All Forum Posts by: Jared K.

@Ellis San Jose Thanks so much for the compliment!! Means a lot to me coming from a note investor!! It helps me to know that my thinking is on the right track and all the research I have done in the past is paying off. Really like your explanation as well!!! 

I have reviewed this same scenario on several properties and I hate to be honest but here were my results.

1. There has to be a HUGE amount of equity in the beginning to make the deal even possible on paper and below is why.

2. Rates/points etc cut deeper into the profit margin with HML's

3. Note buyers want a discount on the note so minus some more equity from your pocket

4. Buying/selling costs (closings, advertising, time to find a qualified buyer and still make the payments, ins, taxes, maintenance, etc) would play a factor so minus that from the equity spread 

5. IF for some reason you didn't keep a qualified buyer in the property long enough to sell the note what would be your other exit strategy? If your buyers defaulted right before your short loan terms expired, then what? Only you can answer this b/c of your finances

I have asked myself every one of these questions HOPING I could justify doing the same type of deal but so far the #'s have never worked due to the amount of equity needed and the terms/costs involved. 

I hope someone else can shed more light on this actual scenario who has experienced it!!!! I would love to know more myself how you could make this work. Best of luck on your quest and sorry it wasn't a positive note!

There are many Bigger Pockets discussions on evaluating a property so you should be able to find some great examples for evaluation. Just be sure to leave yourself room for error in your #'s for maintenance, vacancy, attorney fees for evictions, taxes, ins, etc. I would be concerned being in the top of the rental bracket for the area. Glad to see your taking the initiative to step into real estate on your own but you might also get some good advice from your parents on this one as well. Good luck.

Sounds like a pass in my opinion, especially reading the above stated comments on duplexes in Indy. I own a duplex but not in that market. I like seeing the previous comments and evaluations on #'s!! I would have to lean toward Bill's evaluation. To me personally it doesn't seem like enough cash flow for the investment when you can buy sfr's there, get better/same return, and it would be easier to sell sfr's if you needed an exit. If you have if's and concerns holding you from jumping on it then its probably not a worthwhile deal so follow your gut. There is a lot outh there to be had at good prices. I wish you well in your quest.

Glad to see this topic discussed here on BP and members trying to help each other out. Never know when this might come in handy in the future!!!

My opinion may be straight forward and not exactly what you want to hear but its with good intentions either way. 

Rule #1 Always have multiple exit strategies--supported by current true #'s and bank on the what if's!!! Have several more what if's than your intended outcome in mind, just in case.

Rule#2 Never bank on only appreciation! Look what happened to the entire economy. I can understand in a HIGHLY appreciating market that could be ONE of your exits but the #'s still need to make sense for your other exits... just in case! Otherwise your gambling, not investing. Ask yourself this...What if the stock market/economy crashed tomorrow? Did you buy safe enough to rent it out competitively lower if you had to and still make money? Would you want to hold that investment for several years from afar if you had to given the costs involved?

Just my blunt honest thoughts but I have good intentions. I wish you the best of luck :) with your endeavors!! 

Wow Chris, good question. I have had rentals for 10+yrs myself and this situation is fairly common to me but with people dating mostly. I do see where this situation could get sticky and also could be very simple depending on the reaction/decisions of the parties involved (husband & wife). I agree with your decision and statement telling them your not a marriage counselor to sort it out..lol. I probably would have done the same and they just might do so. If they are divorcing I am sure at some point one of them will decide to live elsewhere anyway. Here is a thought for the future. I have it written in my lease I may evict, at my discretion, if law enforcement is called to the property for any reason thus making the lease void and tenant agrees to move immediately and waives any rights to the apartment/residence. In this case I could avoid renting to either of them all together which has came in handy!! It sounds like the husband is trying to make it tough on his wife for sure but she definitely has rights being on the lease. If you really want to keep the guy and the wife also wants to stay then that is a whole new ballgame. I would say consult with your attorney b/c things like this probably vary state by state and situation by situation. I would think it could possibly end up on the divorce decree who gets to stay in the apartment if they really wanted to butt heads about it long enough!! Oh wow, who knows how this could turn out!! I would be interested to hear the end result!! I have some sneaky tactics for handling situations like this but I wouldn't promise they are the most suggested approaches either...lol. 

Todd, yes it seems we do have similar strategies. I will be glad when I can start keeping some of these rather than pass on the deals to someone else. Glad someone else has the same opinion.

Sorry to be negative here but I would have to agree with Stan Jackson. The numbers dont seem that great on either one to me. There are a lot of great deals to be had right now out there with better returns.

Todd, I highly agree. Some of the areas I deal with are just outside the bourded and burnt out areas where the proeprties are still well cared for mostly. I do see that as a major convcern so my agents dont bring me anything on streets like that b/c they know I wont take them. They actually make sure they are not just the next street over and are a bit outside of that for that reason so, good point there. A person has to be careful. I even have my handyman scope the area and home as well and meet the agent so the agent isnt just looking for a quick sale and I get took b/c it happens.