All Forum Posts by: Rick Sheldon

@Mark Albini thanks for the reply! I thought the $8K was a conservative estimate for the immediate repairs (I should have clarified that I am trying to negotiate the soffit/fascia allowing bats into the attic being fixed by seller before closing). 

I think for all of the less immediate updates, including interior cosmetic updates, window replacements, new siding, new plumbing, furnace, etc., I would budget another $20K or so, but that would be over the next several years and would increase the rents to around $1200-1400 in this area.

Did you mean $10-15k for the upfront repairs mentioned, or overall?

Here is the inspection report for a house I am currently in the inspection period for. Under contract for $70K with 3% concessions.

This would be my first investment property and I would be managing it from out of state. I just visited the house and while there are many items on this report that seem to need to be addressed, I think most of them are not immediate fixes. The ones I think do need immediate attention are the soffit/fascia allowing bats into the attic and the roof leak caused by the improperly attached flashing. And I would install downspouts and minor re-grading to direct water away from house.

I have plumbing and basement specialists checking the home out, this week, but I wanted to get some feedback from this community in case this seems like a money-pit even if those inspections come back okay.

This house would likely be rentable with very little immediate repairs needed, and the rent/insurance/taxes would be around $500. Rent would be at least $950-1,000, so after 30% for vacancy and repairs, cash flow should be around $200/month... Around 9% COC ROI if I put $8K into repairs up front.

Hi everyone,

I have been wanting to get into the market for a year, or so, but with multiple job changes and relocations, I have kept putting it off. I now live in Maryland, but I have a great opportunity to get into the midwest market, in the town I'm from.

I recently put an offer on a house then found out the seller is the father of my childhood best friend. That house was sold to another buyer with a full price cash offer, but I have been speaking with them directly since then, and they have about 40-50 units they are trying to divest because they own and operate a growing business and want to focus on that. 

They are open to seller financing, but they mentioned "20% down." I put together this PPT, hoping to explain why we would both benefit from less money down. Please let me know if my terms seem appropriate and if so, is this a good way to begin my business and scale quickly?

The way I imagine this working would be to use 0-10% down to purchase a house with seller financing. They would already have a tenant in place from day 1 and after 5 years, I would refinance and use the cash pulled out for the balloon payment on each house. By doing this, I could buy many more houses, but my concern would be that I would be very highly leveraged. However, as you can tell from the PPT, the home prices are very modest, and I have a pretty high income, so I could weather some rough times if needed.

Any advice or encouragement is appreciated.

Hi,

I have been wanting to get involved with real estate investing for years, now, and I think I have a good chance to do it. I currently have a very flexible sales job and the chance to move to my hometown in the midwest, which cash flows pretty well. I want to use rentals as my vehicle to wealth, but I think wholesaling sounds like a very important aspect of diving in... Why not try to uncover deals yourself for max profit? Please don't use this opportunity to discourage me from Wholesaling, just assume I was going to anyway. 

The real decision I am seeking advice for is whether or not I should become a real estate agent, in the process? This is how I can imagine the next few months going:

1. By the end of March, I will have moved to hometown and buy a house for $60K, which will have very low payments and should cash flow about $100/month after vacancy, property manager and maintenance. After buying this house, I will have $5K to get licensed, insured, CRM and other tools for the business. I will have another $15K in savings and $35K in retirement accounts

2. Since I will still have my sales job through this time, I will receive about $5K per month for salary, with personal expenses of $1,300/month. This allows me to save $2K while investing about $1,500/month into the wholesaling/real estate business in the form of lists, skip tracing, Deal Machine, mailers, etc.

3. I would focus my efforts to typical wholesaling lists (like equity), but I would be able to offer a more complete variety of ways to get any homeowner's house sold. Some people are better suited for listing on the MLS, but some houses will not qualify for traditional financing or the buyer may want a fast all-cash close for a variety of other reasons. I would make proper disclosures in all cases.

4. I would focus exclusively on listing homes as a real estate agent, opposed to acting as a buyer's agent. This is why I will be able to focus well enough to be an agent and a wholesaler. I am more niche than most agents, I only sell homes.

5. As I earn and save enough, I will buy and house-hack a $200K MFH with an FHA loan, and only have to put 0.5% down, since I will earn 3% as my own agent.

Sorry for rambling, I've been overthinking this for a while... Please let me know if it sounds like a good approach, or if I am taking on too much.

Hello,

I have a PA in place for a house in Michigan. Below is the financial information (table on the left is for while I live in it and rent out the larger unit; the table on the right is for after I move out and rent both units after the FHA owner occupancy requirement is fulfilled):

My question is related, specifically, to zoning. The home is currently zoned as a SFH with only one meter for electric. The seller mentioned that the municipality is aware that the building has been rented as a duplex for several years, with no issue. They also claimed that rents for the two units were $900 and $600, when they will more realistically be around $750 and $550, respectively, so I do not particularly trust what they say. (the offer is contingent on them producing proof of rental income, but they have yet to produce it).

Any and all advice is appreciated!

@Russell Brazil in a LCOL area in the Midwest. Purchase price of $125K and about $1900 in gross rents ($1375 for units I won’t be occupying) so it sounds like it should pass any criteria like this

@Frank Jiang the title was mostly click bait because I’ve posited on BP without many responses.

I agree with most of what you said, but this is a lender who made it seem like I would be able to get a 3.5% down FHA loan, then ignored me for 4 days then came back with this message, saying that all four lenders he spoke with require 15%. Either he is bad at his job or he probably didn't actually speak to 4 lenders.

@Mary Mitchell He is aware of this. He fed me a BS line about how if it were a duplex it would have been 3.5% but since it’s a 3Plex I would be occupying less than half of it.

@Shaun Weekes thanks for all that info, it certainly sounds like what is happening. The home is in Michigan

@Eric C. Thanks, I have been preapproved by Two other lenders but was leaning towards this broker because of my agents recommendation. I have been nurturing the relationships with the other lenders, and I fired off emails to them right after I heard this from this broker.

And honestly, this agent hasn’t been that great either but the deal was too good to pass up so I went with her to close as quickly as possible.