All Forum Posts by: Jeff G.

Ok, so one of two things is likely happening here:

Either there are two wholesalers with the same property under contract. In which case, the smarter of the two should run, not walk, to county records and get his contract recorded against the property title. This will "cloud title" and make it more difficult for an unethical second wholesaler to steal the deal.

ORRRRRR....

One wholesaler has the deal under contract and he's having a difficult time moving the property and he's given a flex option contract to a second wholesaler to try to move the property before it expires. Usually, in the case of the flex option the second wholesaler's price is equal to the first wholesaler's price plus between one and five thousand dollars.

Given the math, I'd say there is second, possibly unethical, wholesaler in the mix. It's also possible that the homeowner is just clueless and thinks two wholesalers are better than one! Don't laugh too loudly, it happens.

@Drew Mim Mack

Talk to wholesalers in your area. If you play your cards right you could buy at least two multifamily homes for that given the following scenario:

• Cash purchase of the first property.
• Hard money to do any rehab, if any, with favorable terms.
• Refi into a conventional mortgage to pay off the hard money loan.
• Get some tenants in there and 12 month leases signed.
• Use your equity in building one, rental income (with signed leases,) and personal credit to buy the second building with a conventional loan.

The above assumes you have good credit (700-ish) and between the rental income and the equity in the first building you'll have 20% down plus reserves and customary costs on the second building. Depending upon your situation the second acquisition could take 6 months or somewhat more than a year. There are lots of moving parts and I could always be wrong. But, I think above is a good "bar napkin doodle" of a game plain. Is that helpful?

Alright, a few things here:

• First off, don't forget to add property tax into the mix.
• It would be helpful to break down the building into unit size / rents. So, 750 sq. ft. 2/1 at $850/mo. Do that for all 4 units. Then go over to rentometer and see if you're getting approximately median rent for the area: https://www.rentometer.com/. If you are, great, if not, you're going to want to increase rent.
• What is the parking situation? I can't tell you how many multifamily homes I've passed on because the parking situation was bad.
• Look at a crime map (Zillow or Trulia, I forget which) and see if there are significant amounts of violent crime or property crime.
• When you take a look at the insides... make sure you're dealing with hardwood or laminate. If the units have carpet work in the cost of replacing it with laminate into your budget every time a tenant turns over.

Class C areas and "central air" do NOT mix! Eventually it will get stolen, vandalized, or stripped for copper and the proceeds will fund someone's habbit. 

About Expenses:

• Vacancies: Assume TWO units will be vacant for two months per year. I don't care what the local stats say on citydata. Just do that.
• Upkeep: Assume you'll be paying 35% of your property income AFTER debt service and taxation. Why? 10% for property management, 20% for repairs, and 5% odd's 'n ends.
• Utilities: Are the utilities in the property owner's name or the tenants? That's a BIG deal if it's in your name. If that's the case, look into sub-metering.

@Cynthia Scaife

 welcome to BP!

You might try Rentalutions, they handle rental processing and (if memory serves) repair orders as well. They're not free, but they're reasonably priced.

Renters with bank accounts simply pair their bank account to the service and set an authorization date between the 1st and the 5th of the month.

Renters without bank accounts can pay with Bitcoin, and you receive their payment in dollars unless you elect otherwise.

I'm with @Matthew Paul all basements flood eventually. So, I'm inclined to one of two options that can take the punishment when it arrives. 

Low End: Painted floors with high gloss sealant. If you really want to spruce it up add flecks of paint in a complimentary color. 

High End: Acid stained concrete in a color that isn't likely to clash.

The tile you have right now will eventually come lose and or chip off. The above two options are unlikely to be phased by flooding. 

I don't currently have any bird dogs. But, I was thinking about using the "flex option" contract. Google it and see what you think

@J Scott

 Well, since you bring that up, in addition to the usual inspection period clauses I also have the following:

Since I've never been to law school I didn't want to come off as giving legal advice as I'm unqualified to do so.

Personally, a low earnest money deposit. If a deal falls through:

• I send them a copy of the original contract and stamp it "cancelled."
• I mail the seller a check or money order in the amount of the earnest money deposit.
• A copy of the cancelled contract says in my file drawer.

I don't open escrow until I have an end-buyer committed to buying the property. @Jerrell Slay If you open escrow fist you might be out a bit more money.

Oh God, yes!

First of all @Rod Desinord a good mentor will be able to answer your specific questions in a timely manner. Second of all they'll be able to proactively teach you new stuff so you you're less likely to get stuck in the first place.

Also, not all mentors are of the $4,000 buy-in and $100 an hour types. [Removed]

Also, become active in BP and you'll get to know lots of people with specialized knowledge that will be helpful. Some of them you'll lean on a little others a lot. But you'll be providing them value in return so it's mutually beneficial.