All Forum Posts by: Collin Sparks

Your estimated rent roll is correct. I was the one who wanted the 10 year amortization because I like to get things paid down quickly. These rental properties are my retirement, my other business is ny source of income. This is why I don't mind the higher payments, plus it lowers the balloon payment and the total interest paid.

I have been looking for my next deal for a while and thought that this was a no brainer, just wanted to get BP members valuable input.

I recently submitted an offer on a 5-unit idling. It is a brick one story building with 5 units 2 bed/ 1 bath each. No major repairs needed. 3 of the units are rent ready with one of them occupied. The other two units need omelette remodel including windows and doors to match the other 3 units. The own has moved out of the country and cannot properly manage the property, which is completely paid for. The comparable rents and the rentals in the area that I know will aloof ow these units tô rent for $400\month.

The offer: I submitted a favorable to me offer because the owner seemed desperate to sell. Selling price of $51,000 witha down payment of $8,400 the remainder owner financed through land contract. The financing is at 10 year amortization 6% with a 5 year balloon.
The downpayment is a little strange. The current owner wants to continue to rent 2 of the units himself for when he and his daughter travel for business. He wants to sign a 1 year lease and pre-pay for both units at $350 per month or $8,400 for the year. He is willing to use this as the downpayment. Since he will be renting these 2 units he will renovate them to match the other units as part of the offer.

This offer will allow me to get into the property with very little up front cost, which will allow me to use my capital elsewhere. This was not my original intention but seems to work out great for me.

The counter offer: same as above except the sale price raised to $54,900.

What do you think?

I am confident about this deal but always like an outside perspective.

I am located in Dayton Ohio and my other company is a landscape installation company. Being in the industry I have run into most of the roofing contractors in the area and can tell you some companies to look at and some to stay away from if you would like. Feel free to message me.

Thank you for your responses! I have a list of questions that I will be asking tomorrow, I just wanted everyone at BP to help me think outside the box. I will be investing in rental properties.

I am meeting with a CPA/Attorney/Real-estate investor tomorrow to determine the best business entity to start for my real-estate business. I have a list of questions that I will be asking, and have her review my first potential deals numbers. I was told by my realtor and long time family friend to consult with her as my business takes off because of her many angles of experience. I would like any suggestions of questions that any of you wished you had asked when first starting out.

Yes, the investors have enough cash to hold the mortgages on several properties. Thank you John for your input. I have a few more questions if you don't mind giving your opinion.

Since the investors are really looking to invest for cash flow, how would you go about setting things up for investors to split the proceeds? I understand it will be very complex.

What is a typical interest rate when borrowing from a private lender in a straight forward manner that you described above?

Does the 50% rule still apply when I will be managing the property myself? My landscape company is going to be taking care of the properties which should reduce costs. I used to have a property maintenance division and still have all of the equipment and trained employees.

As a side note these duplexes bring anywhere from $800-$1000 a month depending on which unit.

Let me start by giving some background information. I have been researching real estate investing and am in the process of starting a LLC. I have owned a landscape installation company for 9 years. This company generates enough income finance and allows me enough time to dedicate to real-estate investing. I am interested in buy and hold properties only for right now. All of the income generated from this company will be put back into new properties. Through the experience gained in my landscape design/build company I have knowledge, and a good network of contractors for any range of repairs or maintenance.

I have a goal of investing in 2-3 properties with 2-4 units each before the end of the year. I have 2 investors that would like to invest in these same type of properties. The problem that I have run into is; the investors would like to invest for the same reasons that I am, cash flow. They have no interest in taking draws and would just like to invest to diversify, have something of value, and protect themselves from inflation. So how would you set things up with these investors? I have a couple ideas but would like input.

One way for them to invest would be the easiest to track and much more simple than the other option. In this method I would come to one of them once I find a property and offer them a % return on the privately loaned amount. I would give them payment terms and they would hold the 2nd mortgage if they cover part of the large downpayment and the rest is financed through the bank. I plan on placing large down payments, or possibly paying cash, on these properties with my money and private investors money to have greater positive cash flow and help to adjust for the learning curve I am bound to encounter.

Option 2: Since my investors want to invest for cash flow, is there a way of splitting the profits on each individual property between investors. Ex. In the Dayton, OH area there are duplexes readily available for $25k. If I was to find a property, and ask one of the investors to put up $15k and I put up the other $10k, then every quarter split the positive cash flow between us at some pre-determined percentage. What percentage would be fair to compensate for my time and risk involved, and for the investors money? Is there a way to do this without having the investors as partners? Since each investor has expressed that they would like to keep the income they generate in the company and new properties, is there a way to keep everyones money separated? Without having it taxed fro leaving the company back account or having several bank accounts just for this company?

I apologize for being so long winded. I am learning this business so any advise would be greatly appreciated.