All Forum Posts by: Bill F.

@Aaron Moore You can always stop an eviction process if you need to, but you can't go back in time and start it.

Odds on you will end up evicting them based on the situation you've described. Start it now, It will save you money if they do end up going through the entire process or it could motivate them to leave (for real this time).

@Gregory Schwartz it sounds like you have a plan going forward, which is good. However I think you need to cross a lot of significant hurdles (HML, MH repair, financing, renting) All for a thin margin. When I ran your numbers and included lot rent ($200), you cash flowed $86.00/month for 6.45% CoC.

I wouldn't personally count on the military demographic to rent a trailer in Hampstead. There simply are to many other products at more competitive prices between base and your location that don't involve a 45 min commute. 

Good Luck!

@Aaron Phillips Neither party knows you are wholesaling this deal? Being even more clear, the seller does not know you have no intention of buying the property and the buyer doesn't know you don't own the property? 

You've dug yourself this hole. Its time to climb on out, hat in hand.

@Aaron Phillips That's about the long and short of it. 

Level with the buyer and seller about the situation. I don't know if the buyer is an active investor, but its the most upfront thing to do and may give you the ability to establish a relationship with them.

@Aaron Phillips I am not the right guy to give you wholesaling advice.  Its not my space so I won't pretend to know the ins and outs of it.

What I can say is that you need to think about the service you provide and to whom you provide it. Wholesalers should add value to the buyer through locating undervalued properties in areas with favorable rental characteristics. They save them time and money by answering big questions about rehab costs, negotiating with owners, figuring out ballpark what it should rent for ect ect. 

Looking at it through the lens of only getting deals under contract so you can get your part of the action is what causes this fear of being cut out . A wholesaler who adds value by saving the buyer time doesn't have that problem because that buyer would never dream of doing anything which would jeopardize the relationship; that relationship makes money.

 I get that wholesaling is a means to an end for you, but that's no excuse not to treat it like a job. 

Actionable advice: Ask the buyer to cut you a check for a finders fee, connect the buyer and seller, and tear up your contract. Then get out of the deal because the two months of reading you've done hasn't prepared you enough to see thing all the way though.

@Aaron Phillips Getting your RE Licenses won't solve the issue you had here. You entered into a contract with only one way to fulfill your side of the deal; finding another buyer.

If you don't have a plan b and c than you leave yourself open to not honoring your word, which in this case is buy the home. Next time you do this you should have more than one plan, ie HML and have done your homework so a simple thing like a buyer wanting to walk through the home won't throw you into a tailspin.

@Andrey Y. What would you do with the money? Do you have a deal lined up or are you looking to optimize?

I think the low ROE numbers show you did somethings right; you bought in an area with good appreciation and you've paid down the debt. Why stop the train now? 

Lots of people talk about The 2% Rule for buying, but the 2% Rule also is an ROE calculations. If you go by these rules of thumb you are double what a 'good' property is.

If I was in your shoes ( and man do I wish I was) I would consider getting a LOC against all three. That gives you an option to deploy your equity quickly if you find a great deal, but doesn't leave you with a pile of cash and no where to put it.

 As the old saying goes "the time to look for financing is when you don't need it"

@Nick Allen for your second question, it depends on how long you plan on living in the area. If its 5+ years than I'd buy. You will spread the transaction costs out and gives you a chance to get some principal payments in. 

The first question is a good one, but I don't think anyone here can give you a 100% answer that will work for you. First you need to define your why and goals for RE Investing. Reading between the lines of your conversation with the other investors, I think they have a different end state than you. They may have more capital than you and need a place to park it in order to hedge against inflation risk. RE in a growing city like San Diego is a way to do that. That could explain their belief that Gross rent should cover PITI. Another explanation is also stupidity. You met them so would know better than us.

It seems like you have the more traditional four wealth builders in mind for your RE investments. If those suit your goals better, maybe it's not time for you to invest in SoCal and you'd get better returns elsewhere. Though just because you scoured the market once and didn't find any deals, doesn't mean there won't be one tomorrow or next week or next month. Keep looking and you may be surprised what you find. 

@Joshua H. I just put in Allure IsoCore in my rental. They didn't have it in stock, but i ordered it online and they shipped it to the store for me to pick up. The IsoCore has a 6mm thick surface and built in padding for sound reduction/insulation. 

For color variation I looked at the lot number on the boxes and pulled from six different lots when I installed. I noticed the color differences when I installed it, but after finishing the entire floor and throwing a coat of mop and glo on it looks fine.

All in all, I'm a fan of the IsoCore and I'd use it again. I like the wood tiles, but they don't have the forgiveness for uneven subfloor that LVP does. Making a messed up sub floor level enough for tile can raise the cost considerably. If I had a unit that could support it, I'd go the tile route though.

@Gregory Schwartz I'll add a few things to @Nathan Gesner's great response.

Who is your ideal tenant? Its going to be someone who works a hourly wage job in or around Wilmington and can't afford to live in New Hanover County. Is that the class of renter you have the abilities and skill set to cater to? Nothing against renting to tenants on the lower end of the spectrum, everyone deserves a clean safe lace to live, but most investors have multiple units to spread the increased risk over more than one stream of cash flow.

Re-Financing non owner occupied manufactured homes is a banking niche that few lenders venture into, so cut down your options dramatically. Also a manufactured home this old has nearly no possibility of appreciating past the value of your renovations, so your main method return on this deal is cash flow, which I thin once you finance it if you can.

Do you have a relationship with a HML who will make the 12 month loan to you?

If you can't refi out of it, what are similar homes selling for and how long are they sitting on the market?

Rental Price. I know I do most of my business about an hour north in Jacksonville, but I rent 2/2.5 1000sqft Condos for $850-900 a month. Not saying you are wrong, but do you know for a fact you can rent the unit for $950?