All Forum Posts by: Zachary LaJoye

I’m not knowledgeable enough about this situation or foreclosures in general to give you an answer one way or another. If you’re dead set on it all you can do is ask. I would caution getting too attached to any one property just because it’s the first one you find. Plenty of deals out there, especially with your VA Loan. Being new, one thing you’ll learn quickly is you can only get deals if you step up and make offers. I’m not saying to go in blindly overspending but run your numbers and if a deal makes sense make an offer that you think is fair. In this case, find out if this property will meet the standards of your VA Loan and make a lowball offer if you really think it’s a good deal and your numbers and research support that. Just don’t confuse facts and numbers with emotions and what you want to be fact. I brought up multi family deals for your loan because I look at this house as a deal with more potential to do harm than good. If you got into an owner-occupied multi family you would have an investment property purchased for nothing or practically nothing and would be living for free and ideally cash flowing. A great start! Going the route of buying this house you are committed to paying the mortgage every month while living there. If you have trouble flipping it quickly, which, you very well may depending on your area it could become a money pit and you would essentially be shooting yourself in the foot at the start line.

Well if you’re using a VA Loan the property will have to be “move-in ready” so if any major repairs were needed this would be a problem. If what you believe is true about the house being in good condition (which you should definitely follow up on by getting a home inspection) than my question would be how do you plan on adding value?? I would definitely not buy a property that has sat vacant for so long especially in a cold market unless I knew I could add some great value to it. This basically means a complete rehab. I guess the big question here is what makes you think you can sell something after doing minimal work on it when the bank couldn’t? If you can answer this, perhaps it’s worth taking a look at. Have you thought about using your VA Loan to get into a multi family property such as a duplex or even a fourplex?

Mohamed Nagoor I agree with Jeremy Taggart . Refinished hardwood floors are more desirable and higher class. Now if it was a rental and I was worried about durability, I would go with vinyl flooring that I would install myself. It’s fairly simple even if you’ve never done it.

More details would be helpful if you want a detailed, more accurate answer. What shape is the house in and how much do you estimate it will cost to repair? Any idea what the comps are in the area to establish an ARV (after repair value)? Also, if you are low on liquid capital how do you plan on purchasing? While flips offer a chance to make money fairly quickly they also require a fair amount of money up front in repair costs. Hope this helps.

I agree with Max Tanenbaum on this one. If the numbers are too tight to allow for rents to decrease without turning cash flow negative, I don’t touch it. Also a big reason why I like solid B class properties with affordable rents. There will always be a demand. How leveraged you choose to be depends on a lot of things and how much risk you are willing to take though. However, if the 15-year mortgages are turning your deals cash flow negative I would think this would be putting you at higher risk than what a 30 year with positive cash flow would. Just depends on your savings cushion and your individual goals.

First thing, if you haven’t already, figure out your monthly finances. I’m talking every single cent that flows into and out of your wallet/bank account. Once you’ve done this and had an honest conversation with yourself you can figure out how much you can save in a set amount of time. But making the plan is only half the battle. The most important step in your endeavor will be adapting to this plan and all the changes that come along with it, depending how tight you want to get with your finances. To follow this plan will require some self-discipline practiced daily, especially if this mindset doesn’t come naturally. I would recommend reading “The Richest Man in Babylon” for some motivation and prepare yourself for a paradigm shift! If your savings rate isn’t as high as you’d like get out there and grind any way you can find to make some extra cash. All the while as you’re watching your savings grow you can be listening to podcasts, readings books, talking to people, and searching for deals. By the time you’ve got some money saved up you’ll be locked, cocked and ready to rock! Good luck!

I agree that it sounds like syndicating a deal is what you’re getting at. I have no experience personally doing this yet, but hope to take this same avenue in the next year or two when I find the right deal. So I have done a fair amount of research on the forums here and elsewhere as well. Generally speaking, it’s common practice to provide a “preferred return” to your investors. This can be whatever rate you decide to set but should be attractive as to convince your investors that they want to invest with you. For instance, I just read about a deal in which the preferred rate was 9%. Paying this preferred rate to the investors takes #1 priority when distributing the cash flow from the deal. Several other fees can be charged by you and your partner if you plan on managing the property or charging a “finders fee”. These would be paid only after the preferred rate is distributed and the decision to include any of these would be made at your discretion and agreed upon by all investors. The remaining cash flow or any profits from a planned sale would be split amongst the investors and you and your partner in a pre-determined split. For instance, the same deal I mentioned earlier provided a 70/30 split with 70% going to the cash investors (limited investors) and the remaining 30% going to you and your partner. If you and your partner are also putting your own money into the deal, then you would earn a share of the 70% split also in proportion to your investment. Obviously, all of this is negotiable and would be in the agreement you sign with your investors. As someone mentioned above, I would definitely get in touch with an attorney to draft all of the documents so as to provide adequate protection to both you and your investors. It seems pretty kosher to structure your deal so that all costs related to these fees are attached to the closing costs so that all investors would equally share in the cost. I hope this helps! Good luck with your endeavors!