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Started By
Message
Real Estate ivestment/ mother in law
Posted on 1/22/17 at 10:27 pm
Posted on 1/22/17 at 10:27 pm
Trying to break in to real state for cash flow with buy and hold.
Trying to start with seller financing so that i don't have to put much down out of pocket.
Mother in law is trying to sell her condo(free and clear) and it isn't going well. Want to talk to her about letting me have it via seller financing to rent out. Its a 3br 2 ba 3rd story condo. Should easily bring in $1200+ a month in rent. I would work out terms with her so she gets a monthly payment.
If she has it listed for $185,900, what would be acceptable terms?
If she agrees, what would be the next step to make it official? Hire a lawyer to draft a promissory note?
I think it would be easiest to hire a management company to run the unit. Once they are hired, they find and screen the tenants correct?
Any other important steps i am missing. Any reservations with this other than dealing with family? I feel like this will be the easiest way to break into real estate and get some monthly cashflow. TIA
Trying to start with seller financing so that i don't have to put much down out of pocket.
Mother in law is trying to sell her condo(free and clear) and it isn't going well. Want to talk to her about letting me have it via seller financing to rent out. Its a 3br 2 ba 3rd story condo. Should easily bring in $1200+ a month in rent. I would work out terms with her so she gets a monthly payment.
If she has it listed for $185,900, what would be acceptable terms?
If she agrees, what would be the next step to make it official? Hire a lawyer to draft a promissory note?
I think it would be easiest to hire a management company to run the unit. Once they are hired, they find and screen the tenants correct?
Any other important steps i am missing. Any reservations with this other than dealing with family? I feel like this will be the easiest way to break into real estate and get some monthly cashflow. TIA
5
Posted on 1/23/17 at 6:37 am to LSU_CRAIGERS
On the surface, that does not seem like that great a deal. I wouldn't pay $100,000 for a property that is only renting for $1,200.
ETA: Why would this have 3 down-votes?
ETA: Why would this have 3 down-votes?
This post was edited on 1/24/17 at 7:43 am
Posted on 1/23/17 at 8:02 am to I Love Bama
Depends on area Bama, but valid point on costs vs rent, it seems well apart to be profitable long term.
I bought a small condo from my mother in law as a rental but costs vs rent was close to 1% at the time. She financed me at 6.5% and 5 year balloon, but I put nothing down and paid $450 to close.
OP I'd start by asking mother in law what she plans to do with the money? Also if it's not selling or even getting offers then it's probably priced wrong. If she just plans to go on a vacation and invest the rest you could probablyoffer her a small down payment and finance the rest. You may need to offer her a higher interest rate as well so she views it as a good risk to take.
On my unit I knew it would work out well since I have done some improvements myself - paint and caulk went a long way. I raised rent and got rid of the management company. Now, it's free cash flowing $100/month now.
I bought a small condo from my mother in law as a rental but costs vs rent was close to 1% at the time. She financed me at 6.5% and 5 year balloon, but I put nothing down and paid $450 to close.
OP I'd start by asking mother in law what she plans to do with the money? Also if it's not selling or even getting offers then it's probably priced wrong. If she just plans to go on a vacation and invest the rest you could probablyoffer her a small down payment and finance the rest. You may need to offer her a higher interest rate as well so she views it as a good risk to take.
On my unit I knew it would work out well since I have done some improvements myself - paint and caulk went a long way. I raised rent and got rid of the management company. Now, it's free cash flowing $100/month now.
Posted on 1/23/17 at 8:23 am to LSU_CRAIGERS
Not nearly enough meat on that bone.
Posted on 1/23/17 at 8:33 am to eng08
quote:
I raised rent and got rid of the management company. Now, it's free cash flowing $100/month now.
but it was not before? You bought wrong then from the start it sounds like.
Posted on 1/23/17 at 8:50 am to Fat Bastard
In laws had not raised rent since they bought it like 5 years before I bought, so no.
Posted on 1/23/17 at 9:04 am to LSU_CRAIGERS
I would assume she is not getting much action on the sale because it is priced too high if it only brings 1200/month
run the numbers on that and you will be upside down quick
what is the CAM fee?
you are looking at a note around $1000 just for P/I (30 year loan at that)plus insurance, taxes, repairs and maintenance, cam fee, property mgmt fee, unoccupied time, etc, you had better be ready and able to throw money at this every month. I suspect the only cash flow on this deal will be negative. not to even mention the dealing with family especially an in law, 30 years is a long time
run away from this one
run the numbers on that and you will be upside down quick
what is the CAM fee?
you are looking at a note around $1000 just for P/I (30 year loan at that)plus insurance, taxes, repairs and maintenance, cam fee, property mgmt fee, unoccupied time, etc, you had better be ready and able to throw money at this every month. I suspect the only cash flow on this deal will be negative. not to even mention the dealing with family especially an in law, 30 years is a long time
run away from this one
This post was edited on 1/23/17 at 9:07 am
Posted on 1/23/17 at 9:32 am to LSU_CRAIGERS
Price looks very high. Maybe it's nice and you would want to buy it as a personal residence. But that seems very high to buy as an investment.
Posted on 1/23/17 at 4:57 pm to eng08
She says she plans on investing the money. People say they like it but complain about it being on the 3rd floor. It's completely updated and doesn't need any work at all. Being on the 3rd(top) floor, it has vaulted ceilings and a fireplace. Also has tile backsplash in the kitchen.
Planned on offering a small down payment and tried to run the numbers as paying her $650 month over a 24 year term
Say it get $1300. That leaves me with $650.
Say 10-15% for management
10% vacancy
10% repair
That should leave ~$220 a month in positive cash flow
Am I just missing a lot of other expenses? I am new to this.
Thanks for any help
Planned on offering a small down payment and tried to run the numbers as paying her $650 month over a 24 year term
Say it get $1300. That leaves me with $650.
Say 10-15% for management
10% vacancy
10% repair
That should leave ~$220 a month in positive cash flow
Am I just missing a lot of other expenses? I am new to this.
Thanks for any help
Posted on 1/23/17 at 4:58 pm to LSU_CRAIGERS
I am in the Salt Lake City area and market is high. That's why I am exploring seller financing on free and clear houses so I can either set the price or the terms
Posted on 1/23/17 at 5:40 pm to LSU_CRAIGERS
quote:
Am I just missing a lot of other expenses?
Property tax,insurance and CAM fee to name a few
why would she sell to you and owner finance for ~1% interest if her goal is investment? If you can get her to go for it great for you but she would be getting a pretty lop sided deal
This post was edited on 1/23/17 at 5:42 pm
Posted on 1/23/17 at 6:28 pm to Tigerpaw123
quote:
for ~1% interest if her goal is investment? If you can get her to go for it great for you but she would be getting a pretty lop sided deal
I'm her favorite son in law???
i joke. I think we would arrange for the end purchase price to be higher to compensate for interest so that it is a win win.
I see what everyone is saying with property tax and insurance and CAM eating into any + cashflow.
Anyone have a good way of calculating insurance for a given area? or just call companies and ask?
Anyone have a spreadsheet they are willing to share for quick checks for profitability of investment opportunities?
This area is inflated with high prices. Might have to look in other areas but don't like not being close to the property geography wise. Anyone buy properties from afar and have any advice?
Posted on 1/23/17 at 7:01 pm to LSU_CRAIGERS
As an investment property, with that sort of income, it's already a no-go. Once you add in the expenses that you've left out and/or raise the price to make it a better deal for her, it just gets worse.
This is not a cashflow deal. The numbers simply don't work. If you think it has serious appreciation potential and you don't mind having a near zero (or sometimes negative) cashflow, then take a swing at it.
This is not a cashflow deal. The numbers simply don't work. If you think it has serious appreciation potential and you don't mind having a near zero (or sometimes negative) cashflow, then take a swing at it.
Posted on 1/23/17 at 7:05 pm to LSU_CRAIGERS
Join bigger pockets.com for free. Then go to the spreadsheets section and download he SFH analysis sheet. It's pretty detailed and you can adjust/add other rows as you see fit.
I added some more to mine regarding prepaid costs the bank will most likely require so I can make sure I know how much cash will be required to get the deal done.
I added some more to mine regarding prepaid costs the bank will most likely require so I can make sure I know how much cash will be required to get the deal done.
Posted on 1/23/17 at 9:10 pm to lighter345
Joined recently but have not made it to that section. Thanks for the heads up
Posted on 1/23/17 at 10:58 pm to LSU_CRAIGERS
quote:
That should leave ~$220 a month in positive cash flow
That's not enough cash flow while allowing for vacancy and possible non/late paying tennants. I'd try to get something for around 100K and get 1000 to 1200 a month. If you're handy, you can probably get one that needs a little work at a good price and have a better cash flow. Not using a management company will add to your cash flow. It's really not that hard. Try to buy in good area and get good tenants.
This post was edited on 1/23/17 at 11:05 pm
Posted on 1/24/17 at 6:07 am to LSU_CRAIGERS
I represent several successful investors. Not a one of them would touch a property with these numbers. I'll leave it at that.
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