All Forum Posts by: Thomas Usher

I know most Real Estate Lawyers can handle a Master lease contract but I am looking for someone who has a few years experience with writing them. My main strategy is based on getting these type of contracts in order to take over properties. I am also new at this so someone who likes to teach the client (me) is a plus. I want to get four of these done a month over the next year. I will be starting in the area of 8 - 50 units for the next 3-6 months then move up. 

I see the majority of the wiser investors would say bring some one more seasoned into the deal or wholesale it to them. I will have to agree "Where there is no counsel, the people fall; But in the multitude of counselors there is safety.". So thank you all for the help. Now I would love to know more about how to set up a wholesale deal for a property like this.

Should I out line the possibilities with the deal, I did all the reasearch for it to be a profitable venture but I realize my experience is lacking. I also realize many investors would not be as interested in this property because it is a long term investment due to the prepayment penalty on the assumed loan.

Thank you all again for the help.

I am looking for constructive advice on how to get this deal under my belt. I know it's big but these type of deals keep comming up and I see alot of opportunity here. I am in Houston, TX and the property has a existing loan on it that I can assume. I am a buy and hold type of investor so the prepayment penalty means very little to me. I will hold on to the apartment complex for at least as long as the penalty exists. I'll need about 2 mil to get my hands on the asset and I can increase it's value by at least 2.5 mil in 3 months. I know this equity will not be immedaitly availble to me but the extra cash flow will help me pay down the debt that much quicker. I know if I can get this deal out the gate my investing career will be on the fast track to success.

I have VERY Little money and just below fair credit. I am interested in working with partners and private investers.

Thank you all. I realize I don't know enough to handle a large deal like this YET. I will go to much smaller deals for now (5 unit to 20 unit) then move up to the 200 unit deals. I am not as interested in single family homes as I am in multi-family so I'll at least stay in the multi-family arena.  My goal is to be ready for this type of deal before the end of next year. I'll probably be able fund it alone by then (with a mortgage of course). 

This forum has been a great help for me, some times you have to step back and evaluate what your ready for when your just starting out. I hope I can get this type of advice from you all when i get my first deals under contract (hopefully before the end of this month).

Wow, Eric you picked up on what I saw when I first looked at this deal. The rents are at least 20% below market and would definitely increase the cash flow on this property once it is repaired. I used the 6% vacancy rate to give my self a cushion when negotiating with the seller. 

I have an appointment to discuss expenses for other similar apartment complexes so I can have a baseline of costs to work with. Does anyone know another source for cost comparison in the area of expenses?

By the way Everyone, thank you for your Help.

All the expenses, Vacancy (6%), contract services, labor costs, management fees, marketing, loss to lease (2%) are figured in already. In the last year the gross rental income was about $1.4 mill. The landlord overspent in a number of areas (with the figures I have gathered already) and is showing a cash flow of over $250k.

Are you in the Houston area?

My situation looks like a new investors dream deal on the surface. A 250 unit apartment, with owner financing that currently cash flows. The rents are well below market and the complex needs about 750k worth of renovations. The owner wants 10% of the 7.2 mill value of the property as a down payment. He will carry a loan at 7% interest for the rest. His current loan is has a prepayment penalty that is fairly large so he wants to carry the loan for at least 5 years. I am meeting with a PM to check the offering memorandum numbers against what their company usually sees in the area of the apartment complex. My initial estimates put me at approximately $100 per unit monthly cash flow after loans and taxes. 

I am getting all my ducks in a row BEFORE I start looking for investors. I do realize once the real numbers come in many things will change so I want to have as much lined up as possible in the next week so I can make a profitable offer. Any suggestions?

Why did you mention a realtor right off the bat?? Did you analyze the deal using only the numbers? How much is the mortgage? How much do you need to set aside for possible repairs? Can you get the owner to reduce his/her price. Are there terms that would allow you to use none of your money? Seller finance, lease to own, etc. 

Get a property check off list from a contractor (or maybe they have one on this site) before you do an inspection. Make sure your contract is subject to....(maybe financing, passing inspection or some other clause that would let you out of it if things don't go right after you sign). Please read the material they have available to you here before you sign on the dotted line.

I am a newbie just like you, but it seems that you would have a few options is this area. What part of the foreclosure process is it in? Can you still work with the person who bought the property or will you have to work with the bank/lender? If you can still work with the individual ( be absolutely sure) then find a way to take it out of foreclosure (pay pass due mortgage payments AFTER you get the owner to turn over the deed or get the property under contract) ( think about that due on sale clause ). Then you can get a hard money loan or private money to repair the property. Remember the rules of engagement whenever your reviewing a property for purchase. Never spend more than 70% of the ARV of the property while purchasing and repairing if you are looking to refinance or resell it quickly. If you are holding it your expenses shouldn't be more than 50% of your gross income from that property. PLEASE figure out your cash flow/profit BEFORE you step into the deal. Use the deal analyzer on this site before you buy. Read the article on analyzing deals as well. These are only suggestions from a NEWBIE just like you....

You have to ask yourself "what are my goals?" How does this property's potential get me closer to where I want to be? If your only wholesaling property this property could get you 5 - 9 thousand. If your selling it in the retail market it could get you 40k or more (if it doesn't need repairs). You can hold on to it, bring it up to a rent-able condition, rent it out and use a portion of the equity as a down payment to buy other properties. Which ever fits your goals/plans.