All Forum Posts by: Scott Rosslow

Originally posted by @John T.:

Thanks @Scott Rosslow.  I'm guessing this that is something the state can perform? Thanks again. 

 In Florida it would be typical for private industry to provide those services. You might try a phone call here

https://www.nrcs.usda.gov/wps/portal/nrcs/detail/pia/contact/local/?cid=nrcs142p2_038640

You may also want a geotechnical report. I’ve heard a few stories of people developing lots only to find out all the vegetation from nearby developments had been stockpiles or muck. Which required removal on the unsuitable material prior to placing your foundations, driveways, drainage etc.

I am looking to get into my first so my advice might not be the best. I listen to the pod casts and read a lot on the subject though. It really would depend on your goals. Generally it seems the people that want to grow their portfolios will either harvest the equity through cashout refinance or HELOC and try to get longer term loans. I believe you can only carry about 10 loans at a time after that you need to look into commercial loans which may have balloons or require higher LTV. Another method i see mentioned a good amount is if you bring in a partner with a great dept to income ratio, although I am not sure what the terms of that agreement would look like.

Originally posted by @Aaron K.:

@Scott Rosslow You don't need to offer on every property at your price, some are just too far off, I'm not sure how competitive your market is out there but in Southern California if you offered 200k on a property that was asking 500k, they wouldn't even take the time to respond with a rejection. Your realtor is telling you your offer is unrealistic because they don't want to waste your time, their time, or the seller's time with an offer that your agent is 99.9% sure will not be accepted.  Your best option might be to ask your realtor straight up if your expectations are realistic for your market, if not you will most likely either need to adjust your expectations or invest in a different market.

Thanks Aaron, we were trying to make an offer on both properties when my partner and I believed it was 500k asking for two buildings of 4 units each (8 units). Both buildings were described 8 units in the listing but apparently there is a duplicate listing on the MLS just with different addresses. We were going to try to offer around 360k for 8 units and we could go as high as 400k and the numbers still worked for us (thinking they were asking 500k for 8 units). I caught that only one address was listed on the contract draft and asked the agent and she indicated that the listing is only for 1 building. Lesson learned, I assumed my interpretation of the listing was correct. I used the 16 2/1 sold for 1 million as justification for 8 2/1 units being listed for .5 million. I have also seen portfolios listed before at a "specific addresses".

This is why my offer would have to be altered so much and so far below asking.

@Joe Villeneuve

1 - So do comps on multifamily from my understanding.

2 - 480 doesn't cash flow I want a yield play.

3 - They want out and wont hold paper. they have had the property more than 30 years so they will pay taxes on the full amount

4 - a, I calculate vacancy as an expense that is equal to 1/12 the income. There is always expense with turn over I am accounting for 4 months of vacancy.

b, 660 is over my $100 minimum a month cashflow and my 15% coc.

5 - True but my market is really hot right now. 

6 -I am new at this so i don't have a large body of experience investing in real estate. I very certain that 900 is conservative.

Seller wants out. They don't want to manage the property. They haven't raised rates, they have delayed maintenance. I am new trying to find my first deal.

@Brian Garrett

Forest Hill

@Aaron Klatt

So I should just not throw out my offer? I know its a long shot. The listing was misleading which is why I put so much effort into trying to make this deal work. The listing said 8 units were for sale for 500k. My agent said it was 500k per building.

@all How would you modify my offer or calculations? I am taking it you guys just wouldn't invest in my market? taxes and insurance are the bane of every deal I look at.

I am looking at a C+,B- 4 plex in S Florida. Asking is 500k and the neighboring 16 units sold 2 years ago for $1,040,000. These are 825 sf 2/1 units. The numbers are:

• Asking 500,000
• Current Rents 815, 800, 750, 815
• My Offer 200k cash - refinance after purchase
• Monthly Expenses taxes 433, insurance 500, refi mortgage 860, vacancy 318, water/sewer 125, Lawn 100, Repairs 50, Capx 160, Manage 382, Parking Light 20
• Cash flow is 233 at current rents, property manager thought We could raise rents to at least 900 fairly quickly little management before and below market rents now. Would up cashflow to 660 a month.
• 3k closing and 10k rehab costs

My realtor thinks my offer is too low and provided some multifamily comps showing about 120k per unit. Those units are getting about 1000-1200 per month.

One of the owners passed away recently so they should be motivated. Also this property has been on the market for over a month at this point so its not worth their asking price. 

How would you modify my offer? Also they won't hold paper and they want to close fast.

I found a deal that I am close to making an offer on. I used a guesstimate of 6k annual for insurance while my broker was shopping quotes. I thought I was conservative with that price and he came back with 12k. I am looking to partner and form an LLC to do the deal and my broker said the LLC was hard to shop for saying only 3 places would write on that. Is this common? Ultimately I wanted to refinance out of some borrowed money on the deal and hopefully BRRR it so I will need the insurance. Otherwise I can drop the windstorm coverage and keep the money tied up but it would only cost 3.6 k a year. I am in south FL if that matters. Are there brokers that can shop better for an LLC or what am I missing here?

Originally posted by @Thomas S.:

You need to start at square one by doing extensive research through web sites such as this one. There are plenty of videos, blogs and pod casts to go through and thousands of threads to research.

You need to keep in mind that you and you father have much different approaches to investing at this point in time and until you come together on your approach it is unwise to assume you can partner.

Your father is ultra conservative and will produce very low returns where as you are attempting to maximise returns through leverage. There may be no meeting of the minds.

Which is partially why I wanted him to be the bank for me. He hasn't been able to find deals his way for 10-15 years. He used to buy cash deals where he was doing at least a 20% ROI. But the bulk of that was before internet made it so easy for everyone to get involved.

Talking with a bank a while ago I was pre-approved for 250k loan. They wouldn't however look at a proforma and count that as income in their debt to income calc unless I had the property for 2+ years. I plan on talking to more lenders as well.

I have been looking for a while for some buy and hold small multifamily units. I grew up helping my dad fix and taking care of rental properties. His strategy was different than the approach I want to take. He bought everything in cash and never carries debt. I want to leverage where I can. 

I recently came across 2 4-plex buildings next door to each other that have value add potential that are listed 1 million (price seems absurd) total in Palm Beach County. The current rents are a little over half what appears for the area. Using the current rents to justify a purchase price my offer would be 415k roughly. I am still working on the renovation costs but they would be somwhere 40-100k (I know its a wide range, and I need more detail, I havent seen the units yet).

My question is this: I have always wanted to use my dad for at least a partial financing (smaller financing for down payments + conventional financing). I think my dad more or less wants to partner and form a LLC so that I can review deals with him and then go make cash offers. Should I partner, buy, renovate, rent, and refinance attempting to make him whole? Is an LLC the right choice? As a newbie investor I wanted to get something <200k which I qualify easily for financing so I could learn somethings and scale it out from there. I haven't really been educating myself on the partnership/private funding side of things at this point.

Originally posted by @Andrew Johnson:

Scott Rosslow This is going to be a vague response as I don't know your market but I do think the MLS can be useful. Primarily for 2 areas: listings <7 days or >120 days. So basically, new or stale. If it's new you *might* catch someone who really doesn't want holding costs, has to move for their job, and will take a lower "bird in hand" offer rather than waiting 60 days for a better one. Once you're past 120 days...you're stale. Something is off and 99% of the time it's price. At that point you probably have an exasperated agent and owner. They probably know (even if they don't want to admit it) they won't get the price that they want. At some point, people "just want out".

That said, multifamily can be a different animal. You can easily have an owner that will want ____ or they’ll just keep on making money through cash-flow. It’s why, in my opinion, you occasionally see multifamily properties that are relisted every year, have a DOM of 400, etc.

The fresh items on the MLS to me look like an investor came in to flip the property usually. I usually can't find enough value in those renovated properties to make the numbers work for me. I find that your perspective on it seems accurate from my experiences. Since this would be my first income properties I was attempting to stay away from things that needed a lot of work since I work 50-60 hours a week usually. I might start looking into a mail campaign as well.