All Forum Posts by: Rod Mendoza

I have a potential partner who has several lots that are already zoned multifamily/high density and have utilities in place. The person made me an offer to just sell me a lot/lots and for me to build apartment/condo buildings there OR, they proposed we could go in together, build one -unit building at a time, and once built, decide if we are going to keep and rent or sell them individually. This person actually developed half of the street these lots are on and has experience doing this. But today this person is older, set in their ways, and can be an abrasive landlord. 

I am more interested in developing with him because of his experience, and the potential of doing not one, but several buildings down the road. I have zero experience building and very little liquid capital. I do have the time, energy and drive to run the whole thing with contractors, the city, etc. if needed. I already spoke to a large builder who gave me a ballpark for numbers and a project they are building for us to visit.

Could you guys/gals provide some feedback on your thoughts on these scenarios, and potential best avenues to pursue?

Thank you for the response Elliot. Any feedback on a creative way to handle the rehab? I can’t get into the unit to even begin assessing what’s needed. And I am planning on the rehab cost being a big ticket item, a figure that I need to incorporate into my proposal. 

Hello Real estate champions,

Tomorrow I am meeting with a potential seller on a 2-unit , seller financed propriety and need some advice.

Pros:

Seller is older, tired of dealing with tenants, owns the house outright, doesn’t “need” money, and told me he wants to sell.

“Cons”:

Upstairs unit is in the middle of an eviction process. The unit is wrecked and will need a light-to-medium rehab. I don't know cost of rehab thus, I can't figure selling price, ARV, nor cash flow projections. Because of this lack of info I can't make an offer.

All the “signs” for a seller-financed deal are there. Being this would be my first seller-financed and rehab deal, I am seeking advice on how to approach this deal since we can’t discuss terms before we can figure a selling price, and the pending eviction restricts access to the upstairs unit. 

Hari, 

Following as I have the same exact question. Best wishes on this exciting new endeavor!

Sincerely, Rodrigo.

James,

Thank you so much for sharing your insight! The seller's age is indeed something that also crossed my mind! So interested in learning the rest of the details of your deal. If I understand you correctly the interest would be as follows: Year 1-5: 2.5%  Year 6-10: 5%  Year 11-15 7.5%   Year 16-20: 10% ? You had a Performance Deed (Default) clause in the contract? I understand each state is different but, how did you structure the actual transfer of the property? Also, is it a rental? owner-occupied? How did you manage cash flow with the built-in repair expenses? Thank you!                  

I am looking to add to my portfolio and have identified a person who owns two properties, free and clear. They’re both rentals (occupied) and in poor shape. The owner is older, very busy and has other projects on the table. Owner also has had a rough time with tenants as of late. 

Identifying these opportunities as potential motivators for the owner to want to get rid of both properties, I am looking to put a scenario together in which I would percent present an offer to the owner to help them get rid of their rental-related issues to the owner while growing my portfolio. 

I have been gorging on BP and Pace Morby content, so I have a (shaky 😅) grasp on the gist of my approach: Asking/confirming with seller what the problems are, offering a solution that includes a fair offer on the properties, the elimination of their tenant headaches, a reliable monthly payment, and avoiding expenses such as realtor’s commission and house inspection expenses. I will add the insurance of a Performance Deed built into the contract for a full “Seller’s win”.

In exchange for that problem-solving offer I will ask for “terms” such as seller financing, low interest rate, and low (or no) down payment. The only other fact to consider is that both properties would need some renovation funding in order to bring them up to the standards of my other rentals.

I am looking for observations on this approach, ideas to make it better and constructive criticism to enhance the chances of this deal going through!

Thank you all, Rod. 

Hello BiggerPockets friends,

I live in West Michigan, have a full-time job and a month ago I bought my very first investment property. It’s up two-unit home, bought through conventional (investment) financing. 

I bought DoorLoop ($59/month) to help manage it but after seeing BP had added RentRedi to their Pro membership, it was a no brainer to switch over. Happy to be here, eager to learn from all of you, and to contribute as needed. 

Sincerely, Rod.