DeeLight

Ok time for some updates. I am totally confused about now. It's all goo. Part of the learning curve for me. Here's what's so right now. Seller----who has an auction bidding & purchase biz for agents and investors, says he has an agreement with the present tenant for $1050 rent (this can be contractd when new buyer purchases); public housing authority says rents in the area are at $900 So I went and looked at the comps again. I didn't know how to evaluate comps using $$ per sf. Based on that figure $100 in this case the approx price for this property is $139k. Here's the comp stats all sold within the last 2-4 mo (without investor comps): This home: 2&2 1,594 sf, lot is 17,500 $ per sf $100 Comp #1 3&2.75 1318 sf lot 6,413 $per sf $102 SOLD for $135----adjusted price per sf$ $163k Comp #2 (closest comp???) 3&2 1513 sf lot 19,800 $ per sf $89 SOLD for $135----adjusted price is $142 Comp #3 3&2 1322 sf lot 6,710 $ per sf $85 SOLD $135-----adjusted price is $136 Comp #4 3&2 1574sf lot 6,270 $ per sf $74 SOLD $116k-----adjusted price $117 The guys that brought this to me have an auction bidding company serving realtors and investors. They say that the discount on this property @ $130k is about 15%----I think they'd take $125ish for a fast deal. The responses from the Biggerpockets forum from the buy and hold guys (after they told me it was a terrible deal and all but said I was an idiot): If you are just trying to find out whether a deal is even worth presenting to a potential buy and hold investor, a good rule of thumb would be to just know whether or not the property will yield monthly rents of at least 1.5 percent of the total acquisition cost including any rehab costs to the buyer. The buyer can work out the details from there and make their decision. But using this metric, you won't look like an idiot in any case. If you are paying anything like 132k for this property you should be getting 1320 to 2640 in gross rental income for this to make sense as a good investment. Properties in excellent neighborhoods tend to be purchased at the 1.5% of sales price point and those less pricey properties in less desirable neighborhoods tend to generate 2% of sales price. ( that includes any rehab) Pay attention to the info posted on the 2% 50% rule. part of which states that expenses exclusive of mortgage payments will run 50% of the gross rental income. Expenses include taxes ,insurance vacancy, maintenance ,and property management to name a few. Most investors that will buy this property to hold will use a similar evaluation method. Investors will take less return on rental income if the prospect of a profit on sale is likely. So I really don't know if it's a good deal or not now.

seems like a lot of people out here are (barely breathing) waiting until after the election.

I am sorry to post something that I think has been posted here before. I believe I saw a thread somewhere that told where the best place was to find fmr (fair market rent for the newbies). Would you be so kind as to post a link or tell me where you get that info? Thanks!

Steve is right. Cash flow is great but few investors are going to pay full retail price. Still, I think it's a great opportunity for you to jump in and get some real world experience, and to do so without any risk. Market like a woman possessed and let's see what happens. "like" a woman possessed???? I AM a woman possessed! :lol: I thought that they should give a better buy price too. Being that they are investors you'd think they know the game. What do you use to check FMR? Thanks!

hmmm where did everyone go? Just an update. Seller will discount a couple (to a few) k if it's a cash deal. I've put out feelers to see if there is interest in a prop that provides the $500 cash flow. I decided to put the price at $132k (comps at $135 easy). My option consideration (see that Rex---good wording, right?) will be 2k which is in the sales price.

I've been marketing a lot this past week. I got a call from an investor that has a property that he bought at a trustee sale. He likes to turn these over quickly. Here's the deets: 2&2 built in 1946 In San Bernardino; 1594 sf good rental with improvements New Buyers price $132k Comps $135; 2 with less sf within half mi piti $650 fmr $1200 $100 per sf tenant wants to stay but can't afford more than $1k per mo. The current agreement is he will vacate when the sellers pay him some moving $$. This isn't my niche but it came to me so I thought I'd see what you all think. I have a pure option on it and the option price is written into the sale price. Please advise; I'm new at this. Thank you!

OK I think I'm ready. 1) I'm going to ask the seller if that's his bottom price; 2) Get a pure option (from the Manual) on it ( I haven't had the forms checked out with an attny---no $$ to do that) 3) Going to post on this forum and Biggerpockets.com 4) See if I can sell my option. Jus one lil tiny thing---hehe what would an option like this be worth? The monthly cash flow is $500. Sellers price is $130. Comps at $135 Is this it??? My virgin deal? oooo what shall I wear? does my hair look ok?? :lol:

:lol: :lol: whew, thanks Steve, i needed comic relief. And yes Michael, I switched to decaf

Awesome! That's what I thot----but it's kinda crowded up there in the ole brain right now. The #s on the deal I mentioned above are looking accurate to what he told me---right to the letter. he wants to sell at $130. So, would I get it under a pure option or l/o and then market it in a couple of the forums I'm in? There should be some buy and holders that would be happy with a $500 cash flow, right? Is there anything else to do with this?

You got it Baby!! Yum!! K, here;s another one. I have been playing phn tag with a nice guy that is a mtg banker---called from one of my cl emails. I know a mtg banker could be a good person to have on my team but how do I speak with him---like what's in it for him I have an appt to talk with him at 5pm today---he really wants to connect. Michael, reallllly, I am totally flying by the seat of my pants; oops they're slipping :lol: Don't go on vaca right now, k? k 4 more calls to go. wheeeee this is so frrreakin' fun and scary as hell!!! why should it be scary ? they don't know where I live; they don't know the names of my kids and I may never talk to them again But I wanna talk to them lots and make LOTS o $$$$$$$$$$$$$$$

omgosh Michael, you are there . . . kinda like . . . the crei God.. whew. Thanks, I am on it---will check it all out. You have some serious vig coming when I get these done

ok just laugh at me or with me. I just got this call from my early morning cl mailings. honestly, I don't knwo where to begin with this. he wants a buyer that wants $500 cash flow per month more than he wants a l/o. he just though the would call to see what "we" could do. whew. I love stepping out on a limb but sometimes it's kinda hard to breathe up here. here's what i got from my convo with him---wrote as fast as i could. Bought at trustee sale---likes fast turnaround, FAST house in San Bernardino piti is $650 FMR is $1150-1200 $100 per sf sell at $150 per sf 12-14% margin $500 cash flow tenants want to stay owner will consider l/o and replace tenant in prop BUT mainly wants a buyer that wants cash income Got 4 more people that want me to call them. Hope I wasn't premature in just getting out there and marketing. sheesh Thanks!

Thanks so much for that Steve. I need to get a handle on the numbers part of this crei game. I need to get un-intimidated by that part. People can hear fear and uncertainty in someone's voice. I'll re-read The Manual; I learn something new everytime

Hi David. This biz is so funny. There's no set pattern to things-----well except for the crazy sellers and the crazy buyers. I look forward to the replies to this from the veteran pros. But I am playing a game of trying on different situations and seeing how I would handle it. So, if this were me I'd change my CA hat to put on my SLO hat. If this lad y is truly motivated I'd make her see that you'd need to get a killer price if you were to take on all the responsibility of this. I'd want some good spread (cuz I'm not sure of myself in these yet). I'd make sure that it is worth my while to do the deal. Have you checked out the fmv and the frv? Is there equity in the deal? Heck if you don't want a slo but you are a good negotiator you could set up a killer deal and then flip it to another investor. Just my thots. can't wait to see what happens!

This is such a great thread. Thank you all so much for this. My forte is people, the gift of gab and engagement. The numbers---aim't gonna lie----have me scared. I can just see me when I get someone serious on the phone. I'll say goodbye to them and then RUN to the laptop and scream omgosh, what's the best way to do the numbers. I din't even know exactly how the price per sq foot figured into the whole pic. Does everyone use this piece in figuring out the price/ I need to go back to "The Manual" and re-read that part. I'd love to hear your perspective on it though. Thanks!

Mwds, John Jackson has made his claim to fame (rightfully so) by doing direct mailings to owners of houses that are listed. Do a search here in the forums; it's an inspiring journey. Follow Michael's guidance in "The Manual", get your groove on and then jump into full swing with coaching with John Jackson . . . unless you are making buckets of $$$$$$$$$$ already

Awesome possome Michael. I think I'm going to create this L/O biz as a game . . . like Monopoly. I don't get stressed out when playing a game---it's all fun. And I might just end up with LOTS of houses and money. Ok, it's a game, it's a game. That's my new mantra. Like many noobs sometimes I get the "This is serious" virus. I'm out to have fun

Yes, I always choke on that comment from sellers. It's like this in my head, "Oh reeeealllly now. You'll do me a big favor will you? Hey I'VE got the chocolates. Call me when you want some" hahahahahaha I'll play a bit with them. I could use the practice. I'll give them a call tomorrow just for fun. Thanks Michael

This just in from today's CL emails (It's a growing area, very nice.) Thank you for your inquiry of our home for sale as listed on Craigs List. We would consider a possible Lease Option to purchase if the terms and conditions are acceptable. It is a lovely home in Tehachapi, Ca. called Bear Valley Springs. The house will continue on the market through the end of August, 2012. Beginning Sept. 1st, it will be listed for lease/rent by a local Property Management Company. Doesn't sound super motivated. Maybe market for a t/b? after the listing is up? To me it sounds like they want others to do all the work so I don't know if they would want to "partner" in it with me (put up signs & flyers). I could talk with them to see though. So I need to fill out the info sheet with them 1st and do some homework---fmv, frv----right? I should do this just for the practice, right? ;)Your input is most appreciated

Right, heck, beats working for a living I'm in! hmmm, just had the thought that it seems that it would be very easy for the seller to just side step me when the t/b is ready to jump in. Just the jaded side of me I guess.

Thank you Michael. That clarifies it for me. Roller coasters are scary too but I prefer the thrill of crei. One more thing. So, if the house was a 200k deal the t/b's would put $6k or more down which the seller and I would split . . . something like that . . . like you said there are always variables.

Hey Michael, I just found this and am wondering how you collect the money for the ooa deals you are doing. Do they mail it to you or paypal or ??? Also, are you hiring a local realtor or ic to put up bandit signs (if they're allowed) etc to market the house for l/p. All of my responses are coming from ooa sellers so I am setting up my game plan. Thanks!

you're the best (but I know you already knew that)

Thank you so much Michael. I knew you would know At least I kinda knew that inside. I am always testing myself before I ask a question to see if I'm in the ballpark when I get an answer. Yeah, I'll let them simmer

(Newbies) It's good to be part of a community and make ourselves accountable. Just letting everyone know that I am going to have a lil bit of disposable income later in August so I am going to start doing what our dear brilliant John Jackson does---mail to the owners of listed properties. It will only be maybe 30 pcards per week but it's what I can do right now. What matters is being in ACTION. I've always wondered about this mkting technique and now that I have read almost every post of John's I'm going for it. And (my promise to myself) when I have 2 deals under my belt I am going to do the training with our illustrious, benevolent MC and John. I'll keep you posted as to the results of this plan.