All Forum Posts by: Christopher B.

Hello all, I want to thank you ahead of time for any input, I think best out loud and this is a good substitute. I recently purchased a package of 4 homes, I planned to sell 2 and keep 2 for rentals. I've sold one, the other is almost ready for sell, I'm thinking about no.3. No.3 is an 1800 s.f. ranch with a detached 2 bay garage with a 650s.f. 2/1 apartment above it. The home is conducive to splitting into a duplex, I've talked with the city already and though I've not filed any paperwork for a zoning switch they said it shouldn't be an issue. If I split the house I'll have 3 units plus 2 garage/storage bays (they are smaller bays so are better suited for turning them into storage units). Here are the #'s, I ran through the BP calculator.  I am not taking into account renting the garage bays because I know nothing about renting storage units and not sure if I could get the extra $25-$35/month for each bay.

Purchase: $70k*

Rehab: $100k

Gross Monthly Rent: $2075

Vacancy: 8.33%

CapEx: 5%

Maintenance 5%

Insurance: $100

Taxes: $125

Lawncare: $210 (big yard)

P&I: $649.28

Monthly Cash Flow of $610

CoC 21.54%

The numbers are alright but my issue is the property is located in a C area, not a bad or dangerous area, I own another property less than a mile away, it's just blue collar and there will not be much appreciation. I don't buy for appreciation but I worry about spending this much money in this community, I'm not sure if the property would even appraise for $170k, that's a very expensive property for the area. I look for "free" properties, meaning I want to buy, remodel, and then use the forced appreciation as my down payment instead of my own cash, since I'm trying to grow this will hamper me by taking $34k or more of my money. On the positive side, there could be extra revenue potential in the 2 garage bays and a small storage room off the garage apartment that I haven't accounted for. Also, the house is located in-between a brand-new, very nice apartment complex on one side, a just completed expansion of a nice assisted living facility on the other side and quality brick townhouses behind it. My other options would be to try and rezone it as commercial like the two properties next to it and sell or sell to another investor for $10-$20k profit.

Thoughts?

@Account Closed

The 2 posts prior by @David Thomas

and @Paul Timmins are perfect examples of why you don't need to spend $15k on a course. There's definitely value in a local teacher or mentor and you'll be able to find one for free if you're willing to teach yourself the basics first. Real estate, or baking a pie for that matter, can be as complex as you want it to be. Focus on the basic tasks like how to crunch the #'s first, become proficient, and then gradually work to build your own systems. It can be overwhelming and sometimes it's like drinking through a firehouse, but if you know how to run the #'s and do due diligence as thoroughly as possible mistakes will be building blocks and not critical blows.

@Chris Lynch

I understand how you feel about the j-o-b, heck I'm sure everyone on here does. I just went full-time real estate in October, I was poor then and still am now, but that's ok for me. Heed @Aaron Montague 's advice, keep your job for now, buy a 2-4 unit, move into a unit and continue learning about real estate. Don't know how much $ to save? Well, once you move into a muti unit your monthly expenses will sharply decline, then eliminate any other unnecessary expenses like car payments, credit card bills, etc. You'll find that you can then survive on a very low amount of income, at that point save a years worth of expenses and then, after you've researched exactly what you want to dive into, dive head first. Don't hesitate.

I've been living in a duplex for almost 4yrs now, during that time I've never made over $15k as I worked mainly part-time but my expenses were very low. I sold tile and worked as a leasing consultant for a property mgmt. company, learned a lot btw. I lived (and still do) a very modest lifestyle but I learned a lot about real estate and now I just finished my first flip and will close on a package of 4 houses next week, 2 flips and 2 rentals. It has paid off for me but the main regret I have is by not having a full-time income, though it gave me more time for fun and education, it prevented me from getting into the game sooner, though one could argue that may have been a good thing.

No direct experience with them as I am highly skeptical of the "guru" programs but will say I know one guy who paid the $25k and says it's a rip-off but also know a lady who is still in their program, flips houses and says she couldn't do it without them. I think it depends on you and your level experience. From my experience, limited as it is, I think there are many better alternatives to learn flipping and more sound investments for your money.

@Ann Bellamy

These are very good points you make, thank you for the response, I'll make sure to do just this on future posts.

Cash buyer ended-up not performing on a house I have for sale so I am looking into HML for a package of 4 properties I am buying from an estate. The house I have for sale has an est. market value of $240k based on comps (confident appraisal will easily support), I own this property free and clear. Below are details of my purchase and the HML I am being offered.

Purchase Price: $250k

Current Value: $350 (conservatively)

Cash on-hand: $116,000

Loan Amount: $140,000 - $145,000 (closing costs, insurance,will likely fund monthly payments, etc)

HML:

1pts

3% prepayment penalty (so basically 4pts)

$2,000 Appraisal/Underwriting/Processing Fee

They said the fees and points can be rolled into the loan. I've never used a HML and know nothing more than what I've read on here. Does this sound kosher and reasonable? I've seen where some pay 5pts plus 15% interest, etc, though with the processing fees it looks like I'm paying closer to 5.5pts. The fact they're willing to roll the fees into the loan amount make me feel like they're not a scam. My biggest worry is the company isn't legitimate and then I end-up losing a great deal.

Thanks in advance for your time and any responses.

I figure you may want some more details, Ill post those below. I have also used BP's HML search and reached out to people but am looking for all options.

Loan Amount Needed: $135k

Purchase Price of the 4 Properties: $250k

Current Tax Appraisal is $410k and estimated market value based on condition is $350k, conservatively.

The house I have on the market, which can be seen here: http://www.realtor.com/realestateandhomes-detail/4729-Sunset-Rd_Knoxville_TN_37914_M77339-55708 , is valued at $240k based on market comps. I own this property free and clear and am willing to use it to cross-collateralize the loan if necessary. I have excellent credit and the necessary documents ready for review; I pulled my Transunion and Equifax credit reports 2 days, have filled-out a 1003 and PFS, and have 2 years tax returns.

Hola BP members, I have a deal I need some funding for and am looking for private or hard money. I currently have a property on the market that I have remodeled which has the majority of my cash tied-up. I have a contract to buy 4 properties from an estate at a significant discount. I currently have about 50% ($125k) of the necessary funds in cash and need the other 50% ($125k-$135k), the deal is set to close on June 4th at the latest. I did have a conversation with a HML yesterday but they have yet to send me any information as they stated they would, I am looking to get financing in place asap because I don't want to risk losing this deal. I hope to hear from someone soon, take care.

Nobody has anything to say? This seems to be the norm anytime I ask a question on BP anymore, no response.

Relink Capital? They're listed here on BP. A cash buyer for a house I have on the market just fell through so I am looking at using them to lock down a package of 4 houses I am buying through an estate while all my cash is tied-up. They're offering 3-5pts and 7.50% - 9% interest, the guy said I'd likely be in the 4pts with 8% interest range. The rates sound reasonable but I don't know anything about the company.I've never used a HML and don't want to get burned, especially with such a good deal riding on it.