the most part? I search on homes.com and zillow and realtor.com and find a few here and there, but are their only truly a half dozen multifamily homes for sale in Ypsilanti or none at all in Ann Arbor?

Am I searching wrong?

Any advice?

Just for my own education -- How did you compile the comps for this property? What resources did you use to help you determine your ARV?

I just put a bid on a property for 5000 showing 500 EMD in check to the bank, asking for no closing assistance only contingent on inspection.

Is 500 appropriate for the bid I placed on the home? It's 10%?

Should I have put up 2500 instead to show them I'm serious?

What is a NOTs and NODs?

Thanks Jon for the taxes 101! That helps a lot and makes sense.

Yea, I'll definitely drive by the solds, but since they're all the same looking (Detroit is famous for it's track housing) I'm assuming it's the quality of the interior that made the sale. So that's why I wanted to look at the 127K listing and then then 80K listing and see what the differences were.

Hi Mark! I'm new at this, so we're just building a team now. We currently are working with one realtor on this set of houses. If anything changes though I will let you know! Thanks!

We have 9-5's and during business hours communicate only through email. So that's why he gets a letter and we're not talking over the phone. I just give him something to mull over during the day and we'll talk about it later tonight over beers and a burger.

GOOD STUFF I MISSED! Thanks!

So this is a REO unit. 2009 taxes are 4K. I have to pay all of them? Wouldn't the bank be paying the summer 2009 taxes? I would likely get stuck with winter 2010 taxes? Where can I read up on that? That's all new to me.

How do I get more soldi on the ARV? I looked at the homes in the neighborhood of the same size br/ba and went low? So the usual for this unit it like 100. I priced to sell, but I would suspect a higher appraisal? How can I shore up this information?

Is it normal or good for me to find that working with others to be a largely painful process? I find that everyone else moves slower than I do in regards to vetting deals and doing the necessary work.

When I'm on an information hunt I want it NOW. Is that a common character trait?

This is a copy of an email I plan to send to my partner and want to vet it through you folks here.

Does it look like I have it covered? Can you poke holes please? :)

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Here are my thoughts.

I still like (The dump). I don’t like it as a rental though because it ties up a lot of our capital and requires us taking on debt and makes the property negative cash flow.

I do however like it as a rehab straight flip using off the books financing (Outside silent partners).

So look at it like this. Houses in that neighborhood that recently sold are selling for 80-134K TODAY. As in the last sold I could find was 6/29/2009 for 134K. That neighborhood alone has sold well. 21 homes in the last 6 months. 12 homes in that neighborhood are for sale today ranging from 21K (Our little Westchester jewel) to 127K.

Requirements and caveats: FHA requires 90 seasoning of money so we wouldn’t be able to flip to FHA buyers for 90 days (Largest percentage of buyers).

I suggest we look at 1 lower end for sale (I’m betting it’s a rehab too.) and the 127 and the next closest 95K for sale to see what they offering (Granite, hardwood, et al.)

Doing the math – Low ball

ARV (After Repair Value) = 80,000.
Closing fee’s = 3,000
Commission of realtor = %6 = 4,800
Rehab costs = 30,000
Purchase price = 4,000
Capital Gains = 5,730
6% (Negotiable) return on rehab loan to investor = 1800.00
Home Staging for sale costs = 600.00

Potential Profit = 30,070.00

Minus any carrying costs while the unit is up for sale. However these costs should be very low and superficial since there will be no mortgage to carry. Just heat to keep the pipes from bursting again and power to show. Maybe even some staging furniture rental from rent-a-center.

Potential individual profit = 15K

Exit Strategies:
1. Major Rehab = Rent to own (Land Contract AKA Owner financing)
a. This will require the silent partner putting up the funds to agree to only be paid the return upon sale regardless of time frame.
2. Major Rehab = Flip out to FHA or Investor

This gives us two outs in the event things go tragically wrong.

I’d like to send this to Jeff and vet it through him and see what he thinks when he contacts us back?

My math all depends on getting an inspection of the property and ensuring there’s no game changers and then getting a GC out to the property to give an hard estimate on the rehab costs.