All Forum Posts by: Todd Pultz

@Keith Andrews @Jeffery Smith, I do not invest out there, but I am curious on one topic. You stated you were going to move into one side right? I know you said leases were month to month, but even if they weren’t, you could evict at any point if you were going to live in the home in any area I’m familiar with. Is your area different?

Jeff, on the water, why spend the money separating the water? Find the average bill over the last few years, and charge a “water chargeback” in the lease. We get ours quarterly, so if tenants are short based on the monthly average we charge, we settle them up.

@Blaine Alger don’t be discouraged by any comments on here, but be very cautious. Being able to close deals others can’t, can be significantly rewarding. Here’s my approach to real estate......

1. We have “instant gratification real estate” which is our flips, wholesales etc. that make us money now

2. We have “sugar daddy real estate” which is the long term holds and rentals that will build wealth over a period of years and allow you to take care of your wife and kids

3. Lastly, we have “cookie jar real estate” which is your scenario. In this category we plant seeds along the way that are outside the box that we hope materialize. If you never reach your hand into the cookie jar you never know how delicious the cookies might be, but if you consistently check for cookies, eventually you end up with one and they are freaking delicious! Just, remember, mamma usually steals the cookies!

I like your attitude! I’m about to get beat up for this next comment, but I got the experience to say it anyway. You have to be willing to lose money in real estate to have great success. The trick is you never lose money that really affects you. People will say that’s the wrong thought, but it’s not and happens each day. Example, when we buy land and pay for environmental test, whats happens if the land is not able to be developed? You don’t get your phase 1 money back right? Taking chances happens every day, just do you brother and get advice from experts along the way like your doing on this thread

@David Pai your answer does change my view a bit to be honest. My comment does not take away from the shady behavior of the agent but here is the pitfall.........I agree with @Joe Splitrock and also hate the term cash for keys! I’ve never paid someone cash to get them to move. I get it, maybe it works for some.

However, your mistake is believing that a term like that has the same meaning to everyone when it never does. The realtor or landlord could very easily say that cash for keys meant giving deposits back. There’s absolutely nothing wrong with them asking you to pay the deposits if you were the one stipulating they had to vacate the property. SURE, the landlord is responsible for returning deposits, but he would not have had to do that if you didn’t ask him to vacate the property.

The realtor has some issues with the bounced check, but not because it was for a deposit. She was not property manager and had no responsibility to have a trust account for deposits. The landlord does. I also don’t believe the realtor lied by saying they needed cash for keys! They did, you just didn’t clarify what the cash for keys was covering and it doesn’t matter! It doesn’t matter because you agreed to do it. It doesn’t matter if they spent it all or gave a portion to the tennant to move as long as they got tenant to move. Reason, you agreed to give a set amount to assist in getting the tenant out and you have no stipulation in the addendum I read about money being returned if they didn’t use it all.

Now, the better option would have been for you to take the property with tenants in it. Collect some rent until you got them out, but you would have been credited at closing for the deposit amount in the leases and could have used that to get them out. You actually would have made $600 by doing it that way based on the numbers you provided.

I know this next statement is not what you want to hear, but we all need kicked in the butt from time to time....you were out negotiated and now your upset about that! That’s understandable.

The realtor obviously has her own issues, but you need to focus on how to avoid this next time. Best of luck on this deal

@Dung Nguyen others have already told you this is not a great deal. I would also echo their thoughts. I could go through the numbers and reasons, but the real simple one is that you are paying over list price and it does not appear to be a turnkey property. I’m only assuming the list price is the retail price since most markets are hot right now. Your basically buying a retail property that needs value add, that’s not adding any value.

I would encourage you to stop competing and control your purchases. Drive for dollars. Go get lost in a neighborhood you’ve not been to and find all the properties with deferred maintenance and hand written for rent signs. Track down the owners and ask them if they want to sale. If you are intentional and consistent with that type of model, you will find some great deals. Good luck

@David Pai that’s correct the brokerage controls it.

Just out of curiosity and playing devils advocate......how much were the security deposits? The only reason I ask is if it’s the 2500 just like your cash for keys addendum, I can see where this will become slippery road of word mincing if they tell tenant they are getting deposit back and tell you they need cash for keys to get them out. Both are the same thing. Cash for keys could simply be giving deposits back early. I would not think twice about the tenants never hearing the phrase cash for keys though, as I would never talk like that with my tenants.

Having multiple addendums like this create these issues and things are always easier when the purchase agreement is straight forward and few contingencies. But sometimes I get it, you need a quirky deal.

@Gary Wallace appliances are short everywhere brother! Let me change your thought process. If you want to discount rent, which is perfectly fine, but why not ask them what they think is fair and let them answer.

Honestly, in these situations I Pro rate rent based on number of days they were without it.

@David Pai I’m not a broker, only a realtor, but here is my two cents. I’m assuming she has an exclusive listing agreement with this client. That listing agreement is actually with the brokerage not the agent and the brokerage, not the agent controls the deal if they choose. You allowed her to represent you and that agreement is with the brokerage and then allowing her to represent you. Think about it like this. If an agent puts something under contract and then transfers to another brokerage before that closes, that deal goes to the broker who decides how it is handled. Agreements are always with the brokerage, not the agent directly.

That addendum has me scratching my head. Not sure why it listed the realtor to pay seller 2500 at close? Seemed odd.

If the realtor is also the property manager the bounced check complicates things a bit for her. As a property manager or property owner, deposits have to be maintained in a real estate trust account and can not be commingled with operating funds. Usually the checks say trust account on them so see if the tenant has the bounced check to review that.

Hopefully that helps a small amount

@Jimmy Suszynski I think I understood your question, but I apologize if I'm off. There are currently 14 states (last I checked) that allow a "series LLC". This is basically what your referring to. The simple explanation is having a "master llc" and then placing properties in separate "branch llc's" example, you may have an apartment complex called "123 LLC" then 3 SFH's in "abc LLC" and then a couple duplexes in "dup LLC". In this example you have 3 separate llc's that are all insulated from one another. However they all financially funnel into the master LLC. The master LLC would be the one filing taxes etc. so you could use the master LLC for your credit lines etc. check if your state allows series llc's. If your out of state investor your original home base LLC and the LLC in the state your investing both have to allow

There are plenty of portfolio lenders that will refinance properties into a portfolio loan. They all have different requirements but the last one i refinanced like this required a minimum appraisal amount of 75k per property. They combined the 3 appraisals amounts and gave me a 75% cash out refi and it’s one loan. At certain payback milestones, properties can be released individually. Some require a per door value if it is an apartment building. And will all have a minimum loan amount which varies, but $150k-175k seems to be the minimum a lot of my lenders want on portfolio

We put all loans into the LLC name but banks will still require "x" number of personal guarantors. Commercial loans are higher interest usually, but our last commercial loan on a 21 unit this year was at 4.9%. Ive read stories on here for lower and stories of higher.

Hope this helps

@David Dachtera you weren't wrong.......if your selling. Selling at the lower cap would pay back any debt a lot faster lol! GRM when lower indicates faster payback, but of course just one small metric to be used! Everyone has their formulas and due diligence that makes sense to them. That's what makes real estate so great, the fact you can tackle in many different directions. Have a great night!

@John Erlanger your a funny guy. Remember, we’re not your enemies. Send me a DM and I’ll give you some resources to look up my experience and investment strategies. Maybe, I’ll let you join a few of the conversations we have on networking and building healthy relationships in investing. Nobody is whining big guy, just calling you out for your horrible tact.

However, your questions I will engage briefly.

GRM's do not get used by myself or others I know to purchase real estate. However, it is one small component that we use to filter or point us in a direction for due diligence. The lower GRM the better you and I would agree correct? That means we are paying our property down faster as our acquisition price is lower correct? So if GRM is low and looks good, but then we see a low cap rate, that would indicate the NOI may not be great and might indicate the property is being operated inefficiently or there may be some significant issues with the property that need to be explored. It's used as a guide initially, but a very small piece to equation.

Now, can I calculate house A and house B NOI? Sure, but not in your example because I have no idea what your expenses are. On your 1000 gross rent house let's assume you have 200 expenses and NOI is 800 monthly, so 9600 annually making your cap rate 9.6

Your 950 rent house has 450expenses monthly because you pay all utilities, so 6k NOI annual making your cap rate 6. However, you gave none of that information and only talked about gross rent of 1000 and 950 making it simple 10 cap and 9.5 cap, but that's not NOI and you can't put a value to those two houses unless your selling as a SF based on sales comps. If your selling as an income producing property whether by itself or in a portfolio, cap rate based on a NOI is important. Most smaller portfolios have to stand alone regardless of their portfolio when appraised unless your doing a portfolio loan that does not require that.

However, along with hundreds of doors, hundreds of wholesale deals, dozens and dozens of flips, new home developments.......I am also a realtor and will tell you this. I can show you countless examples of taking a SFH and selling well above sales comps by justifying the price based on the NOI of the actual property through an actual income approach. I can also show you properties I've had to sell for under sales comps because the NOI did not support the sales price due to it being sold as a income property.