All Forum Posts by: Tom C

I am actually not very good at just running numbers and coming up with an offer. I have to walk through a property, pull comps, then look at the numbers. Just looking at your numbers lets say that you can get a 30yr fixed at 7.5% on a commerical loan, your PITI will be $6518.33 per month. Not sure where you got $49,500/ $4125 per month.

Actual Debit service = $78,216
Rents $89,100

OP expenses lets say $30,000 per year and this is on the low side.

Leaves you with $59K or $4961 per month. Current price leaves you at neg. $1557 per month.

So if you expect to make it successful you would need to get the place for $395,000. This would leave you with a PITI of $3721 and a cash flow of $1261 or $114.00 per unit per month.

Yes, that seems pretty nuts to walk in and offer 395K for a property that someone is asking 795K for, but do you see any where I am hosing up the numbers? Remember, you don't count the DP. You have to base it off what you are paying for the property.

You could do the 70% rule based on comps and see where that gets you, but only use that if I am going to flip the place.

Just looking strictly at the cash flow verses the debt, it appears that you are going to have 11 units to manage for around $700.00 bucks a month. That sounds like a full time job where you will be making around 4 dollars an hour if you are lucky. Now cut that $700.00 dollars a month in 1/2 for operating expenses and you are essentially making around $32.00 dollars a month per unit. I would never own a property and rent for $32.00 a month profit.

Unless I read your post incorrectly, I wouldn't touch this deal or touch it, but at a much reduced price. I need to get over $100.00 a month in cash flow before I would even consider buying.

Thanks

Justin,

Run your numbers again. If you throw in a 5% vacancy rate, you are already in the hole. This is using my tax rate of .5% and insurance rate set at .2%. Going owner finiancing is usually more expensive, since they normally charge a higher interes rate. No matter how you slice it, you are going to have over or near $2500.00 PITI.

If you have a scanner, put it out here. I am sure someone here will find a loop hole to get you out.

OK.. I have found a few properties that I would like to get. I would like to shoot for Sub 2 or owner financing. The question is, these properties are on the MLS and listed by agents. How do the agents get there cut when you don't go the traditional routes and no cash is involved? Does the seller have to pull a second and then we split the cost?

Thanks

Lonnie,

Haven't seen R2 around for a while.. He must be busy counting all his money.

tesswis,

I think we all could learn a lot from you if you could, when you get a chance tell us exactly how this home was presented to you when you decided that it would cash flow. They had to have a really excellent shell game going to convince you that a $700 a month rent payment would cover that mort. or did they play on your greed when they gave you 36K cash back?

Yea I have an idea. You walk in his office and grab him by the neck and smack the piss out of him for taking advantage of you. Then you tell him that he is fired and if you hear or see him again your going to burn his house down with him in it. Theres only one way to deal with people like this and thats by playing their game.

Of course I really don't mean you should do the above. Perhaps you can just ask him nicely to disregard the contract and you will still pay him for the homes he finds for you and you purchase. Or go buy a bag of pot, break it up in a bunch of little bags and put it in his office and call the cops.

Here is one company that will insure rehabs. State Farm or Allstate will not touch. This company is pretty pricey though

www.OHIOFAIRPLAN.com

Nick,

Didn't you say they accepted your offer and if so, now what are you going to do, back out???