All Forum Posts by: Sharon Tzib

Kevin, are you asking if you bought a multi family with a loan that had a 5 year balloon, what would your exit strategy options be? Please clarify - your question is a bit confusing.

Ok, so basically you're selling it for FMV less your commission, correct? I think most investors are going to want more of a discount than that to take it off the seller's hands quickly, as-is, for all cash so she can be on her way to her new job, imho.

It definitely cash flows, especially if someone pays all cash (and even if they don't, but then again I assume your target buyer isn't getting a loan, or the seller may as well put it on the MLS and get the highest and best bid). Your target buyer is definitely a buy and hold landlord since there's no value add, which will limit your pool.

Personally, I'd try to get her down another $10K if she really wants to sell quick.

Thanks for responding to my questions, Brian. I'm so glad to hear C Classes aren't trading for $45K per in Houston (I almost had heart failure and was gonna start looking for a new area lol!). I had been told about $20-25 avg, so $10K and up is wonderful - I'll probably stick to C+'s cause I'm w/ you on area. My bad for doing the math with an "all in" number.

Now that I know what you paid, the impounds don't sound low at all. I was using a much, much higher PP when I calculated that. Makes perfect sense now. Again, really appreciate you breaking this down - exciting stuff for you!

Hector, what are the comps? Can't really answer your question until we know that. Thanks!

Wow, Brian, congrats! $45K/door for a Class C. Is that the range you're seeing in Houston now for this asset class?

Can I ask some ?'s re your expenses:

1. I imagine if this wasn't a Reg 506D your entity formation and legal fees would have been less?

2. Why did you have to pay legal fees for the lender?

3. Was the lender's impound account for interest? It seems too low for taxes in TX.

4. How much would you set aside for reserves, and what portion of that would come from security deposits?

5. How long from start to finish did this deal take you?

Thanks for taking the time to share.

It's a pass for me too, Shari! No way I'd take on that tax liability, and you don't have separately metered units on top of it. Add that to the not so great neighborhood that could further decline, and it just doesn't look appealing at all.

Also, @Joseph Weisenbloom 's numbers only accounted for the special assessment tax, not the regular tax, so regardless of the loan term, you are cash flow negative. And what happens if one unit goes vacant and you don't find a tenant right away?

Banking on appreciation in a C area is more risky than taking on debt and looking somewhere else. If you do buy this, make sure you have ample reserves - you're gonna need them.

Just my observations. Good luck whatever you decide.

Hi Charles! Good for you for starting to research real estate investing so early. Lots of good info here on BP. Be seeing you in Houston soon! Good luck!

I've heard previously in this forum that Stewart Title is investor friendly.

http://www.stewart.com/houston

Hi Angela (I kind of want to call you Georgia Peach lol!). Welcome to BP.

It would be hard to start flipping without any money. Even if you found a hard money/private lender, being it is your first deal, they're gonna want you to have some "skin in the game." You could possibly try to find a partner. Or, you could start out by wholesaling, which can be done with little money (I did not say none, as you'll still have some expenses, like gas, basic marketing, small amount of earnest money deposit, etc.). You should research both thoroughly on this forum before proceeding. Sharon Vornholt & Danny Johnson are two of the top wholesalers here. J Scott just wrote a great book on flipping too.

On the note deal, I'm somewhat confused. The house was bought for $192K in 2011 - what is the amount of the note? If the mortgage holder (which I assume is a private individual, not an institutional lender) only wants you to pay off the face value of the note, why would you want to pay the appraised value of $250K?

Instead, you should be buying the note for a discount, since the mortgage holder is in a bind and needs out. Now you have equity with the difference between the two (appraised value and note purchase price). But you say you don't have any start up funds, so not sure how you plan on accomplishing this. But if you find the money, then yes, you can seller finance the note to the tenant collaterized w/ the home. Being that her credit isn't great though, make sure you charge a premium interest rate and she needs to put something down too. Again, you should research this thoroughly before proceeding. There are mortgage servicing companies that she can make her payment to that can help you with some of the formalities.

Please let me know if I've misunderstood any of the details. At a minimum, knowing the pay off amount on the note would be helpful so others can chime in and continue giving you ideas/advice. Hope this helps some.

Welcome, Robbie! I'll be moving to Houston end of the year. Lots of multi families in Houston to do as Ned suggests. Good luck!