Fair warning: It's really, really hard to get financing on packages of single-family investment properties right now.

I say this from the perspective of a commercial loan broker. If someone has a source for these loans, please post here or PM me, we're always looking to add to our lending network.

I've finished Intelligent Real Estate Investor, haven't read any more of the Checklists book yet. I am planning on ordering more books when I'm done with what I have, so I guess that means I would recommend them. I would just echo what I said before, I wouldn't call the book amazing, but it's way more helpful than the other books I've read , which tend to be way too general.

It's a local bank that only does loans in the area or at least semi-close to it.

The family that owns the bank and my family have been pretty close friends for three generations, we've also been shareholders for that long.

They say that they are willing to loan up to 85% of LTV for 10 rental properties. The only kicker is it's a 5/20 optional balloon @ 6.25%. That was the quote for the ten seperate ones, I'm probably going to see if I can get a 30 for the quad, tri, duplex, and mobile home package.

Anyone have any experience with structuring equity partnerships? I have enough capital for a couple transactions, but the deals here are SO good I'd like to capitalize on a lot of them quickly. (As opposed to the MH, which I'm also planning on doing concurrently.) It seems private money's the best way to go given the current lending market--input anyone?

Have more info on that second package:

3 unit rents @ $600/month w/ utilities paid
5 units rent @ $550/month w/ utilities paid
1 unit rents @ $325/month no utilities paid

mobile home rents @ 175/month, so I'm just going to ask him to drop it from the deal since it's on a seperate lot. People really overvalue mobile homes so I'm hoping he'll drop like 25k off the price.

I've looked at as many rental units in the area as possible to determine price of utilities, and it looks like it's standard to be +200-215 to have them included. So back off $215 from each and you get:
3 x 385
5 x 335
1 x 325

= $3,155 in rent income. All are currently rented. $200 deposit on each.

SFH's in the neighborhood are selling for 50-65k.

Pics of outside:





Assuming PP of $165,000, 20% down loan is $132,000.
Down Payment of $33,000 (may see if seller can carry any of the note)

$34,705 =$3,155 x 11 (assume one month vacancy per unit)

($15,617.25) = expenses using 45% rule

$19,087.75 = income

$(10,273.80) = $856.15 x 12 debt services (132k 30 years @ 6.75%)

Net = $8,813.95

COC return 26.71%
CAP rate 12%

Will keep you updated on if I find anything wrong on the inside of the homes.

did you ever post up the contact info?

Hey guys,

I have a question about a property.

Rent = $1100, Purchase price = $46k.


Here's the deal, the renters have been there 5 years and have young kids - are good tenants and said they would sign a 1 yr lease with me. However, because of the property location I would hesistate to buy the property if it wasn't pre-rented. I think fair market rent might actually be a little lower and if they moved out, I'd have to settle for 950-1000 probably. Would you guys ever take a gamble on a property like this where if they stay the deal is a homerun and just a single if they decide to move?

I guess how big of a benefit is the pre-rented factor?

JV

Even at $950/month rent it seems like a good deal (without any further info). Of course this is subject to any rehab and financing issues (among other things).

Cap rate @ $950 = ( 950 * 12 * .50 ) / (46,000 + [insert rehab costs/closing costs/other costs] ) = 12.3%

Thank you so much spex for starting this thread.

Thank you also to Tien, Fun160, Wyman, Bwana Devil, GittyUp and all the others who added good content.

I've spent the last 5 days working through this thread and now have a much better idea of what real estate investing is all about.

Within the next 1.5-2 years I want to purchase my first home/investment property, probably a duplex-quadplex.

In 6 months I will be moving to Florida, I am a poker dealer currently living in Washington state. The state of poker here as well as the cost of property in this area makes very hard to get started. Florida seems to be having a live poker boom, as well as having low cost real estate, and moderate rents.

So, from now until I am able to make the purchase I will be:
1. Reading and learning as much as possible
2. Joining one or more REI clubs
3. Working to improve my credit
4. Saving money
5. Watching my target markets, calculating the numbers on deals (even if I can't afford them at this time).

Ps. It's been extremely interesting how the market has developed in the course of this thread, from easy credit and hard to find deals, to great deals and hard to acquire financing. But regardless, the few best points i've gotten from this thread are probably:
1. Money is made buy buying for the right price.
2. Cashflow is the main priority, appreciation is a nice bonus if it happens.
3. Screening tenants well now will alleviate huge problems later
4. Don't underestimate expenses
5. Don't become over leveraged, or you will be risking everything you have built.

Does anyone read these books?

http://www.dummies.com/store/Busines...al-Estate.html

Ideally within the next 3 years I hope to be able to put $30-$40k down on a house close to my university which is expanding very quickly. The chances of getting it below market value is basically remote. The rental market is very strong; a large student population combined with an odd demographic (there isn't really many apartment complexes, mostly condos and family homes.).

In terms of renting out rooms within a house, what is the best investment to give you an edge over other landlords?

I'm thinking modify the house to comfortably house 4-5 tenants, and have individual bathrooms for each + 2 shared kitchens (Pending the house, of course, just rough estimates). Is this considered a good investment? I would like to make $550 per head gross.

Multiple masters is always a good thing. usually they are capped around two though(I've only ever seen a unit once that had three masters).

one other thing that gives a college feel is tiny cottages. single rooms with kitchenette and one bath.

I'd be careful dumping money into extra bathrooms, kitchens to make a home livable for 4+ students. If you can't make it work for just 4 I wouldn't do it. I wouldn't want to dump money into an extra kitchen. Maybe an extra bathroom. Extra kitchen is just too odd to me if you ever want to resell as a sfh. My university town doesn't allow more than 4 unrelated in a single home, and I've heard other cities have similar ordinances. And you will get busted by nosy neighbors, at least in my town.

Have you already read the books that spex does recommend?

No, its 4 here and its a hot topic issue after a bi-law was passed to make it enforced.

Applemuffin


Rooming houses don't need bathrooms for each. 1 Bathroom and 1 kitchen for 4 is sufficient.


You don't make any more money adding more bathrooms and kitchens. Just more headache.

J_V

Need more information on property area.


Great deal but also need to see the picture of property.


I'm not only a mathematical based real estate investor, although math heavily heavily influences my actions. You gotta be able to see the property and get the feel of it.

Thanks Tien.

No, I thought the for dummies series were better because I didn't got involved into real estate at all

seems like a rhetorical questions, but if my taxes are built into my monthly mortgage payment, I can obviously back that out of the 45% expense rule when I calculate all my actual numbers correct? also, I know there is a breakdown itt of what exactly the 45% is made up of, but I can't seem to find it

8% vacancy
8% mgmt fee
x% taxes
x% maintenance

are the two that I know are built in. can anyone remind me of the others?

maintenance covers most of it, insurance and utilities (if tenant moves out w/o getting them shut off or paid for) probably need to be included.

lawyers (you will want a relationship separate from the management company)
accountants (for taxes etc.)

Also most people consider "management" the 8-12% you pay a company to run your properties. So things like advertising, business cell phone, etc. are separate expenses "generally".

Not to mention things like setting up an LLC or whatever structure you want to hold your property in. Annual state fees associated with having an entity.

The list of "expenses" is quite long. There's tons of 1 time fees or once a year fees that people don't think about.


edited to add:

Small things like "cost of having business checks" seem small/irrelevant...but when you have a bunch of tiny costs, they do add up if you're a ma and pa shop with say two duplexes.

Other random costs:

safe deposit box
paper shredder so you can prove you shred documents
safe (so you can prove proper storage of personal information to the inspector)
fee to the inspector (the guy that comes to your home/office to see if you're legit and not just scamming for people's info, aka so you can receive credit reports at home)


There's just tons of random costs. That's why the general rule of thumb is just that, "general."

i have a good friend who is a real estate lawyer who has offered to do all of the law work for free. make leases bullet proof/set up llc/help with court when evictions occur/etc

i also thought that spex had a list of 4-6 expense that were in the breakdown of the 45%, either way, how much of that 45% is taxes is the real answer that i need. basically, i purchased a property and i'm trying to see how "bad" it really is before i decide where i go with it

I'm assuming your talking about property taxes, and the answer is it depends on the location, look up property records from the tax assessor in the area you are trying to purchase.

I know the amount of taxes that I pay, it's built into my mortgage payment, that's why I needed to know what percentage of the 45% was the taxes portion so I could back that out and calc out my numbers