All Forum Posts by: Account Closed

Thanks @Jeff S., you gave me something I didn't think about, we will see if the lender is open to that. My idea was to have a 2nd lien, is it possible to be 2nd in line with this type of deal? 

Thanks @Charles Lemelle, the loan is at 9% with 1 pt. This is a seasoned investor trying to get us in the game without giving a handout. She'll get that 80k from someone else in a second for this flip, or use her own money. I'm more so looking for a way to securitize our investment, how to structure the deal, and if like you said the terms are totally unreasonable, and for things to look for like the funny accounting for profits. 

We are looking for investments. There is some interest from other investors so getting interest and equity is out of the question. 

Hi All, 

I have a deal that came across the table and am curious what you think or if you have any advice. The investor purchased a triplex for $1.4mm and will put about $150k into it over six months. with about 20% down and points, the cost of financing will be about $75k. The investor will be about $1.75mm into it on the conservative side. 

The investor has offered us to join with $80k for a certain percent of net profits. The investor will be using approximately $320k of their own money. The resale value should conservatively get $2mm. 

My question is, what is a common stake for such a deal? We have been offered 3% of net profits,  of course that's the low so we will definitely negotiate up, the investor has even mentioned that if the 3% is too low we can go a little higher. Lastly how does one structure this type of deal?

Thanks in advance for the comments. 

Hi Syed,

My first property was a condo. My wife and I bought it and rented out a room. It was in a highly desirable rental market, San Diego, so I was able to pretty much cover the mortgage with the one room rented. The HOA does what they want and sometimes you can't predict their actions, ie the board changes and goes in a different direction than the previous one. Or in my case a board member has a condo under water and wants to try and force appreciation through community improvements. The HOA has gone up $10 and rent has stayed the same. For me it doesn't matter as the rental demand is high in the area and the rent is decent.

It was great experience landlording being so close to the tenant. Its a lot easier to learn the managing process when you don't have to travel to your tenant. 

I now rent the whole unit and it has treated us well. Biggest thing I could recommend is learn about tenant screening. If you go through with your plan you are going to be living with this person and having a good tenant is key. 

What terms are you looking for? We have private money if you are interested. 

Thank you. The property withstood the '89 earthquake, had some damage mainly due to trees, I think, in the'83 storm, and has a pretty decent retaining wall thats tied back well. There is some undermining of the foundation but nothing serious as of yet. 

Yeah I have the same thought, guess I just need to hear it from someone else. The skeptic comes out that this is almost too good to be true and something is going to happen. Good thing is im almost even already. Thanks again. 

Thanks for the comment. Since you know the area, the house is on Loma Prieta in Aptos. It's a house with an attached studio on a hill. The hill being the major concern.

What do you foresee for the Santa Cruz market in the next year?

I'm having conflicted feelings on a rental property I own and would love your input. 

The property is in Santa Cruz, CA, where the rental demand is high. The following numbers are actual's 

Purchase Price - $680,000 Down Payment $25,000 Monthly Rent - $4,700 Mortgage - $3,415 Annual Expenses - $5,000 (rounded up) NOI - $51,400 Cap - 7.58% DCR - 1.25

To be in tip top shape the house probably needs $25-$50k in work.

Any comments are greatly appreciated.

Yes, a purchase contract written with a longer contingency for financing. Or if you don't want them knowing you have to find financing, a long inspection contingency would work. My partner and I have a house in contract right now with a 3 month inspection contingency.

Robert,

I may have a commercial building that would interest you.

4 acres
96,000 SqFt
Parking ratio 3 per 1,000 SqFt
South Bay location
100% leased
Net operating income $1mm

At a 5% Cap rate the asking price will be a little above $20mm.

Hopefully this is within your range. If this interests you let me know and I will get in touch with the seller. Without having done any due diligence this looks like a solid investment.

Bobby