All Forum Posts by: Tom Gillotti

Don't have enough reserves to do the work all at once.

Maybe I should already know this, but what is economic occupancy rate? Are you just asking what vacancy rate I ran my numbers at?

I would have preferred to have had them all vacant and done all of the work up front but that would have required a hard money loan, which I was fine doing, but have since transitioned away from, given that current leases are set to expire over the course of a year.

The current owner has stated that he will switch the leases to month to month upon sale but I'm assuming he means the one that is set to expire in July, not the others. 

Ultimately, this is my fault for not being more thorough with my numbers. Now, I just need to make sure I'm not walking into a bad deal.

I realize I should have edited that better as sentences don't flow very well. Please ask if you have questions!

I have an accepted offer on a 4 unit property for $300,000 (310 Hallcock St, Pensacola if you want to take a look). The property needs some work ($80-$95k estimate... contractor going out next week). All units are occupied (I know... not a good sign, right...). 

So, I had previously been told by my realtor that total rents were $4000/mo ($1200 each for the two larger units, $800 each for the two smaller units). This was the only information I had to go off of so it's what I used (hindsight...). I based my offer on these numbers with the assumption that I would have room to increase the rents once rehab was complete (planned to be done to each unit over the next year as leases expire). 

Well, today, after asking several times for rent history, I was shown the current rents for all units... and it's actually $3575 total. 

I tried to explain to my realtor why that is such a big deal and completely changes the value of the property to me as an investor. 

Her plan is to wait for the inspection to be done and bring up the issue then and see what we can work out. My thought was to set the anchor for further negotiations with the reasoning being the information about the rents (which likely came from the seller's agent, although that's unverified). I don't want to pay $950 for inspections on a property if the deal has no more room for negotiation on behalf of the seller... they did accept the first offer of $300k when it was listed for $350k but it had been on the market a long time.

I do believe that the inspection will already give us reason to go back to the negotiating table as I've already seen the inspection the seller has had completed. What I don't want is to try to negotiate two separate issues at the same time. 

Would you push back and have the agent being up the issue with rents now or wait until inspection is complete and do it all at once?

I appreciate any insight that can be shared here!

Hello,

I hope everyone is doing well! After a recent search in which I was unable to find anything newer than 2018 regarding investors working with Lending Home, I was wondering, has anyone worked with them recently? Specifically, investors with smaller portfolios. As someone with only two properties so far and as someone who has never worked with a hard money lender I'm trying to do my due diligence to make sure I'm working with a good lender.

If you run your numbers and factor those periods in as "vacancy" and it still works then you're good. I use an app called investment property calculator. It's free with a paid option and works well!

This thread got spicy 💥 😁

Good discussion all around!

I personally dislike the VA loan for the massive VA funding fee. My preference is to just put the 20% down on a traditional loan, save the funding fee and avoid PMI. I know not everyone can do that so it's personal preference whether to wait and save or jump right in.

It's a hot market there right now. I've had several unsuccessful offers on properties there lately. It's all about what you want, though. Take some time to familiarize yourself with the area and use tools like Zillow and Rentometer to get a better feel for housing costs and rent trends.

Tom

What other lenders would you guys recommend?