All Forum Posts by: Ram Gonzales

@Gino Barbaro Built in 1947. Median income for the city is $86K for a family of four. I agree with you on expenses which is why my offer is where it is. Thank you.

@Robert Rixer This one is directly across the street from my house and I could use one of the units to have my mom close by (health issues). That's why I'm particularly interested in this one. But that's my question really. Is my offer reasonable? Could someone else make it work closer to their list price? I rather doubt it but I could be wrong.

@David Bohn Thanks for taking a look. Yeah, it would be a deep cut in their asking price which is why I wanted some opinions. Wanted to be sure I wasn't missing something. Even at $450K it's a skinny deal but I'm more interested in it for its location that its cashflow potential. I arrived at $450K based on working backwards to what loan amount at 80% LTV could be supported based on the rents and DSCR of 1.25. I also just generally compared to the 1% rule.

@Elliott Sinclair Thanks for reviewing. Yes, my mom would pay rent; or rather, I would be paying it but for purposes of the analysis I'm just assuming a regular tenant. I agree that cap rate would yield a lower price than even $450K. 

I've been waiting for this property to come up for sale. It's directly across the street from me so it would be perfect for my first mf property. Here are the numbers I know so far:

Rents
4 units all currently occupied on one year leases
- #1: 1/1 $995 monthly
- #2: 1/1 $995 monthly
- #3: 1/1 $995 monthly
- #4: 2/1 $1,100 monthly
- Gross rents: $4,085 monthly

Expenses
- $12,070 taxes annually
- $350 monthly insurance (my estimate, they have liability only right now)
- $175 monthly landscaping
- $120 water (electrical on separate meters, tenant pays)
- Total expenses: $1,651 monthly

NOI around $2,434 before vacancy, maintenance, and management (although i would likely self-manage these)

Property needs about $50K in other repairs and udpates from what I can see. Haven't been able to walk each unit though. Roof is about 5 years old. Plumbing repairs done recently. Electrical as well but needs updating. Washer and dryer connections in each unit. Window units, no central air.

Rents are on par with the area but updated units are going for close about $1,200 for 1/1 and $1,350 for 2/1. It's a great area within walking distance (5 minutes) to shopping, grocery, coffee shops, and historic neighborhood, and about 5 minute drive to downtown.

They are asking $695K for it. (Owner passed. Kids are selling. Not particularly interested in seller financing it but will consider). I'm thinking of offering $450K (cash and bank loan), make improvements as leases end, and then refi and increase rents as necessary. What do you think?

The other motivating factor here (for me) is that I want to move my mom into one of the units so she's close by. Separate question for the lenders out there: Could this qualify as a second home for FHA based on her occupying one unit? Someone suggested this.

I appreciate any input on this. Thank you!

What you are proposing is theoretically possible but depends on (1) how good of a deal it is (2) how much assignment fee spread there is, and (3) if the buyer the realtor is bringing is paying retail or also looking for a wholesale price. Assuming the final price is enough for all parties to be satisfied, you'd do a JV agreement with the wholesaler and the realtor would be paid their commission (as opposed to a separate JV). On the HUD statement, realtor gets commission and you and your JV partners would split the assignment fee.

In order for this to work, the property would have to be deeply discounted OR you have a retail end buyer. Your value to this transaction is not zero, but its not much either.

I'd also suggest building a relationship with a small local bank who might consider a business line of credit for you. If you already have a track record, they might consider something small which you can then increase over time. 

You can go to a local title company to run a quick title search for about $200 or you can do it yourself if your county records are online. YouTube has a lot of great videos for this. 

As for foundation or other concerns about the condition of the property, there's no real way to know for sure since you don't have access to inspect the house before the auction (hence the risk). Budget for the worst and buy low accordingly.

I ran a nonprofit for about 5 years and have been part of creating several others. The paperwork isn't too bad, at least here in Texas. Once you have your directors and can clearly articulate your mission, you can create one relatively easily through LegalZoom. Cost will be around $600. After incorporating you'll want to then file for a tax exemption with the IRS. On an annual basis, the administration is mostly meeting minutes, resolutions, and annual filing of your 990, most of which can be outsourced depending on your budget. Happy to answer any specific questions.

ENV Title is also great. If you need some JV funding for a deal let me know and I'll take a look. I'm also in SA.

I recently left a demanding full time job and am now doing consulting so I have more free time to invest in real estate. I'm most interested in funding deals with other investors who are better at finding deals (I'm better at finding money). I'd particularly like to work with residential land flippers nationwide who need funding for 30-60 days. Profit split would depend on the deal but generally looking for 50/50 and a minimum return. 

Where should I look for these kinds of investors and what red flags should I look for beyond the regular due diligence (title, survey, flood zones, etc.)? Anyone else doing these types of deals?