All Forum Posts by: Rick Turman

Update on progress here:

I walked the properties today and was impressed with what I saw. I walked them with the owner and blew him out of the water with my knowledge not only with him but in the RE world. I did a little background check on him and found out that he has 2 other SFR's not included in this deal that I am asking him to wrap in (if applicable). Here's what I found out:

9 Units:

4 duplex's 2 Units per Duplex 2 BD 1 BA ~900SQFT

1 x SFR 2BD 1 BA ~900 SQFT

3 units have pets which he charges 60$ per pet per month.

3 (595$) units are on Mo/Mo

6 (595$/mo) units are on Lease

100% Occupied, 2 Duplex's have been remodeled, SFR has been remodeled

SFR occupant is Maintenance who is on 10$/hr rate for repair 24hrs

Owner pays Water and Trash.

Roofs are 7-10 years old

Owner is willing to do seller financing.

Asking 489K

My numbers ran on this is 350K and hoping it is not a low ball offer.  Looking to get in and turn at least 700 to 800 in rent per unit as 800/2BD 1 BA apartments here are at market 800.  

I have never done Seller Financing so not sure what to expect.  He stated he is willing to negotiate as he is too busy for these and is trying to Retire within a year.  I will ask for 3% Interest for 30 year note.  Is this too much.... To less?  Anything else I need to capture here?  I would eventually like to Cash out Refi after a few years of holding and roll into another but not sure how attractive the new mortgage will look.  Anyhow here's the line-up on analysis:

10% Cap Ex
8% Repair
10% PM
2% Income Growth
3% Expense Growth
5% Va
Mo Cash Flow: ~1400$
COC-ROI: 24%

Thanks Team!

@Jay Helms,

Fantastic Beer.  Cheers indeed!

@Nathan Platter,

Another option I was thinking of was BRRRR these, Sell the Duplexes to pay off the SFR and keep that one for leverage and to rent with 100% Cashflow well of course minus Capx, Maint, etc etc. but anyhow, At least I can look at this from a diff perspective and I appreciate both your feedback. I am going to work up some insurance quotes as well as Flood insurance quotes and see where that lands, then plug and chug in the Calculator. I may be putting an offer in by End of week if this deal looks sexy enough. Owner wants out as he is managing them himself, and he's getting too old. Only thing I didn't do was ask if he had any others around town! Looks like I have some homework to do :-) Thanks gents, and God Speed!

@Jay Helms,

Thank you sir for the reply. I've been torn for the past few days on this thought and was leaning more towards possibly breaking those duplexes out into separate mortgages as they are on different parcels within the city. To answer your question on the "Type' of dwelling, all of the duplexes have the same materials (Shingle/gable roof, brick, etc.) and popped up in Circa 72. The SFR on the other hand was built in 52 and now has siding and i'm sure different furnishings. I have not walked the properties, however requested through my agent the Schedule E, break down of Utilities as far as what is covered vs what is subbed, Insurance est as it is in flood, and lease info (Who's under contract who's not). I am serious on placing an offer, contingent on a walk/inspection. I shall await my info, and plan accordingly. Thanks again Jay, and...

"Stay Thirsty Mis Amigos." < Who said that one?  : - )

Good morning BP Brothers and Sisters,

I may be pulling the trigger on a packaged deal for 9 units (4 Duplex and 1 SFR) and 2 lots of land however wanted to get your take on how to analyze the deal. I'm used to the 4 square method and or the BP Calculators on here however can they be used in calculating multiple homes in 1 deal? Should I treat the deal as 1 mortgage as in reality it would be? My thoughts are I would have 1 PM cover all, still account for Cap-Ex, Expenses, Vacancies, etc. Am I approaching this the correct way or should I be separating these out as each home would get it's own Cap-Ex, Expenses, and Vacancies? Thank you kindly guys and looking forward to your responses!

@Tom Gimer , Thanks Tom for this breakdown and the treasure trove of information. This is what I had envisioned just didn't quite understand why and where the monies went. I really appreciate everyone's input and will definitely be moving forward with this.

@Dustin Haviland, @Tom Gimer

Thanks Dustin and Tom.  From what I understand Tom you mentioned "UNLESS the title company missed them in their search or otherwise did not pay/release them at your settlement."  This is why you buy the title insurance so you are covered am I not right on that behalf?  So what this states is that The initial title search showed clear which is did, however if something was missed (doesn't show until later) then I would be covered?  

Here is another question.  I pay to have a search done ($175) Title is clear.  Then you shouldn't worry about insurance correct?  What is the purpose of insurance then?  Just trying to understand this as I always thought it was protection of your title moving forward from time of purchase.

Thanks for your comments!

BP family,

I've combed through the hills of the forums and have not found a straight answer on this.  Therefore I am turning to you all for help from those with more experience.

I have recently obtained a quote and coverage option for owner's title insurance on a long term buy and hold from my title agency.  I would like to know what others are choosing for total coverage needed?   Do you cover a total of what you bought the property for, all equity in, or do you cover total property value (market) given any lien comes forward over the years that lay ahead? 

Curious to see what others have done.

Thanks in advance! 

Guys,

Looking for some guidance here.  More or less closure in this instance.  I am shopping around for Refi options in Ohio and am going back to my original Lender for help.  Here are their comments:

"If you pay cash for the property, we can do a refinance(upon qualifications) within the first 6 months to get you most of the monies back that you used for purchasing the home if the below items are met… LTV restrictions would apply for the amount you are borrowing. We would use the purchase price as the value for this scenario, not a higher appraised value. Typically max LTV on single family cash out refinance is going to be 75%LTV."

Their "Below Items are met" statement was pretty much an excerpt from the Freddie Mac's Code of conduct 4301.2 / 4301.5.  

I am hearing the terms 80 ARV and 75 ARV however this company has stated 75% LTV being from the Original Purchase price of the property. As this has been from a sheriff sale for a 37K cost, my thoughts are I should not accept this offer and continuing searching for one that will offer ARV as I will only be able to obtain 75% of the original 37K value or locate a bank that will offer 75% LTV after the rehab is complete on the value of the home. ARV on this property will range from 140-160k depending on layout and items within. Am I understanding this correctly or am I totally clueless as to what these "Terms" he is referring to mean? Appreciate any feedback!

@John Mocker

This is brilliant.  Thanks John! 

@Keith Smith, @David Edwards, @John Mocker:

I did quite a bit of searching and it looks like a lot of people discuss the Liability coverage quite frequently but never explain the individual aspects of the insurance.  I would love to know what the terms mean and what the coverage well COVERS if you will.  

Here is a quote I just received.  How do I tell what is covered for Medical for tenants?  What is Aggregate?  Does that mean it goes up to 2M if needed?  based on the info below, Is this enough, and is it a fair price?

Thanks in advance!