All Forum Posts by: Sheldon Alex

 You're welcome! 

Good day everyone! One of my skills is underwriting. Thus, I ensure to vet the deal to forecast the best (or worst) possible outcome for the borrower and a private money lender. That said, here’s another I underwrote…

With this deal, the borrower had a comprehensive line up of documentation regarding the deal.

I checked their CMA report, and they projected a $925,000 ARV. When I gandered at a $400,000+ mortgage balance, I first assumed it was a subject-to deal.

However, I acutely discovered, via reviewing the PSA, the purchase price actually being $775,000.00.

The borrower needed $65,000 and was offering a 25% flat rate.

Now circling back to his estimated $925,000.00 ARV. The comps sold in that CMA were CROSSING MAJOR STREETS. Not only that, the subject property itself was FRONTING a MAJOR TWO WAY STREET!

By Appraisal Rules, since the property is over $500k in value, I had to make a 20% adjustment to the actual ARV.

So, being that a comp sold for $872,500.00, I had to take 20% off of that ($174,500.00) to equal a $698,000.00 estimated ARV.

Thus, with a forecasted debacle from loosing around $163k, one should deliberately refrain from doing this deal.

From that, I hope everyone found this helpful! Any questions or feedback is warmly welcomed!

No I decided to walk away from this one. Very low unit count and the rents weren't as strong as I wanted them to be. 

When I ran calculations, we would've needed to come in at highest $3,650,000, with 10% down and the seller carrying the rest of the note. 

 You're welcome Bryce. The seller was willing to carry the remaining balance. But we would've had to offer over $2 million dollars lower than their asking price to make it work. 

Good day Bigger Pockets community. One of my skills in real estate is underwriting real estate opportunities. These deals I analyze have come from borrowers looking for private money. Thus, I thought I share another one with everyone. More to come...

Sometimes you hope for the numbers to work on behalf of your borrowers. However, the data doesn't lie.

In this example, the borrower estimated the ARV between $270k to $300k.

However, a few of her comps she shared included:
- Properties crossing major streets
- One property pending (NOT SOLD)
- One property sold, but over 350 sq ft apart in size from the subject property

Now I'm not going to say I get it right every time. However, I usually go the conservative route when comping deals (NOT based on speculation or exaggerated predictions). Not to say that's what this borrower did. But some do.

I discovered the ARV being between $250k to about 260k for the subject property give or take. And for what she was offering, there was NO MEAT ON THE BONE.

Thought I'd share this with everyone for education purposes. Any feedback on this deal is highly welcomed. 

Good day everyone! I thought I'd share a few deals from time to time of what I'm underwriting to help anyone out who's learning how to underwrite and comp deals. Here's a first...

Throughout the year's I've ran numbers on numerous properties, single-family and multi-family. This is the first one I wanted to share, a multi-family property in Tampa, Florida.

The subject property has been on the market well over 120 days. Why? Because of the seller's asking price.

With a $5,950,000 asking price and only a 5.05% cap rate, after just calculating the value, the property is over priced by over $2 million!!!

Mind you, they were offering seller financing. But after running the numbers, even with seller financing, which you can find in the images, this opportunity is a NO GO!!

Always important to see what's under the hood, and not act based on what's shown on the surface. 

Anyways, would love to get your feedback on the matter. More of these scenarios to come soon!!!

PS: I made a mistake on the Cash to Close section. This scenario I set (even though this property is really listed for this much), I factored in the investor not coming in with any money but instead using 4 PMLs.

It's good that you would rather start small and work your way up to bigger investments down the road. If that's more your comfort zone, it's good to stay firm. Don't fall into shiny object syndrome or feel pressured to buy something beyond your primary buying criteria. Hope this helps. 

That's great you've narrowed your focus into Philadelphia, PA. When going to those networking events in that area, put your name out there and talk to as many investors, attorneys, wholesalers, and agents as possible. Let them know not only what you're looking for, but what value you can bring to the table as well. That will make you truly stand out. 

And if you're looking for lenders who can fund your deals, let's connect. I'm more than happy to help you. 

Sheldon 

Hi Mohammad,

There are people who may express their concerns with what you're planning to do. There is risk when doing real estate investing, but there's a lot to gain if done right. Block out any negativity or any recommendations to dissuade you from pursuing this business. Maintain focus on finding the right cash-flow producing properties. 

Based on your numbers, there would be little to no cash-flow (if held as a long-term rental), especially if you factor in the high interest rates. 

It's usually a good idea to look for rental properties that require little to no rehab because of the timeframe needed to get a property rent ready before marketing it to find suitable tenants.

Hope this helps. 

Sheldon Alex