All Forum Posts by: Tyler Vining

@Tim Coppola  I am just starting out myself. I would recommend listening to the BP Podcast! In every episode successful investors explain how they got started, mistakes they made, and what they're currently doing to be successful. After the first episode you'll be hooked! Then just scour the forums and you'll learn about every aspect of every strategy you mentioned above. 

In the podcast Brandon Turner is a big fan and talks a lot about the strategy of starting out in multi-family and being an owner-occupant. 

Good Luck!

Thanks for the feedback @Curt Davis I thought a private investor might be a stretch. My thought was since the note would be about 70% of ARV that an investor would know their money is safe regardless of poor initial cash flows.

Regarding the price vs the owners payoff; at this point it feels like he has a bit more leverage, or he isn't as motivated, as he would be if he was being foreclosed on. I need to have another conversation with him to see if the bank is threatening foreclosure yet. It would be really attractive at 66% of ARV.

I'm realizing I don't know if I have much position in going after this deal though. Assigning a lease option and collecting an option consideration, but then I don't think the owner could manage being a landlord. However could I propose managing it for him and collecting the free cash flow as my management fee?

Also something to consider. The property has been lived in for a decade, it will need 10-15K for a face-lift (carpet/paint) to be rentable. I don't know where that money would come from.

I just know that the payoff bal is 66% of the ARV so it has to be an opportunity for someone. I would just like to benefit from it as well.

@Abhi Golhar Thanks for the quick advice. While typing up my post I realized I never explored the option of the current owners moving out.

1. My understanding of a sandwich lease agreement is this: me leasing it from the owner for his mortgage payment ($1350) and then turning around and leasing it to a tenant for market value ($1800). Then my cash-flow would be the spread.

In this case it is a good house, in a great location, in a good school district, but it isn’t marketable as-is. I would need to front say 5K for option considerations to the owner, then another 10-15K for new carpet and paint + minor cosmetic fixes. Which is understandable but I’m not in the position to front up to 20K.

This owner would also want to be off the hook for repairs/expenses, so in my agreement to the owner I would somehow need to take responsibility for those. I assume this is typical in sandwich lease options?

2. As for a lease option, again I hadn't considered the idea of the current owners moving out immediately. They would want some sort of down payment to help with moving expenses etc. Would the owner and me as the middle man split the option considerations?

Average DOM in Tulsa, Oklahoma is about 55 days.

I am actually a newbie and hoping this house ends up being my first deal. 

I have a lead on what seems to be a deal. I’d like to solve the current owners’ problem and hopefully create an opportunity for myself.

Property:

• Location: Tulsa, Oklahoma
• Type: Single family
• Built: 1999
• Size: 2,675 SF
• Layout: 4 bed/2.5 bath
• Stories: 2

Backstory:

This is a single family house. The current owners are in a tough financial state. They have missed a couple mortgage payments over the last year or two and are struggling to keep up with payments. He even tried restructuring his mortgage to get a reduced payment--this didn’t work.

I can go into more detail but to make a longer story short, he is motivated. 

I asked if he had ever thought of selling his house to an investor and then renting it back from them. This has really gained his attention.

After some leg work I’ve a) educated him on what it would take to sell and get market value, and b) established realistic price expectations if he were to sell to an investor instead. At this point if he could pay off his mortgage and then some I think he would be happy to get out of ownership.

Numbers:

• Previous Sale: $235,000 in 2007 ($87/SF)
• Estimated ARV: $240,000 ($90/SF)
• Mortgage Balance: ~$160,000 (66% of ARV)
• Potential Purchase Price: $175,000-$180,000 ($65-67/SF or 72-75% of ARV)

Potential Solution:

The current mortgage payment is about $1,350/mo.

I think an investor could purchase the property for $175,000 - $180,000 (72-75% of ARV) and reduce their rent to say $1,100/mo for year one, then maybe $1,200/mo for year two. But as part of the agreement/lease the rent would then return to market value of about $1,800-1,900/mo.

My Role:

I would love to do one of two things. One would be wholesale the property. However I think it might be hard to find a buyer willing to take a reduced revenue stream for years one and maybe two. Or Two would be have a real estate investor act as my bank and fund my purchase of the property. Then I would be the investor willing to take a reduced cash flow. Those numbers might look like: $175,000 note at 6-7% + $5,000 down payment, I/O payments during the reduced rent period (1 or 2 years), then revert to P&I payments for the remainder of the term.

Wholesale: Are their investors who are willing to structure a deal like this?

Buy and Hold: Are their investors looking to invest cash in other investors at terms close to these?

Any advice or recommendations on what I should do would be greatly appreciated!

Tyler

Thanks @Brandon Turner

I follow the podcast and really enjoy it. And I'm excited to go through some of these books and readings! Thanks.

Thanks @Chris Simmons Congratulations on your third rental. About where in town is it located?

Having a W2 would make things a bit easier. What will probably make the most sense for me is finding a good seller-financing scenario. I've begun networking with a few investors and they are opening my eyes to different options that might be available.

Hopefully we'll get a chance to meet at the next luncheons.

Tyler

Thanks for the advice @Dmitriy Fomichenko

@Kevin LIVINGSTON Congratulations on your first investment. My goal is to do my first deal this year. I will be on the lookout for BA properties.

I plan on attending the three Tulsa REIA events in July. Here is their schedule: http://tulsareia.com/events/

Thank you @Deborah Burian

Thanks @Nate Garrett . I prefer the suburbs as well, particularly South Tulsa, Jenks, Bixby, and Broken Arrow. I would also consider the idea of a condo in Tulsa. Nate, do you primarily do property management for investors or do you invest yourself?