(#15) – Best neighborhood yet!

(#15) – Best neighborhood yet!

A stone’s throw away from a few $200k+ homes, overlooking the entire city as long as trees aren’t full of leaves.

Purchase – $21,000
Renovations – <$16,500
Income/yr – $9,000
Insurance – $750/yr
Taxes – $1250/yr
R&M Escrow – $1000/yr

NOI – $6000/yr or 16.4%
ARV – $65,000-$75,000

2016-03-11 17.41.26

 

2016-03-11 17.30.20 2016-03-11 17.31.55 2016-03-11 17.32.12 2016-03-11 17.27.58 2016-03-11 17.29.46

Financing

Other than people asking me how to find good cash flowing properties, how to get money to finance a property is likely the second most often asked question that I get.

 

So, I will be going over in the various methods used to purchase and hold rental real estate. Some of these I use almost exclusively, other ones I do not and in those cases I will differentiate between the two.

The old fashioned way

None of the gurus will tell you, but simply having regular employment, a decent credit score and a surplus of cash each month is by far the best and easiest way to get into rental real estate. If this is something you sorely lack, it may simply be best to start off by going to the local library and getting a few Dave Ramsey books and read about how to get your personal finances in check.

The simple fact is that creative financing is rarely easy and requires education in various deal structures among other things. This isn’t to say the other ways are impossible, however do realize that most real estate gurus selling courses have a desire to sell you on a dream, not on reality. Virtually all of them make money to sell you dreams, not on deals you close or whether they come through on their promises.

Seller financing.

 

Seller financing is most likely the easiest way for someone with minimum cash outlays to go out and buy a rental property or some sort of real estate investment. The same with seller financing most of the time though, is the fact that you typically will get a property at a crummy return rate because the seller is some sort of investor and realizes that if you were in a good position to purchase it you would go with a bank that offers a very low interest rate and purchase the property out right. That is it to say you can’t make money on them it however is just the fact that you may have to the ladies that cash flow for a while under seller financing.

 

Most of the seller financing situations that I have seen the seller will for a period of anywhere from 3 to 20 years as a loan into the buyer, these are typically also very high interest rates. He’s basically do not exceed that hard money lenders especially since you can negotiate with Nick so ur face to face an attempt to get a better rate. Most of the deal that I have seen or in the 6%-9% range for seller financing. The absolute truth is would be to purchase getting them running well and then cash out through a local bank. You may still have more money in it then a good cash deal, but at least you have a property in something to show for it. Come on over to an article that I will be writing about the ways to find property this and realize in order to find seller financing deals you after market yourself and what you were doing in order to find me two kinds of things.

 

 

Our first flip! (#13)

We will be updating the journal soon on this.

Purchase Price : $31,500
Estimated rehab  : $30,000
Hopeful Resale price : $99,900
Closing costs – <$8,000

Profit : $30,400

The 37 year tenant (#14)

The 37 year tenant (#14)

2015-06-10 10.50.04

 

Features

  • Duplex
  • ~2000 Square feet
  • 2 bed 1 bath per side
  • MLS listed

Financials

  • $52,500 purchase price
  • ~$0 rehab cost
  • $615 monthly NOI
  • 14.35% ROI
  • $60,000ARV ($7,250 in net equity after rehab)

Investment diary

This is one of the few potentially ‘hands off’ deals we’ve had. A traditionally listed MLS duplex, no distress, just owners tired of managing a rental property.

There appears to be no rehab needed. The noteworthy thing about this rental is that one tenant has been in the duplex for over 37 years! Pretty amazing, we will be the seventh landlord she’s had since she’s lived there. We plan on being the last since this seems to be a great money maker.

Blog from the car #1

Well, we are at the start of another week. The past few weeks I’ve been pretty good overall. Hopefully we will stop burning through cash reserves at the pace that we have the past couple months. We went over around $10,000 on the rehab on property #12 and likely will go a little over on property #13 thankfully, the business has been very strong. I’ve had a couple tenants come back late on my rent.

Last week we received new Capital from a brand new investor partner. I am really excited about the future with this investor as well as the infected will have on our existing business. Operations likely will only be able to slip two more properties through the end of the year. This is because the bank still difficult to work with. They are requesting two to three years of seasoning on our existing properties.

We are about through the year now and so far imagined. I had hoped by the halfway mark we would be up to 30 properties instead, we’re still at 18 units, the same number that we were at during March. With the offer I put in today and the extra property I am viewing tonight if we were able to purchase then they would take us up to a total of 14 properties consisting of 21 units total almost halfway to our 2015 goal. Our 2015 end year goal is 50 total units.

Cash flow from these new units looks to be very similar to where we are at now, the duplex will be quite interesting though. They are asking $50k for it with a total of $935 and income. This is a little low compared to the current houses however we may be able to get the rent up. Interestingly enough one of the tenants in there has been living for a 37 year exclamation.

I would like to raise the rent on this tenant a little bit so we can get closer to the $1100 mark. Locally this is a very fair amount. I am seeing more and more two-bedroom units rent out for $600 to $700 dollars a month. This is significantly higher than our average two bedroom unit which sits right around $500 per month. It means that when we have to replace tennants I expect a sizable increase in the amount of rent we collect. I am NOT one to raise rent significantly existing tenants.

If this, I do believe that by September we are looking at 35. I am looking at a quad plex as well