All Forum Posts by: Ryan MacDonald

I spoke with an investor this past summer and he told me a practice he has done was to separate out the lease and the option side into two separate contracts. Basically the buyer would sign a lease to occupy your property as a tenant for 1 yr or whatever timeframe you agree upon and a separate agreement of the option to buy the property at a time in the future. This way they are both exclusive to each other from a legal standpoint as one is just a lease and the other only an option. This conversation was back in August so I might be hazy on the details but that is the overall idea I took away from that part of the conversation. I've never done one and it could still be illegal but I thought I'd share just in case someone could correct me or provide additional insight. Cheers from New Braunfels. It's a great town and I love it here.

Hi all,

I just wanted to give everyone a quick update on the duplex.  I am on the last day of my option period today and have had to reevaluate my offer and send a new offer.  here is a quick breakdown of what I have found on this property.

- Originally a 2/1 and 2/1 duplex inherited by current owner on the market for $156K before price drop to $135K.  Accepted my offer of $120K cash.

- After repair rental values for the market are $915/unit.

- Property was a 1950's built 2/1 home that was expanded to have an addition which made it a duplex in 2006 I believe. Zoning allows for multifamily but it doesn't look like the addition of the 2nd unit was permitted according to city records (no firewall dividing the 2 units and it has one address and not split utilities or submeters for the building. Water split from the city runs $11.5K alone to split water utilities.

- I received 2 repair estimates each of $88K and $175K  This is for a full rehab so I'm sure I can find ways to save a little or hold off on some wanted not needed repairs to bring the prices down.(floor joists likely need to be replaced in entire units or leveling of the home). subfloor has large holes in it so the whole place likely needs new subfloors which eats up a large portion of the cost as well as splitting utilities.

- I sent my revised offer last night of $40K offer price as I can do some of the repairs such as kitchen cabinets, counter tops and flooring myself.

- Found out title is having a hard time obtaining pay of amounts from mortgage company as it looks like a mortgage was taken out on the home in 2011 of $120K.  So the sale likely won't go through because the owners will owe more than the home is worth.

Next Steps: likely cancel the contract during today's final option period and try to work with the seller and mortgage company directly to see if they would consider a short sale or something along those lines.  I think I actually need to get this property for sub $20K to really make it worth the return on investment.  Thoughts?

@Jennifer Jackson

Thanks for the advise!  At first I was reluctant to mess with it, but when I met the investor in the Austin REA who is and has flipped several flooded homes in the Onion Creek area, I thought I would dig a little deeper to see what is possible.  

With the mix use zoning, I would prefer to find a large multifamily buyer as I think the overall neighborhood has the greatest potential for an apartment complex with the increasing student population, but I still have a long way to go to make those connections as well as look at buying up all of the properties in that area to allow for a multifamily apartment.

@Matthew Carducci

Nothing yet.  The homeowner is still on my followup list.  I was able to connect with an investor in Austin who is flipping several homes in the Onion Creek area that flooded this year and last and he said he is willing to partner with me since he has experience with flooded properties but progress hasn't been too much more as of yet.

@David Ramirez

I would definitely appreciate their phone numbers. I will pm you here shortly.  I need to build up my team so having these contacts in place would be very beneficial.  

I was debating on flipping it as a 3/2 or 4/2 SFH instead of using it as a rental except that rental prices are so good in the area for a 2/1, it would have so much more value than a 3/2 or 4/2 in the same neighborhood, so that is the route I'm trying to take.

@Nicholas Miller

I will actually need an A/C guy as this duplex only has window units.  I will look up Bill Buck and son to  see if they can give me a quote.  It's a pretty extensive rehab with complete sub floor replacement, likely roof replacement and reconfiguration of the 2nd unit since overall layout is really awkward for the 2nd unit.  I also need to look at trying to get it sub metered on all utilities since the 2nd part of the duplex was an add on.  I think I will need to renegotiate significantly so we'll see if the seller is willing to meet me once I get a few quotes together.

I recently got my first duplex under contract in New Braunfels and I am looking for contractors to perform a rehab on the property so that I can get it rent ready.  Can anyone recommend any contractors that they have worked with?  My option period ends on the 24th and I have called a few contractors but I am wondering if anyone has any referrals.

Thanks,
Ryan

Sorry for the title.  I meant to write Flood Plain.

Hi all,

So I have started marketing for sellers in my area and have come across an individual who is interested in possibly selling his property.  Some things to note off the bat is that it is a 3/2 home with a detached garage on a half acre lot.  The owner says that it will be or is currently zoned for mix use which is great as I see apartments continuing to be developed in the area.  

However, the issue is that his home flooded twice this year resulting in the area to be rezoned in a flood plain. That being said, since this is one of my first opportunities, I am not sure what to do here. The home is currently being worked on but has a substantial amount of work left to be done. It has to be raised a foot or so in order to be out of the flood plain if one was to keep it as a SFR. With it being zoned for mix use intrigues me as it has a lot of opportunity to the right buyer who can come in and develop the land but it doesn't make too much sense from a fix/flip and wholesale standpoint.

Has anyone ever had any experience with something like this?

Hi @Matthew Carducci,

Welcome to the community.  Perhaps our paths will cross someday since we are in the same area.