All Forum Posts by: Shawn Ginder

Do your research well, run your numbers on at least a 100 properties before you are ready to pull the trigger on a property. The property has to cash flow well enough, the truth is if all properties cash flowed strong enough on paper we'd have a lot more people investing. Finding a strong enough deal on paper is one thing, then you have the reality of how the investment will perform. Be sure to include maintenance, repairs, management fees and vacancy because all of this will be a reality at some point in your property. If you find a deal that cashflows strong enough there are ways to work in using private money lenders for the 20% down, but you got to know the numbers other wise the property will easily end up costing you money each month, and a lender will find it difficult to underwriting the 80% loan if they don't see strong enough cash flow to pay for itself and the debt service. Believe me they will look for this even with a commercial loan. That brings up another point, understand the differences between commercial loans and residential loans the advantages and disadvantages of using each will give you the tools to know what questions you need to ask bankers as you shop for financing.

It is possible to buy without an attorney, we used a title company for closings. Inspectors, getting referrals from a local real-estate agents is a good place to resource from - we used one recommended by an agent and have continued to use them on future deals. I have been up north but don't live up in that area, so can't provide more info.

$925 3bd 1ba Harrisburg, PA

Paid $50k

We have a regional bank in Harrisburg PA that was able to give a 2nd lien note on an investment property up to 80% LTV. Terms are 4.85%, fixed for 5 years than adjusts, we did an 11 year term note. This bank is holding the current mortgage on the property, but we had enough equity on the rental unit they gave a loan in 2nd position. This is a cost effective way to access equity if the lender is flexible to offer. We purchased in June 2016, set up the 2nd loan in Jan 2017, so we used the same appraisal as was for the purchase, as they base the LTV loan off the appraisal number.

You are getting a lot of great advice here. Keys: know your numbers, know what works for you on an offer, consider a higher offer that you are comfortable with. Agree on not getting emotional over the deal. Real estate is like a slow moving train and you are standing watching this train go by, on the one side you see 100's of thousands of deals that have already passed you by, then look the other direction and you see 100's of thousands of deals coming toward you. You get to pick and choose what you get involved with. 

If it is a strong deal, bring the offer up, as a new investor I'd say don't go in without an inspection, as the inspection will be a valuable blue print for you on repairs the property needs, and if something major shows up renegotiate cash in the offer for the repair. 

Patrick,

Thank you for taking the time to write, appreciate it greatly.

Here are the details on the monthly numbers I am using.

1700 rent

-569 mortgage

-161 seller finance interest only

-292 taxes

-67 insurance

-102 PM

-119 maintenance

-51 Cap Ex - putting 10k into it up front

-85 vacancy

254 net cash flow

So $255 per month are going toward Maintenance/Cap Ex/Vacancy - but keeping in mind the 10k getting up front to put in on the CapEx and maintenance. During due diligence will need to determine if this will be sufficient.

PM - yes includes advertising. The lease up fee is 1/2 months rent is not included as both tenants plan to stay long term, so won't have this up front on taking ownership. We are using this PM on another property and are doing a great job for us.

Insurance, I have a policy on a similar size two unit in Harrisburg just north of the location and this is at $720 so $800 seems fair value. I had shopped around on Insurance on our first units and found varying degrees on premiums.

Snow removal and lawn care are not factored in, have to find out if tenants are managing this as the seller is from out of state but claims self managing the property. Additionally the tenants are involved on the maintenance of the building, so it wouldn't surprise me if this will be handled by the tenants.

Thank you for pointing out lawn care/snow removal, I learned this the hard way on the Harrisburg two unit. I didn't factor it in prior to purchase, but thankful the property cash flows well enough it isn't an issue. The setup of that two unit lends itself better to pay for lawn care and snow removal with the type tenants we have there.

Thanks Chris for your comments!

For paying out the second - options on the table:

• Improve property and refinance
• Utilize a business loan with combination of current line of credit w/saving cash flow
• Or last re-sort sell the property, or sell another property we can move on. 

Getting a commercial loan as residential lenders have tighter restrictions with seller financing in place, haven't found a bank yet who can do loans with seller financing on a traditional bank loan, have shopped over 20 lending options. 

I am considering a duplex purchase in Red Lion PA looking for any advice on the area for a rental and any other tips you have as I analyse the deal.

Here are the details:

On North Main street in Red Lion, PA - Dallastown school district.

Buying through a wholesaler who is helping a friend out with the sale.

Each unit rents for $850 a month - $1700 month income

Each unit 3 bedroom 1.5 baths

1288 Sq ft per unit

Currently both rented, with tenant who plan to stay long term, one tenant as been there 6-7 yrs. Tenant history treats property like there own, consistent paying tenants.

Purchase price $115k

Seller will hold financing on 25% for down payment at 5% for 3 yrs interest only.

Property will need about 10k in cosmetic work, seller willing to add in 10k cash back for repairs added to the seller financing agreement.

Have a lender in place who can finance this deal at 75% with seller financing in second lien position.

$3500 taxes

$800 insurance

Tenants pay all utilities

Would be getting a commercial loan amortised over 20yr.

Plan to use management team at 6%, that we are using on another property.

What are your thoughts and perspectives on a deal like this?

No money in on the deal but looking at over $200 net cash flow, with capital given at settlement for immediate repairs that need addressed.

If you will invest time learning more on investing in real estate and start thinking outside the box you can achieve your dreams of owning real estate. I did living in Europe, investing in PA using virtually non of my own savings money. If you want to chat more on this send me a private message. Shawn Ginder 

Welcome to BP!

I am from Lititz, but live overseas, bought our first units in June this year in Harrisburg and York.

Love owning Realestate! 

Wish you all the best, let me know if we can help in anyway!