All Forum Posts by: Paul B.

Hi @Stuart Samples ; welcome! Good to see another local here.

Hi @Jeremiah Meacham and welcome to the site. Best of luck with your investing and I would check out the Guide these guys have put together

http://www.biggerpockets.com/real-estate-investing

In my experience the best way to overcome all the initial fear is to arm yourself with knowledge. The second fear is actually doing a deal, in which you actually put REAL money on the line. But to me, if I now know a deal is going to work based on my knowledge (and all the knowledge and advice from the BP community), I feel a whole lot more confident to take that next step. Ultimately experience will be the best teacher, and I think this holds especially in real estate. All my opinion, but hope it helps! Best

Hi @Veronica Roye ,

If it was me, I would talk to the seller in-person and find out why they are selling and get to know them. You may be able to work out something advantageous to both parties. If I was the seller, I probably would want you to "qualify" in my eyes, even without a bank mortgage in the mix. Maybe you can make a certain monthly payment amount (with a higher sales price and not much down-payment) and the seller could be ok with that. From my understanding of seller-financing there may can be more latitude in structuring a deal and coming to terms with the seller. Best of luck,

@Wendy Dykema ;

Welcome to BP. I'm also in the Hunstville area. Tax class sounds like fun.. What kind of real estate investing are you interested in?

Hi BP,

Looking for some advice here. I have a buyer for two lots, but they are short on cash. We were considering seller-financing or lease-optioning. There are pros and cons to each of these, including all the tax implications. This property was purchased several years ago as part of a 1031 exchange. So I am interested in your thoughts on which of these two paths to take, or some other path entirely I have not thought of! Thanks,

Hi @Jimmy Park ; I own two four-plexes. That's a low cap. Careful on cap rates. Four-plexes are still residential, so cap does not mean as much (if anything at all). On paper your cash flow is ~$350/month. This is assuming the expenses are accurate. Will you be managing it yourself? Add 10% on gross rents if not. How old is the building and systems? If it is older, the operating expenses may be higher than advertised. $350 seems light to me including trash, pest control, etc. Ask the owner if he/she will share the last three months operating statements to verify the $350/mth. And don't forget on-going expenses such as legal entity costs, tax prep, the inevitable evictions, and so on. Calculate vacancy as well. I used 5%, but it will be different for your area. How much turnover is in this building? In my area, fourplex tenants tend to turnover a lot. Missing a couple tenants for a month or two hurts with rehab costs and lost income. I am learning quickly especially a fourplex makes or breaks on the strength of the PM. I would talk to some PMs in that area and get the lowdown on those units. Talk to some realtors and see if you can get the buy/sell history and how many foreclosures were on that building over time. Proceed with caution. Cheers!

Hi @Chris Jordon ; Welcome! Great to have you here.

Hi @Jonathan C. ; what I meant by x4 is that with an older 4plex, all the systems tend to be aging along with it (HVAC, plumbing, etc), among other things like siding and windows. I have a 4plex about 30 years old and replacing these items adds up, especially when they have about the same cycle life. If you have the cash reserves to handle it, may be not an issue. Just make sure to account for it in the analysis I guess is what I'm driving at. --Paul

Hi @Jonathan C. ; I agree with @Michael Seeker on rent at least 1% of list price. Question I would ask is what is the upside once you buy, through increased rents, lowered expenses, etc. Market in that area going up/down? In addition, that 4 hour away market may or may not hold the rent numbers or what you perceive as potential rent increases over time. Also, how old is the 4plex and is there deferred maintenance? Just from personal experience, x4 starts to add up on everything. Cheers

Hi @Rick L. ; I have to agree with @Steve L. . I have also tried rebuttal without success. The appraisal company and the bank stuck with the appraiser. I had to find another bank and do it all over again. Sigh. I have read about how appraisals are performed, how they take deductions, how to fight a bad appraisal, etc, and you can find that out on the net. Any reduction values they take on your property to me seem to be based on the particular appraiser; how they feel that day; the weather...I'm sure it is experience-based on seeing many many similar properties, but it seems rather subjective at times. Hope it works out for you. Cheers