All Forum Posts by: Simona Potocar

I'm afraid I'm purchasing this property at too high of a price for the kind of returns I would want in the future. 

Based on the numbers below and the overall background of it - should I back out of this deal? Also if I do end up going through with it, how do I deal with the undermarket renter on the other side? Do I just raise the rent to what it needs to be and if she doesn't want to stay, then that's on her? I also forgot to ask about the security deposit she likely put down, am I liable for giving it back to her once she moves out? 

Background and Property Details: The property is a duplex, each side consisting of 3bed/1 bath and a 1 car garage. About 1,056 square feet of space altogether per side. Its located in Avon Lake, OH (a suburb outside of Cleveland). One side is rented at $1100/month with the lease going to July 2022. I think that rent is below market by about $150-$200.

It sits on just under half an acre. It's walking distance to the lake and several great restaurants and bars. It's in a fantastic school district.One side is already rented until July of next year for $1100 per month. I believe I can get the other side to rent for $1300 once I update some items like:

1. 1. LVP flooring in the living room
2. 2. Paint all rooms and trim a neutral and fresh tone
3. 3. Resurface countertop, sink, and faucet
4. 4. New range/stove
5. 5. New closet doors and doors for rooms - the old ones are in bad shape and brown, and basically ruining the aesthetic

Some of the downsides of the unrented side are that there is no dishwasher or microwave and the stove and dryer are old and will need replaced. Do I need to get a dishwasher into the unit?

I can barely find any comparables on rent because there's literally nothing on the market to rent, no houses at least. There are some apartments, 2 bedrooms mostly.Here are the numbers - this is an investor loan from a bank:

Purchase Price: $305,500

Insurance: $1132 annually

Down Pmt: 25%Rate: 4.5%

RE Taxes: $3561 annually

Assuming an optimistic scenario where I do get a tenant in the other side at $1300:

Cash on Cash return is conservatively about 8% and Cap Rate is about 2.19%

Added some pics so you guys can get a visual of the unrented side. The rented side looks similar but with laminate flooring.

If I'm in a bad deal - how do I get out? I've got a signed purchase agreement, waiting on financing. No contingencies except on the financing.

right on senseh!

@Federico Gutierrez thanks for the free legal advice! I wouldn't have attempted it first without talking to a real estate attorney. I wanted to find out if there was some sort of loophole with that law, but yes honestly the more I learn the less I want to do it.

By the way, keep in touch, it was nice meeting you at the Key Realty training!

Hi There BP!

I first heard about wholesaling a little over two months ago, just randomly via a podcast hosted by Sean Terry.

As a realtor, I had never heard of this before! And to be honest, neither had my broker or any of the people I spoke to at my office. 

I took a deeper dive, and listened to may of the podcast episodes that Sean had put out, as well as the BP podcast episodes where the various methods of wholesalers were revealed in interview after interview.

I found many similarities among what I'd read and heard on the podcasts:

• Direct Mail is a very popular way to go
• You'll likely need to spend thousands in marketing dollars (most likely using yellow letters and postcards) to get the deals coming in to you
• Once you get one deal, the rest snowball
• Commit to one marketing strategy, bandit signs may work but they tend to be the least favored here on BP (due to their "uglying up a neighborhood" and the fact that many times they are illegal and get removed)

So I get the general gist of this but the questions I still have unanswered are:

• How does one know what is the right legal language to put on contracts?  For instance, I know you can assign a contract or do a double escrow, but how do I know what sort of language to put in the contract in order to make it work? Do I just pay a real estate attorney to draw those up for me or is there a less expensive way to go about this?
• How much, on average, does a person spend on direct mail campaigns and how many months go by before a call comes in that nets you a deal?
• How in depth do you go with your buyers? Do many wholesalers put together a mini appraisal or is that above and beyond that maybe doesn't need to happen until you're more established?

Thanks in advance - I know this is a wall of text!

Hi Folks - I am getting my condo in ready to rent condition and the biggest issue I am facing is with a leaky bathtub.

It's a two story townhome and the bathtub is leaking, therefore my living room ceiling is dripping.  A plumber has come out about 4 times (same plumber, his work is under warranty) and can't seem to find the issue.  He's tightened the trap and redid the caulking twice. He even caulked the toilet right next to it.

I still see water dripping from the ceiling, not a big continuous drip, but after about an hour and a half there's about 2 cm of water in the pan I have sitting out to catch the leak. 

I think it has something to do with the tub surround and the tub possibly not being flush/lined up right? I can't tell visually but I don't know what else it could be.  The other possibility is the waste stack may be the culprit, though I can't see it from the access panel.

I think I may have to have a plumber cut open the ceiling. 

Has anyone ever encountered this issue? Not sure what other details I can provide in this post but will answer any and all questions, I just need help and/or contractor and plumber suggestions for my area (Cleveland, OH)

@Sharee Mason  Thanks for that response! I did talk it over with him, he feels the work was done well. 

Hi Folks - I'm enlisting your collective knowledgebase again because I'm looking to purchase a home to live in, and on the surface things seem ok. 

Just had the inspection - the biggest issues found were a bit of mold on the drywall in the basement. The drywall is not truly close to any water source and the inspector felt it may have been due to a leak in the hot water tank. 

The part that sort of gives me a sinking feeling is the basement walls. The inspector didn't see any issue, and indeed they aren't buckling, there isn't water damage or anything.  However, when I called the company that did the water proofing (or what the listing agent thought was waterproofing) turns out they weren't out there to water proof at all!

They were out there because the wall had buckled.  The previous owner of the home (now deceased) had hired these guys because they were his family (and he himself was a bricklayer) and they came out and dug up the wall and fixed it.  The guy who did the work called me and said that it was one of the most fortunate cases ever because the wall just popped back into place (and evidently that only happens 10% of the time) and they sealed it and everything was fine (this was around 2007).

Would you guys still buy this house knowing this information? Should I just back out now? I love everything else about this house, so I know I'm just being emotional about the purchase so I'm looking for objective opinions.

Thank you so very much for your help.

@Joel Owens  Will do, this isn't the type of neighborhood where meth exists, not that it would rule that possibility out. But the probability if it being meth is very very low.

I've spoken to the neighbors (also smokers by the way) and they knew this guy well (he died).  He was a smoker.

Joel Owens thank you so much for your detailed answer. I am buying the home for myself and my 2 year old to live in. I think yes I agree that probably paying someone to do the work will be the best option.

@Sean Ridlon

Thank you, that was some really helpful information. I truly appreciate your recommendations.