All Forum Posts by: Wendell De Guzman

Purchase Price: $57,000 direct from motivated seller. I wholesale the vast majority of my deals and market direct to motivated sellers using direct mail, and online advertising, which enables me to find highly discounted properties.

Funding: A private lender loaned me $57,000 in private money at 12% and 2 discount points secured by a 1st mortgage. Win-win for both me and my network of lenders!

Rehab, Holding, and Closing Costs on the purchase: Roughly $9,000 of my own cash invested

Listed: $116,900 - Full price offer after 1 DOM. Currently waiting on inspection report to comeback.

I have more deals like this in my BiggerPockets Marketplace Thread.

This is my best deal since I began investing 3 years ago.

I felt like sharing it with the community to inspire people to take action!

Without BP this wouldn't have been possible. Thanks to all of those in my network that have either supported me or mentored me along the way in one form or another no matter how small. These people include:

@Dave Short

@Will Hull

and many more I'm forgetting at the moment. Thank you all!

Great job Ben!

$40K+ profit is not bad all. You're an inspiration to the BP Community. I am sure @Joshua Dorkin and @Brandon Turner will agree.

BTW, if you need funding or any help on your subsequent deals let me know.

0 Votes

Originally posted by @Justin Young:

@Wendell De Guzman I really appreciate the advice and will be referring back to it in the future.

You're very welcome. BP is such an awesome community isn't it?

BRRRR does work.

That's what we do in our real estate business but instead of just renting the house, we do rent to own.

1 Vote

Originally posted by @Andrew Marzec:

@Wendell De Guzman awesome thank you!

As far as vacancies there is a 5 year contract with the existing tenant in place. Would you still account for vacancies in your spreadsheet?

At the end of the day, it's up to you (your risk tolerance). If it were me, I will still put, maybe a 5% vacancy factor. A 5-year lease does not mean anything unless the tenant pays. What if he does not pay the rent? You have to evict him and that will cost money. You might as well factor that in and if he pays the rent on time for the next 5 years, then your actuals look better than projected. So, be conservative in your projections and if the deal still works, then great. If not, find a better deal.

0 Votes

Lily, creative financing in a shortsale is likely out since banks usually sell a shortsale to a cash buyer or those who can qualify for hard money (specially since you have this mold issue).

One way to finance this with as little money down as possible is as follows:

Step 1: qualify for hard money

Step 2: for the downpayment, you can partner up with another investor who can put up the downpayment OR, you can explore P2P (Peer to Peer) lenders like LendingClub to help fund your downpayment. If you have good credit, P2P might work for you.

1 Vote

Originally posted by @Andrew Marzec:

Hi Everyone,

I am looking to purchasing my first Investment property and wanted to get some input from those with experience.

The specific property I am looking at is a single family 2 bed 2 bath home with an office in a 55 and older active community in Florida. The asking price is $167,000 (Comparable to those in the neighborhood). The property taxes are roughly $2,000/year. Insurance is roughly $1,000/year. Landscaping cost $55/month and the HOA fees are $85/month. The property has a tenant who pays $1,450/month and is under contract for the next 5 years. I am looking to put down 25,000 dollars and take out a loan for the remainder (30 years @ 3.7%).

The property itself is in great condition. New interior paint in 2015, new carpets in bedrooms in 2014 and a new roof in 2005, New AC in 2014, and Updated Kirchen. Home is in central Florida and built on a concrete slab.

Running the numbers myself It seems like a good play, however any feedback would be greatly appreciated before I jump into this one.

Thanks!

Andrew

You have to factor things like:

- vacancy
- property management
- repairs and maintenance
- replacement reserves
in addition to the usual PITIA (Principal, interest, taxes, insurance and assessment). You can use the Cashflow Analyzer spreadsheet I have on Biggerpockets Fileplace. Here's the LINK:

https://www.biggerpockets.com/files/user/Mister4cl...

0 Votes

Originally posted by @Justin Young:

Aloha BP!

Exactly as my title states, if I were to purchase a property all cash, then wait for the seasoning period (if there is any), and purchase the next property, are there any setbacks to this? There are a few things I would need to account for such as refinance costs, making sure the property still cash flows, the amount of the refi LTV and if that's enough for the next property. Are there any other downfalls to this strategy? Is this strategy used commonly or am I just heading in the wrong direction? Thanks in advance. ALOHA!

Several things can go wrong (but which strategy is without risks - even wholesaling has risks). Instead of listing what can go wrong, it will be good to ask the following questions per every stage of the BRRRR process: @Brandon Turner might think of other questions to ask or what the risks are in each step.

B - Buy
1. Are you buying at the right price?
2. Have you estimated the repair cost accurately?
3. (if you're using financing) Have you lined up a good hard money lender? What are the terms? Is the HML legit?
4. Title have been checked?
5. Has the property professionally inspected? (strongly suggest you do this on your first deal)

R - rehab
1. Have you lined up 3 good GCs to give you bids on a Scope of Work you developed?
2. Have you vetted out the GC you decide to choose (are they licensed, bonded and insured)?
3. What about permits? Do you know of village/ city inspection requirements? Timelines?

R - rent
Here you have the typical risks of having a rental property - the most important consideration is tenant screening. Another consideration is property management.

R - refinance
1. Have you lined up the lender who will do the Refi?
2. What's the lender's seasoning requirements if any?
3. How much LTV can you refi?
4. Do you have the right debt to income to do the refi?
5. What are the terms of the loan? Will the property still cashflows?

R - repeat
1. How many loans have you done? Are you approaching the 10 loan-limit? if so...
2. Do you have a portfolio lender?

5 Votes

Originally posted by @Scott Everhart:

I have a new property I'm putting on the market to rent. A prospective candidate has come to my property and likes it. She is a woman going through a divorce and will receive alimony. The alimony will be her source of income for rent (No Job). How do I properly get proof of the alimony she will receive AND how do I protect myself from her either not paying or getting her alimony to pay? While she seems like a nice lady, I don't want to be caught in the middle if her X-Husband decides he doesn't want to pay her. What are the proper steps here to cover myself properly?

Don't do it.

Life is too short to accept high risk tenants like her.

You have no control over the husband. You did not run his rental application so you don't know the soon to be ex-husband's income.

In our rental criteria, if more than 40% of the income come from unstable sources like alimony, child support, commissions, etc - we reject the tenant even if the total (or I would say "claimed total") income meets the income requirement.

0 Votes

Originally posted by @Russell Brazil:

@Sean Ray You need to determine what your goals are with investing. Often the cash flow areas and the appreciation areas are going to be in different locations. If you are someone looking for income replacement...then a 1% cash flow area might be right for you. However if you have a high income that is sustainable then perhaps appreciation plays are more right for you.

I agree with Russell. You get cashflow in C areas and appreciation in A areas. Here's a chart I developed about the impact of area/location on appreciation, cap rates, etc. and how you can identify each area (crime rate, school district, number of board ups):

2 Votes

You do a title search as early as possible - as soon as you sign the Purchase Contract. Having clear conveyable title is one of the requirements of the buyer so don't close if the title is not clean. Also, the sooner you know what those liens are and their amounts, the sooner you can negotiate with the lien holder and determine what your over-all "all-in" acquisition cost will be.

0 Votes

All Forum Posts by: Wendell De Guzman

Wendell De Guzman has started 284 posts and replied 2096 times.

Post: Great Short sale deal, what can i do??

Post: 344% Cash on Cash ROI for Indianapolis Flip

Post: Purchase all cash, refi, repeat. Would that work?

Post: First Deal

Post: Great Short sale deal, what can i do??

Post: First Deal

Post: Purchase all cash, refi, repeat. Would that work?

Post: Potential Tenant Can Only Pay Rent With Alimony. What Do I Do?

Post: Am I Crazy? The 1% Rule seems impossible in Dallas. Am I wrong??

Post: To worry or to not worry