All Forum Posts by: Steve Hiltabiddle

@Cameron Canz Hi Cameron,  I used Zillow for one but I also jotted down some phone numbers driving for dollars and called for prices.  I didn't contact property managers which could also provide insight.  Rentometer.com, neighborhoodscout are vendors available through BP

@Nick Giulioni  Nick, Thanks for the confirmation of my thinking.  I need to follow up with him to get some additional information and show continued interest.  I will ask about his concerns with taxes tied to a lump sum purchase. If that strikes a cord, I will dig in a bit more to find out what would help solve his problem.

@Charles Soper  Charles, This had also crossed my mind but couldn't work around extending value beyond his years.  I like the idea and will see what I can do to uncover opportunities around extending the legacy.

A straight play with a conventional loan, depending on expenses may doesn't seem to be a deal but him being the bank may.     Thank you

Hi BP Community, 

Seeking some strategies/advice on how I, as a buyer, could structure a purchase with a seller who has a duplex free and clear to help reduce the appreciation taxes on the sale. This is an older owner (70+) with some health problems so seller financing for a long term may not make sense to him. He is knowledgeable about the market and was a GC so I believe the property needs little work. Rents seem to be inline with market. I’m not sure if there is much of an opportunity as an investor but I’m thinking if I can offer options, when he’s ready to sell, he may consider me and my options versus paying a realtor to get market value. Being outside Philly, price to rent is on the high end, rent currently is about 1% of reasonable market price. I would still need to get additional data from him about expenses, etc to fully vet the deal.

My thoughts and assumptions on tax value are multiple offers:

• 1) Seller financing for 80% after 20% down from me – Best tax advantaged?
• 2) Seller financing for my 20% with 80% conventional loan – medium tax advantaged?
• 3) Somewhere in between 1&2
• 4) Cash offer: this would have to low ball (to refinance later) 0 tax advantaged. (this may not make any sense for this)

I feel like with the right interest rate (low), purchase without a realtor (saves 6%) and tax advantage based on his need, I could negotiate a low enough price where 1 or 2 or something in between might make sense.

Am I thinking about this correctly or missing something obvious?

Thanks in advance for any thoughts.

Steve

@Nathan Gesner   Thanks for sharing your thoughts.  I'm certain he's not 90 but he is most likely on the back side of the mountain when it comes to investing.  That being said, and I think you're thoughts are correct on the 'tried and true' books like Think and Grow Rich and How to Win Friends are classics for a reason.  Sound advice isn't dulled by time.   I reached out from his website donaldpbeck.com and ordered his book to gain preliminary insight.  That being said even the price of his 'study at home course' seems more than reasonable given what it could save with one tenant at one property.   While I have little experience, the advice I heard from him was sensible, thoughtful and creative to avoid tenant issues.  I especially like his quote, and perhaps this is not new, 90% of tenant issues are solved or created during screening.  One idea he shared was he finds excuses to stop by potential tenants residences (if convenient) to see how they live today.  He seems to leave little to chance and his lease has over 50 unique clauses to protect his interests.  There are certainly plenty of sources of learning in this space. 

Recently saw Don Beck, speaker on rules of the road on landlording.  He has a book, a home study course and other tools including a lease, available on his website. Don is a very experienced landlord and property owner who has lived through many cycles since the 80's and is great speaker on the topic.  Education is so essential and while mistakes will happen, avoiding common ones in landlording seems wise.  Don seems to be someone with a lot of knowledge to share.

Seeking out those who know of and used any of Don's materials or taken his course to get your take on his advice.

Thanks,

Steve

@Lee Ripma and @Michael T.'s book was on point.  I also greatly appreciate the guidance on the importance of leveraging comps for a duplex and loan limits.  

Did some driving for dollars yesterday looking for run-down/abandoned properties. Found more ‘for rent' signs and made some calls to get a sense of rent in the area. Connected with a 76 year old long-time landlord who, after some probing, said he might be interested in selling the duplex in question. Since he was a contractor the property appears to need little work at this time so I crossed off a BRRRR opportunity. While rents seem appropriate, his thought on price is right around 100x total rent. He's owned the property since 1987, while I didn't ask, I am currently assuming it's free and clear of a mortgage.

A few thoughts and I’d welcome some perspective from the BP community:

• Assuming I can obtain a conventional 20-30yr mortgage, is there any reason to consider bringing up seller financing. Why pay 7-8% if I can pay 4.5%? I read Low/No money down by Brandon Turner and couldn’t find an angle it made sense since I could cover 20% down.
• NOI is not yet known to fully evaluate the property, but if there is little to no rehab and property has been well maintained, it seems the value could be negotiated below 100x rent because he'd save on commissions. Other than rehab costs, other negotiation plays?
• Running rental prop estimates on the BP calculator with a 30yr loan including 10% PM fees (which I could handle initially), cap rate is in line with location (6%), 9.3% CoCROI, about $500 cash flow. Numbers look good I think, my concern is tying up a sizeable deposit.

I’m a newbie so putting numbers together for possible first deal is different than just analyzing random properties so any guidance you can share would be welcome.

Thanks

Steve Hiltabiddle