All Forum Posts by: Eric Myers

I just closed on a two family that I purchased for 50% of market value or 50 cents on a dollar if you prefer.

The property is a prime rehab candidate, was owned by an out of the area investor who didn't manage it at all, from what I can gather put anyone and everyone in it and when it got to be too bad it just put it up for sale.

So now I am in there doing the rehab to get the units up and rentable. My thoughts are this, the house is worth 50K according to the town assesor, the real estate agent claims she can get me 70-80K after repairs. The spread between purchase price and sales price makes flipping it rather appealing. especially since it would be a large chunk up front vs trying to collect that much rent over time to acheive that same profit margin, it would take me close to twenty years of renting to achieve that much cash profit from the building that flipping it would do.

The house is in a strong neighborhood, and should draw nice tenants if managed correctly.

What I'm looking for a different perspectives on this option. I know I can always rent it out to cover all expenses and make a profit. that is first and foremost. Second I can sell it and make a profit from it as well so I am good either way.

But the lure of a big paycheck from the flip is very appealing. I guess the thing to consider is what is the capital gains tax on a flip like. Or possibely doing a 1031, and investing into another property again possibley another flip or maybe two more multi unit bldgs... then drawing that equity out as cash in terms of a loan.

I am an investor in upstate NY and I am wondering if anyone has a source for calculating the closing costs in NY. I guess NY is a different state in how we calculate the real tax prorations. Our property taxes come out quarterly and when we close on a property the buyer refunds to the seller the taxes paid for the balance of the year.

The lawyers normally calculate it for us, but I like to know in advance what these costs would be, as it would make preparing for a closing alot easier.

Thank you

Thank you for your responses. What I think is he is old school and is using the he who names a price first looses mentality. And it is really wrecking havoc for me obviously in trying to put this deal together as I dont have a base from the seller to start from, and I told him that. But I'm also getting an impression from him that he is trying to educate me as well as to how he created this portfolio ( ofcourse I could be way wrong and he could just be shrewd). When I talk to him he will drop little comments like, he bought one by telling the person their price was irrelevent, but based on the numbers this is what the property was actually worth.

He also told me that there were no "deals" here, no 10K dollar properties, but I know he only paid 17 for one property and avg of 25 for others.

What my thought is if I subtract vacancy allowance, Maint, materials, taxes and insurances and misc. I'm taking that net amount and essentially splitting it like 60/40 with him to amotrize the bldgs. using a 10 yrs amortization.

I have come across a deal with an investor that is looking to retire. He has a portfolio of about 15 bldgs from sfr's to 6 unit bldgs all in the same neighborhood, for a total of 35 rental units.They are not in the best but not the worst part of town but claims to have a low vacancy rate there. I do own other proprties in the town so i am familiar with the area.

The seller is very flexible with this deal, I can buy it in whole in part or just one if I choose. The only thing he wont do is name a price for the package or a property. Nor will he discuss terms, but will consider holding paper on these, all but one is paid off. I have to present something to him. I went to the county record building and found out the "fair" market values, and what he paid for each propert, the lowest priced one was 17K high was 100K mean is 30K.

Ideally I would like to buy the entire package, but when I review the numbers, doing a cash flow analysis sheet on them, it may be more profitable to just buy the multi-units. But I could take them all and sell of the SFR's down the road and cash in that way.

What I know is the rent rolls, the taxes, the insurances, the maint man cost (but not material costs), the lawn care costs. All of the utilities are seperated out, right down to the water and sewer. The only costs here are your PITI payments, and the maintenance. For the price of the bldgs and int rate I am guestimating them.

I have it all mapped out and can elaborate more as needed just dont want to write an essay on it just yet.