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Hi Jeff,

Instead of copying and pasting my original post, I though I'd link to it:

Original FBG Post

Or, if you'd prefer, I can go over all the details right here.

So far, I'm getting mostly negative feedback, albeit from few replies, but very good ones.

Should I get my deposit back and look for other RE investment opportunities?

Thanks in advance.

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For the benefit of this thread....Real estate is highly local.

Find another property manager in the Norman area and ask what typical rents for apts/ THs that size are in the area.

Google area newspapers to check rents as well.

Call the college and ask what room costs typically run, and what drives the higher rents (close to campus, facilities, etc.). Also ask what is included - utilities can cost dearly.

Sounds like you're basing EVERYTHING on $1800 a month, and that costs will be $1500 a month. It also sounds like that's too high to expect based on this thread.

Do your homework NOW, ASAP. If the $1800 is BS, bail.

Don't get caught holding a bad property. You have a chance to get out so use this time and do your Due Diligence fast.

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Thanks for the reply.Great advice . I'll get on this ASAP.

I went ahead and "Craigslisted" a bit and found that rent in the Norman area averaged just under $1000.

I think the builder's selling point was that these are brand new townhomes and these types of properties are new in the area (i.e. townhomes practically within a shopping center...)

Another point made by the builder was "if we didn't think that we'd be able to sell these properties, would we be developing them?"

I've read that the city of Oklahoma has been doing quite a bit of developing lately, especially in the downtown area.

After much thinking, we are already leaning toward getting our deposit back and moving on to other opportunities.

Thanks again for your input.

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Question:

There's one place that I keep being drawn to, the property is ~68k 2br/1ba 768sq feet but a few concerns:

1. Long term tenant (family) is living there ($450 a month pay out in rent), I don't think Texas is like NY where it's tough to remove tenants but I do feel a bit uncomfortable.

2. Stop and Go like store across the street and down the street there's a drug dealer. Interesting the second time I drove by he even smiled at me. Tough to get rid of dealers?

3. Good thing is two doors down, total rehab is going on and house looks nice, one door down from that house is a newly build house is for lease, 1300 for 3br, 2bth.

4. The house that shares a two car garage with above house is also for sale. It's vacant, 960 sq feet, 3br/1.5bath asking 90k. Both property = 158k

Thoughts?

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one more question if you don't mind:

What's the easiest way to compute if it's worth purchasing a particular property IF you were going to rent it out? So, a house for 68k on the market should at least generate x amout to break even; x amount to generate y profit...

Edit: I can use a mortgage calculator, just looking for a "quick and dirty" method...thanks!

Edit2: 68k must get at least 680 a month to be "worth" buying?

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Gutting a house and "starting over" is AT LEAST $50 a square foot, assuming a full gut job.

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I did mine for $0.30 per sq ft including new HVAC. Of course I found a note from the inspector saying have your electrician call me and spent all day today reassembling the cabinet drawers which were backwards. This could get interesting. Should I have asked for green cards?

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There's no way you did a complete rehab for $.30 a square foot.HVAC costs $3-5K - even if you got it for $2K - for a 4,000 sq.ft. house - both are BIG REACHES - that would be $.50 a sq. ft.

The rule of thumb for most builders is AT LEAST $100 / sq. ft. - but that includes the land.

Back out the land and you are $50-75 a sq. ft.

I'm doing a high end rehab in Baltimore and am spending about $90 / sq. ft.

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Want pics???

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I'd settle for a SOW and your definition of a "complete rehab".How big is the property?

4,000 sq. ft. would be $1200. I call MAJOR

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#### Jeff...didn't see my typo with that decimal. $30 / sf

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Update:

Yesterday, I scoured in a little bit better neighborhood (closer to downtown/UT) and found a nice little place on a street where three houses were just put up (complete tear down and new house) or almost finished.

This house I found is a bit more though, $90k but includes complete DEMOLITION from the seller. There's no AC and a complete dump. The lot size is 42 X 129.

Interesting, while zillow.com usually shows properties undervalued, I did a quick search and the property was valued at 110k.

Thinking about buying the place, having the seller demolish it then build a two story on it and sell it.

My biggest problem is finding out what that property is really worth? Don't want to overpay.

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Hi Jeff,

Instead of copying and pasting my original post, I though I'd link to it:

Original FBG Post

Or, if you'd prefer, I can go over all the details right here.

So far, I'm getting mostly negative feedback, albeit from few replies, but very good ones.

Should I get my deposit back and look for other RE investment opportunities?

Thanks in advance.

Click to expand...

We just bought a townhome in the city of Norman, ....

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No need to read any further.

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Please explain.TIA

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Seems to me that your overpriced in your market. Coming from CA you have a skewed sense of real estate in the middle south. I've seen many "investors" pay large sums of money to buy lofts that I participated in designing. I personally don't think the market is always going to be there. To me that's why the investors are finding buyers in CA for homes in Norman. In a college town, I think smaller older homes that can be rented to college students for around $800 are the ticket.

Click to expand...

Gutting a house and "starting over" is AT LEAST $50 a square foot, assuming a full gut job.

Click to expand...

I did mine for $0.30 per sq ft including new HVAC. Of course I found a note from the inspector saying have your electrician call me and spent all day today reassembling the cabinet drawers which were backwards. This could get interesting. Should I have asked for green cards?

Click to expand...

There's no way you did a complete rehab for $.30 a square foot.HVAC costs $3-5K - even if you got it for $2K - for a 4,000 sq.ft. house - both are BIG REACHES - that would be $.50 a sq. ft.

The rule of thumb for most builders is AT LEAST $100 / sq. ft. - but that includes the land.

Back out the land and you are $50-75 a sq. ft.

I'm doing a high end rehab in Baltimore and am spending about $90 / sq. ft.

Click to expand...

Want pics???

Click to expand...

I'd settle for a SOW and your definition of a "complete rehab".How big is the property?

4,000 sq. ft. would be $1200. I call MAJOR

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#### Jeff...didn't see my typo with that decimal. $30 / sf

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about time.Still a good price. Did you rip it down to the rafters?

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Hi Jeff,

Instead of copying and pasting my original post, I though I'd link to it:

Original FBG Post

Or, if you'd prefer, I can go over all the details right here.

So far, I'm getting mostly negative feedback, albeit from few replies, but very good ones.

Should I get my deposit back and look for other RE investment opportunities?

Thanks in advance.

Click to expand...

Just me, but I would be terrified to buy in a city some 5 states away into a market so dis-similar (Silicon Valley) from your own, where you might think that you are getting a HUGE value.You are trusting a company who's goal it is to make money to detail a market that you have no working knowledge of. If Bass or Jeff were telling me about it, I'd trust the figures, short of that, No ####### way.

Then, do you really want to vacation to scenic OK a few times a year to check on things? Why not look in AZ or somewhere you would like to visit, and can get to easier?

Across the street from me, I had a College professor move here from SoCal. He sold a 3 bedroom ranch for like a Million out there. Here he bought a 3 story, 4K sqft house, 5 bedroom, 4 bath, fireman's pole, elevator, 12 foot tall stone basement, 5 working gas fireplaces, the works for $180K (Honestly? He overpaid by $20K). His wife didn't work again, they hired a live in Nanny, and lived like the Howells on Gilligan's Island. The cost of living here is ridiculously low. We have one of the BEST cost of living in the US as listed each year when the report comes out. Gas was at $2.56 today at the stations. How about your area?

Now, had he been an investor, and we get our share of investors from the West Cost, they see a place for a Quarter million that would cost 3.3 Million out West and they JUMP!!! The problem is that the place was worth 150K, they over paid by $100K, and lose money every month because the rents match the market, not the West Coast. We have a Realtor here who specializes in nailing big fish from CA with too much money, and no knowledge of the market. The CA investor bails after awhile, and the Realtor gets another commission selling to the next unsuspecting CA investor. I have lost what would have been great deals for me when an investor from the West coast comes in and overpays by $20-100K. Makes the property DEAD to the local market for a few years until one of the CA investors goes under, and the price corrects.

So where I am going here is that without someone I trusted completely, there is no way I buy that far out of Market, in terms of both distance and financial reality.

Click to expand...

Hi Jeff,

Instead of copying and pasting my original post, I though I'd link to it:

Original FBG Post

Or, if you'd prefer, I can go over all the details right here.

So far, I'm getting mostly negative feedback, albeit from few replies, but very good ones.

Should I get my deposit back and look for other RE investment opportunities?

Thanks in advance.

Click to expand...

Just me, but I would be terrified to buy in a city some 5 states away into a market so dis-similar (Silicon Valley) from your own, where you might think that you are getting a HUGE value.You are trusting a company who's goal it is to make money to detail a market that you have no working knowledge of. If Bass or Jeff were telling me about it, I'd trust the figures, short of that, No ####### way.

Then, do you really want to vacation to scenic OK a few times a year to check on things? Why not look in AZ or somewhere you would like to visit, and can get to easier?

Across the street from me, I had a College professor move here from SoCal. He sold a 3 bedroom ranch for like a Million out there. Here he bought a 3 story, 4K sqft house, 5 bedroom, 4 bath, fireman's pole, elevator, 12 foot tall stone basement, 5 working gas fireplaces, the works for $180K (Honestly? He overpaid by $20K). His wife didn't work again, they hired a live in Nanny, and lived like the Howells on Gilligan's Island. The cost of living here is ridiculously low. We have one of the BEST cost of living in the US as listed each year when the report comes out. Gas was at $2.56 today at the stations. How about your area?

Now, had he been an investor, and we get our share of investors from the West Cost, they see a place for a Quarter million that would cost 3.3 Million out West and they JUMP!!! The problem is that the place was worth 150K, they over paid by $100K, and lose money every month because the rents match the market, not the West Coast. We have a Realtor here who specializes in nailing big fish from CA with too much money, and no knowledge of the market. The CA investor bails after awhile, and the Realtor gets another commission selling to the next unsuspecting CA investor. I have lost what would have been great deals for me when an investor from the West coast comes in and overpays by $20-100K. Makes the property DEAD to the local market for a few years until one of the CA investors goes under, and the price corrects.

So where I am going here is that without someone I trusted completely, there is no way I buy that far out of Market, in terms of both distance and financial reality.

Click to expand...

Here is an exact example of what I am referring to:223 W DeWald St

I will take services from any Realtor in the Market that brings me a deal. So I went to look at this "Fourplex". Once you are actually inside it, you quickly understand that it is only a 3 plex, with a common boiler system and electric.

It's 2 Blocks north of a very nice area, across from a HUGE catholic church, and is quickly becoming an all Mexican area. Not that there is anything wrong with that, except those pesky "Stacking" laws. If you aren't familiar, Goggle Real Estate Renting Stacking.

The Mexicans are piled sky high in this triplex, was about 15 of them when I viewed the property. Honestly, they were illegally renting it, but dear god does this place make a fortune. It has a 4 bay garage out back that is rented out as well, makes tons of money.

It's priced at 27,900 for the Local investors, however this RE Agent confided to me that it was priced at $120K to his out of state investors.

It happens in every fly over state every day.

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Hi Jeff,

Instead of copying and pasting my original post, I though I'd link to it:

Original FBG Post

Or, if you'd prefer, I can go over all the details right here.

So far, I'm getting mostly negative feedback, albeit from few replies, but very good ones.

Should I get my deposit back and look for other RE investment opportunities?

Thanks in advance.

Click to expand...

Just me, but I would be terrified to buy in a city some 5 states away into a market so dis-similar (Silicon Valley) from your own, where you might think that you are getting a HUGE value.You are trusting a company who's goal it is to make money to detail a market that you have no working knowledge of. If Bass or Jeff were telling me about it, I'd trust the figures, short of that, No ####### way.

Then, do you really want to vacation to scenic OK a few times a year to check on things? Why not look in AZ or somewhere you would like to visit, and can get to easier?

Across the street from me, I had a College professor move here from SoCal. He sold a 3 bedroom ranch for like a Million out there. Here he bought a 3 story, 4K sqft house, 5 bedroom, 4 bath, fireman's pole, elevator, 12 foot tall stone basement, 5 working gas fireplaces, the works for $180K (Honestly? He overpaid by $20K). His wife didn't work again, they hired a live in Nanny, and lived like the Howells on Gilligan's Island. The cost of living here is ridiculously low. We have one of the BEST cost of living in the US as listed each year when the report comes out. Gas was at $2.56 today at the stations. How about your area?

Now, had he been an investor, and we get our share of investors from the West Cost, they see a place for a Quarter million that would cost 3.3 Million out West and they JUMP!!! The problem is that the place was worth 150K, they over paid by $100K, and lose money every month because the rents match the market, not the West Coast. We have a Realtor here who specializes in nailing big fish from CA with too much money, and no knowledge of the market. The CA investor bails after awhile, and the Realtor gets another commission selling to the next unsuspecting CA investor. I have lost what would have been great deals for me when an investor from the West coast comes in and overpays by $20-100K. Makes the property DEAD to the local market for a few years until one of the CA investors goes under, and the price corrects.

So where I am going here is that without someone I trusted completely, there is no way I buy that far out of Market, in terms of both distance and financial reality.

Click to expand...

Here is an exact example of what I am referring to:223 W DeWald St

I will take services from any Realtor in the Market that brings me a deal. So I went to look at this "Fourplex". Once you are actually inside it, you quickly understand that it is only a 3 plex, with a common boiler system and electric.

It's 2 Blocks north of a very nice area, across from a HUGE catholic church, and is quickly becoming an all Mexican area. Not that there is anything wrong with that, except those pesky "Stacking" laws. If you aren't familiar, Goggle Real Estate Renting Stacking.

The Mexicans are piled sky high in this triplex, was about 15 of them when I viewed the property. Honestly, they were illegally renting it, but dear god does this place make a fortune. It has a 4 bay garage out back that is rented out as well, makes tons of money.

It's priced at 27,900 for the Local investors, however this RE Agent confided to me that it was priced at $120K to his out of state investors.

It happens in every fly over state every day.

Click to expand...

Boy am I sure glad I check this thread...

By the way, we will be withdrawing our deposit for that Norman, OK property you provided input for.

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Just today, I got a PM asking about RE in Nebraska.

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market. It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal? I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand. Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime. I doubt it since he could make twice the profit a month in my market, but who knows?

Click to expand...

Just today, I got a PM asking about RE in Nebraska. 

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market.  It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal?  I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand.  Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime.  I doubt it since he could make twice the profit a month in my market, but who knows?

Click to expand...

I agree with everything you've said thus far.For all I know, I MIGHT BE throwing away a huge opportunity...

But I'm willing to admit that I don't know nearly as much as I should about RE investing. You've made some damn solid points and I will take them to heart.

How would you recommend a person like myself get educated. I've lived all my life in the Bay Area and, as you can tell, I'm not very savvy in the RE market.

Click to expand...

Just today, I got a PM asking about RE in Nebraska. 

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market.  It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal?  I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand.  Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime.  I doubt it since he could make twice the profit a month in my market, but who knows?

Click to expand...

I agree with everything you've said thus far.For all I know, I MIGHT BE throwing away a huge opportunity...

But I'm willing to admit that I don't know nearly as much as I should about RE investing. You've made some damn solid points and I will take them to heart.

How would you recommend a person like myself get educated. I've lived all my life in the Bay Area and, as you can tell, I'm not very savvy in the RE market.

Click to expand...

Honestly?MrLandLord.com --- CLICK THE FIRST 'KEY" labeled "Q&A"

I learned more about Renting (And some of the finances) there in a week than I did in 10 years of actually being a RE Investor/LandLord.

(Once again, not and endorsement from a FBG Employee)

Outside of that, I have learned a TON in this very thread from Jeff, Bass, and ProNinja. Whatever it takes, encourage ProNinja to post, he has fallen off some of late, that guy is a wealth of Knowledge on the Money side of the business.

Someone send the guy a PM, and get him back in here.

Jeff can easily post some "Money/Investor" type of Message boards for you. For me, Asking anything and everything on MrLandLord.com is my current sounding board of advisers. I can't recommend it enough. You don't even need to register, just start posting. Infact, I would encourage GC to do a cut and paste of his post to that board, and see what they say???? That is a Very active board of Real Estate investors from the LL mentality, and the board moves along at a good pace, with posters on at all times. It is not a board with a few posts a day, more like MANY posts an hour.

They are not as strong on the Finance side Maybe because there are many more questions about the nuts and bolts of being a LL, and not as many about the $ side, but the $ questions still always get a solid amount of answers), where Jeff and ProNinja are aces.

Anyway, GC, I strongly encourage you to do a Cut and Paste of your question here to that board, and see what the results are.

Click to expand...

Just today, I got a PM asking about RE in Nebraska. 

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market.  It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal?  I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand.  Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime.  I doubt it since he could make twice the profit a month in my market, but who knows?

Click to expand...

I agree with everything you've said thus far.For all I know, I MIGHT BE throwing away a huge opportunity...

But I'm willing to admit that I don't know nearly as much as I should about RE investing. You've made some damn solid points and I will take them to heart.

How would you recommend a person like myself get educated. I've lived all my life in the Bay Area and, as you can tell, I'm not very savvy in the RE market.

Click to expand...

Honestly?MrLandLord.com --- CLICK THE FIRST 'KEY" labeled "Q&A"

I learned more about Renting (And some of the finances) there in a week than I did in 10 years of actually being a RE Investor/LandLord.

(Once again, not and endorsement from a FBG Employee)

Outside of that, I have learned a TON in this very thread from Jeff, Bass, and ProNinja. Whatever it takes, encourage ProNinja to post, he has fallen off some of late, that guy is a wealth of Knowledge on the Money side of the business.

Someone send the guy a PM, and get him back in here.

Jeff can easily post some "Money/Investor" type of Message boards for you. For me, Asking anything and everything on MrLandLord.com is my current sounding board of advisers. I can't recommend it enough. You don't even need to register, just start posting. Infact, I would encourage GC to do a cut and paste of his post to that board, and see what they say???? That is a Very active board of Real Estate investors from the LL mentality, and the board moves along at a good pace, with posters on at all times. It is not a board with a few posts a day, more like MANY posts an hour.

They are not as strong on the Finance side Maybe because there are many more questions about the nuts and bolts of being a LL, and not as many about the $ side, but the $ questions still always get a solid amount of answers), where Jeff and ProNinja are aces.

Anyway, GC, I strongly encourage you to do a Cut and Paste of your question here to that board, and see what the results are.

Click to expand...

Click to expand...

Just today, I got a PM asking about RE in Nebraska. 

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market.  It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal?  I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand.  Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime.  I doubt it since he could make twice the profit a month in my market, but who knows?

Click to expand...

I agree with everything you've said thus far.For all I know, I MIGHT BE throwing away a huge opportunity...

But I'm willing to admit that I don't know nearly as much as I should about RE investing. You've made some damn solid points and I will take them to heart.

How would you recommend a person like myself get educated. I've lived all my life in the Bay Area and, as you can tell, I'm not very savvy in the RE market.

Click to expand...

Honestly?MrLandLord.com --- CLICK THE FIRST 'KEY" labeled "Q&A"

I learned more about Renting (And some of the finances) there in a week than I did in 10 years of actually being a RE Investor/LandLord.

(Once again, not and endorsement from a FBG Employee)

Outside of that, I have learned a TON in this very thread from Jeff, Bass, and ProNinja. Whatever it takes, encourage ProNinja to post, he has fallen off some of late, that guy is a wealth of Knowledge on the Money side of the business.

Someone send the guy a PM, and get him back in here.

Jeff can easily post some "Money/Investor" type of Message boards for you. For me, Asking anything and everything on MrLandLord.com is my current sounding board of advisers. I can't recommend it enough. You don't even need to register, just start posting. Infact, I would encourage GC to do a cut and paste of his post to that board, and see what they say???? That is a Very active board of Real Estate investors from the LL mentality, and the board moves along at a good pace, with posters on at all times. It is not a board with a few posts a day, more like MANY posts an hour.

They are not as strong on the Finance side Maybe because there are many more questions about the nuts and bolts of being a LL, and not as many about the $ side, but the $ questions still always get a solid amount of answers), where Jeff and ProNinja are aces.

Anyway, GC, I strongly encourage you to do a Cut and Paste of your question here to that board, and see what the results are.

Click to expand...

Click to expand...

GC, hopefully you will post over there. I do constantly. It's a real nuts and bolts. Any board that can tell me how to strip down a Refrigerator and make it work again is a good board for me.In every way, if it is a LL question, including the $ side, they will have multiple answers.

Do a cut and paste, and see what they have to say. It might be a totally different answer.

But Honestly, when it comes to the $ side, I want an opinion from ProNinja just as much as i want an answer there. He is sharp as a tack, and right here in this thread.

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Hypothetical question:

Mr. X's house is appraised at $320,000. He still owes $300,000 on the mortgage.

He hears of a mortgage lender which will give him 125% of the value of his home. So he could refinance and get a loan for $400,000. $320K would go to pay off the first loan, and let's say there is $5,000 in closing fees.

He now has $75,000 to put in the bank... make home improvements... whatever.

He makes a decent living (about $80,000/yr.) and has no other outstanding debt, no wife, no children. He lives in a beautiful neighborhood, and his house, 25 years old but still in pristine condition, has appreciated greatly each of the past six years.

Is this a loan he should consider, or are the 125% mortgages to be avoided?

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Some important questions:1. What is his current interest rate?

2. What is his current payment?

3. What is his plan for the home?

4. How has his house appreciated greatly each of the past six years, and he only has $20k in equity? What is he spending his home equity on?

5. Most importantly - What does he plan to do with the extra $75k, and how is that going to net him a greater return than the added cost?

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Hypothetical question:

Mr. X's house is appraised at $320,000. He still owes $300,000 on the mortgage.

He hears of a mortgage lender which will give him 125% of the value of his home. So he could refinance and get a loan for $400,000. $320K would go to pay off the first loan, and let's say there is $5,000 in closing fees.

He now has $75,000 to put in the bank... make home improvements... whatever.

He makes a decent living (about $80,000/yr.) and has no other outstanding debt, no wife, no children. He lives in a beautiful neighborhood, and his house, 25 years old but still in pristine condition, has appreciated greatly each of the past six years.

Is this a loan he should consider, or are the 125% mortgages to be avoided?

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Some important questions:1. What is his current interest rate?

2. What is his current payment?

3. What is his plan for the home?

4. How has his house appreciated greatly each of the past six years, and he only has $20k in equity? What is he spending his home equity on?

5. Most importantly - What does he plan to do with the extra $75k, and how is that going to net him a greater return than the added cost?

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1) 7%2) $2400, including tax/ins. escrow

3) Live there for the foreseeable future

4) Refi'd several times w/ cash-out to pay student loans, family debt, etc.

5) Mainly home improvements. Adding a deck, in-ground pool, paint the house, professional landscaping, and several minor upgrades.

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Define "family debt." - if you have a history of spending irresponsibly and using your home equity to cover up for it, I would strongly recommend against pulling more money out of your house.What I want you to avoid is spending your home equity. I want you to invest your home equity, having it earn a return. Some more questions.

1. Exactly how much are all of the improvements going to cost? Get bids.

2. How much are the improvments going to add to the value of the home? Talk to an appraiser.

3. Any improvements that don't add to the value of the home are purchases, not investments, and I would advise you to not go into debt for a purchase of an item that's for your enjoyment, not an investment. Spend the money you save from your income on the purchases. Don't rob your home of its equity.

4. 7% seems high.

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I went out and passed my RE licensing test with flying colors.

WHY???

Honest, it makes it tougher as an Investor. As a licensed RE agent, I am required to provide a Year warranty on any home I sell, the average guy can sell as is. My State law makes it a bear to actually be a licensed Agent.

That said, the only way I can be a Property manager is to have a RE License.

I am about 3-5 years away from running my own Management company.

Honestly? when the time comes, I will be able to turn an investment of $45K into a $950.00 GROSS flow property ALL DAY LONG!!! Run the CAP figures, Slam Dunk, ALL DAY LONG.

That is my Market, should nothing change, and there really is no change here.

When the time comes, it's as slam dunk for me as well.

I will only be buying for others right where I have my own properties, this is certainly an attempt to control "blocks" of RE where I don't have the mojo to pull it off. Controlling some 7 properties in a row (And I currently have a number of places I control 2-3 properties in a row) is a slam dunk to me. Outside of that, I will charge 10% of the gross and say $100 to place a tenant, with evictions at cost as I might have placed the slug. Repairs I will have my own crew where I charge for the repair and Materials, them pay my own guy and hourly wage. All in all, a slam dunk for me.

I won't be advertising out of market, as I won't need to. There is plenty of money to be made here. TONS OF MONEY for EVERYONE involved.

I find it very suspect that this operation is "selling" GC some 5 states away. If there was money to be made, everyone would be on board, and it wouldn't be something GC would even have a shot at.

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I went out and passed my RE licensing test with flying colors.

WHY???

Honest, it makes it tougher as an Investor. As a licensed RE agent, I am required to provide a Year warranty on any home I sell, the average guy can sell as is. My State law makes it a bear to actually be a licensed Agent.

That said, the only way I can be a Property manager is to have a RE License.

I am about 3-5 years away from running my own Management company.

Honestly? when the time comes, I will be able to turn an investment of $45K into a $950.00 GROSS flow property ALL DAY LONG!!! Run the CAP figures, Slam Dunk, ALL DAY LONG.

That is my Market, should nothing change, and there really is no change here.

When the time comes, it's as slam dunk for me as well.

I will only be buying for others right where I have my own properties, this is certainly an attempt to control "blocks" of RE where I don't have the mojo to pull it off. Controlling some 7 properties in a row (And I currently have a number of places I control 2-3 properties in a row) is a slam dunk to me. Outside of that, I will charge 10% of the gross and say $100 to place a tenant, with evictions at cost as I might have placed the slug. Repairs I will have my own crew where I charge for the repair and Materials, them pay my own guy and hourly wage. All in all, a slam dunk for me.

I won't be advertising out of market, as I won't need to. There is plenty of money to be made here. TONS OF MONEY for EVERYONE involved.

I find it very suspect that this operation is "selling" GC some 5 states away. If there was money to be made, everyone would be on board, and it wouldn't be something GC would even have a shot at.

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You make it seem like it's practically impossible to find property out of state to invest in and make a nice profit or see truly postive cash flow.

How do you establish a connection to the investment opportunities in areas that you've never even been to? I mean, you can only do so much when it comes to researching an area to find out the statistics and what not.

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You make it seem like it's practically impossible to find property out of state to invest in and make a nice profit or see truly postive cash flow.

How do you establish a connection to the investment opportunities in areas that you've never even been to?  I mean, you can only do so much when it comes to researching an area to find out the statistics and what not.

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The basic answer is that you need to go to where ever you're looking to invest and do your own research. You'll learn plenty in just a couple of days. Any one smart enough to ask the questions you've been asking here will quickly get a feel for a market. In a weekend you should be a to talk with a couple of property managers, a couple of agents, visit several new home communities, pick up and review the classifieds in the local papers, and drive around enough to get a feel for the area and call the numbers on any signs you see. Once you've identified a target area, you can then start looking for specific deals that suit you. During your travels, you should start to build some relationships with anyone you feel is trust worthy.

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Just today, I got a PM asking about RE in Nebraska.

One of the big differences is that the FBG asking lived in the area in Nebraska.

My advice to him was to work the price down, and really hit a HOME RUN!!!

I gave him numbers where it was a slam dunk, and where it was a dog.

It was easy to tell him where he made a silly amount of money, and the deal was a slam dunk, compared to where it was a dog.

The difference was it was his home market as he was able to provide "givens" (Remember High School geometry) of things he "Knew" about the market. It was easy for me to work from there, as he "knew" certain realities/constants.

I don't know Norman OK, and neither does GC.

There is no way anyone here outside of an active investor working in the Norman OK market could give GC solid advice.

Maybe it's a heck of a deal? I don't know the buy in, but anything over even $80K purchase price to make $300 a month is a Dog in the Fly over states outside of a Hot market.

People on the coasts don't understand. Certainly the Left Coast.

Sorry to ramble, but it's a solid point.

Maybe my comments are persuading GC to throw away the opportunity of a Lifetime. I doubt it since he could make twice the profit a month in my market, but who knows?

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I agree with everything you've said thus far.For all I know, I MIGHT BE throwing away a huge opportunity...

But I'm willing to admit that I don't know nearly as much as I should about RE investing. You've made some damn solid points and I will take them to heart.

How would you recommend a person like myself get educated. I've lived all my life in the Bay Area and, as you can tell, I'm not very savvy in the RE market.

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Honestly?MrLandLord.com --- CLICK THE FIRST 'KEY" labeled "Q&A"

I learned more about Renting (And some of the finances) there in a week than I did in 10 years of actually being a RE Investor/LandLord.

(Once again, not and endorsement from a FBG Employee)

Outside of that, I have learned a TON in this very thread from Jeff, Bass, and ProNinja. Whatever it takes, encourage ProNinja to post, he has fallen off some of late, that guy is a wealth of Knowledge on the Money side of the business.

Someone send the guy a PM, and get him back in here.

Jeff can easily post some "Money/Investor" type of Message boards for you. For me, Asking anything and everything on MrLandLord.com is my current sounding board of advisers. I can't recommend it enough. You don't even need to register, just start posting. Infact, I would encourage GC to do a cut and paste of his post to that board, and see what they say???? That is a Very active board of Real Estate investors from the LL mentality, and the board moves along at a good pace, with posters on at all times. It is not a board with a few posts a day, more like MANY posts an hour.

They are not as strong on the Finance side Maybe because there are many more questions about the nuts and bolts of being a LL, and not as many about the $ side, but the $ questions still always get a solid amount of answers), where Jeff and ProNinja are aces.

Anyway, GC, I strongly encourage you to do a Cut and Paste of your question here to that board, and see what the results are.

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GC, hopefully you will post over there. I do constantly. It's a real nuts and bolts. Any board that can tell me how to strip down a Refrigerator and make it work again is a good board for me.In every way, if it is a LL question, including the $ side, they will have multiple answers.

Do a cut and paste, and see what they have to say. It might be a totally different answer.

But Honestly, when it comes to the $ side, I want an opinion from ProNinja just as much as i want an answer there. He is sharp as a tack, and right here in this thread.

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That's a great site.Not sure I'll bother with a cut and paste... even if this was the deal of a lifetime, I don't think I'm ready to start investing in RE.

I do know, however, that I would like to get into it real soon.

I think I'll just sit back and start educating myself until I feel comfortable and confident that I know what I'm doing. I will also definitely check in with ya'll for some advice and such... if you guys don't mind

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You make it seem like it's practically impossible to find property out of state to invest in and make a nice profit or see truly postive cash flow.

How do you establish a connection to the investment opportunities in areas that you've never even been to? I mean, you can only do so much when it comes to researching an area to find out the statistics and what not.

Click to expand...

The basic answer is that you need to go to where ever you're looking to invest and do your own research. You'll learn plenty in just a couple of days. Any one smart enough to ask the questions you've been asking here will quickly get a feel for a market. In a weekend you should be a to talk with a couple of property managers, a couple of agents, visit several new home communities, pick up and review the classifieds in the local papers, and drive around enough to get a feel for the area and call the numbers on any signs you see. Once you've identified a target area, you can then start looking for specific deals that suit you. During your travels, you should start to build some relationships with anyone you feel is trust worthy.

Click to expand...

Thanks for the input Bass. I think that's a very safe a simple approach.My next question is... what resources do you use to determine what area has the most potential?

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Homer, I'll get to this tommorow. I'm mentally exhausted from trying to save that other dude's marriage and need some sleep.

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Alright, here's a request of the main posters in this thread.  Jeff, Ninja, Mike, Bass...I want to become your pet project.  I'm starting the real estate classes on Monday, but since I have to finish out my current situation (working for my brother) until the end of June, I won't finish the real estate classes until the end of July.  One class in June and the other three in July.  By August 1, I'll have my license.

The thing is, I've just learned that even when you've got your RE license, you still need to work for a broker.  Crap!  Anyway, I've already got my eye on a few properties.  I want to do rehabs, be a landlord, and be a residential sales goon.  I want to do my own thing when I want and where I want.  I'm stubborn that way. 

The good thing is that my brother's best friend is a big time real estate broker here in Columbus.  The bad thing is the aforementioned tendency toward doing my own thing.

My first question, AS YOUR NEW PET PROJECT, is what do I go into the meeting with Bruce (the broker) to get him to sponsor me?  Obviously, it's going to be mainly a financial decision for him, but there's a strong personal connection there.  So I've got that going for me, which is nice. 

I don't want to be a sales monkey, so do you think it's possible that I can be affiliated with him without giving up half of everything I do?

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Another question for my new mentors.

As of right now, I've got a good credit score--740 or so--but I'll officially be unemployed right after July 4th. But I'll actually be working for my brother under the table at half salary, which combined with a company car and unemployment compensation should leave me okay for a few months. There's a duplex that I want to buy, listing at 120k with both sides rented for $575 per month. That's $1150 income on a payment of about $850...looks like a good deal. Anyway, I'm thinking about grabbing this (pending inspection and appraisal) while my financial situation still looks good to the lender.

I'm cashing out my 401k (around 12,000) and have over 10,000 in available credit, so I can withstand a few months without renters, or even move in myself. Plus, I have siblings and parents that would help at the drop of a hat. The only thing I don't have is a sizable down payment.

Here's the listing (I hope you can get there from this link).

MLS Listing

It was listed for a couple of months, then showed up as "sale pending". Now it's back as available. Not sure what that's all about, but I'm seriously thinking about buying this in the next few weeks.

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At this point, you are losing $20.00 a month for the privilege of dealing with renters.

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the privilege of dealing with renters

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Alright, here's a request of the main posters in this thread. Jeff, Ninja, Mike, Bass...I want to become your pet project. I'm starting the real estate classes on Monday, but since I have to finish out my current situation (working for my brother) until the end of June, I won't finish the real estate classes until the end of July. One class in June and the other three in July. By August 1, I'll have my license.

The thing is, I've just learned that even when you've got your RE license, you still need to work for a broker. Crap! Anyway, I've already got my eye on a few properties. I want to do rehabs, be a landlord, and be a residential sales goon. I want to do my own thing when I want and where I want. I'm stubborn that way.

The good thing is that my brother's best friend is a big time real estate broker here in Columbus. The bad thing is the aforementioned tendency toward doing my own thing.

My first question, AS YOUR NEW PET PROJECT, is what do I go into the meeting with Bruce (the broker) to get him to sponsor me? Obviously, it's going to be mainly a financial decision for him, but there's a strong personal connection there. So I've got that going for me, which is nice.

I don't want to be a sales monkey, so do you think it's possible that I can be affiliated with him without giving up half of everything I do?

Click to expand...

Homer,I had the EXACT same concerns.

I had a short list of Brokers that I already worked with. I went to each of them, and laid it out like this:

I am getting my License because I want the ability to Manage property for others down the road. I have to hang it somewhere for at least a year before I can take the brokers test. I will not be selling any of MY property while my License is hung with you, however, if I do, I want you to list it for me, and take the commission (Selling as an Agent here requires me to provide a Year warranty, and an Agent cannot sell a property in an "As-is" condition, I would want someone else to list it anyway). And I am busy enough will my own properties to take a listing, SHORT of it being one of my best friends, if I get one, it's yours.I already use you (Broker) to buy houses. If you hang my License, I will run every deal I do through you. I want to be added to your E&O insurance (the cost is MUCH less than having your own policy), I understand that I will pay dues, and the MLS fees.I am in this for myself, to build my company, and not be a working agent. You don't have to train me, I will not be selling or buying for other people, I will only buy, and everything will be run through you/your office so you can sign off that everything is correct in my dealings.Think of it as free money that you are not going to be getting if I end up with this deal at another brokerage.I will do no assigned floor time, however, I will be happy to answer the phones when I am already on property doing research for me. Everyone of those phone ups will be passed to you personally. I will not pay a desk rental, however I want the ability to access the MLS from a computer. My "footprint" on your office will be next to nothing.I will pay you nothing directly ever, no monthly fee, anything. When I buy, if it is a repo where a buying agent earns no commission, you are my agent, and you take all of the buyers commission, and work the deal. When I can earn a commission, I will work the deal, run it through your office, and give you 30% of the buyers commission. It's free money with zero additional work on your end, and I am 100% exclusive to you.I was prepared to give up 40% of the buyers commission on my deals. I figure that getting anything is better than the nothing I get now. Even 3 OF MY OWN deals a year where I only get a share of the buyers commission more than paid for any costs I would have in a structure like this.At the end of the day, 3 Brokers jumped at the chance. One of the brokers that jumped I had never spoken to before in my life.

You can't get what you don't ask for.

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General rules:

EVERY property must support itself at the BARE MINIMUM.  I don't want to PAY to own something, otherwise why did I buy it?
1% rule.  1% rule.  1% rule. Rent > 1% of purchase price.  Or walk.
I don't count on appreciation.  Ever.

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Alright, here's a request of the main posters in this thread.  Jeff, Ninja, Mike, Bass...I want to become your pet project.  I'm starting the real estate classes on Monday, but since I have to finish out my current situation (working for my brother) until the end of June, I won't finish the real estate classes until the end of July.  One class in June and the other three in July.  By August 1, I'll have my license.

The thing is, I've just learned that even when you've got your RE license, you still need to work for a broker.  Crap!  Anyway, I've already got my eye on a few properties.  I want to do rehabs, be a landlord, and be a residential sales goon.  I want to do my own thing when I want and where I want.  I'm stubborn that way. 

The good thing is that my brother's best friend is a big time real estate broker here in Columbus.  The bad thing is the aforementioned tendency toward doing my own thing.

My first question, AS YOUR NEW PET PROJECT, is what do I go into the meeting with Bruce (the broker) to get him to sponsor me?  Obviously, it's going to be mainly a financial decision for him, but there's a strong personal connection there.  So I've got that going for me, which is nice. 

I don't want to be a sales monkey, so do you think it's possible that I can be affiliated with him without giving up half of everything I do?

Click to expand...

Homer,I had the EXACT same concerns.

I had a short list of Brokers that I already worked with. I went to each of them, and laid it out like this:

I am getting my License because I want the ability to Manage property for others down the road.  I have to hang it somewhere for at least a year before I can take the brokers test.  I will not be selling any of MY property while my License is hung with you, however, if I do, I want you to list it for me, and take the commission (Selling as an Agent here requires me to provide a Year warranty, and an Agent cannot sell a property in an "As-is" condition, I would want someone else to list it anyway).  And I am busy enough will my own properties to take a listing, SHORT of it being one of my best friends, if I get one, it's yours.I already use you (Broker) to buy houses.  If you hang my License, I will run every deal I do through you.  I want to be added to your E&O insurance (the cost is MUCH less than having your own policy), I understand that I will pay dues, and the MLS fees.I am in this for myself, to build my company, and not be a working agent.  You don't have to train me, I will not be selling or buying for other people, I will only buy, and everything will be run through you/your office so you can sign off that everything is correct in my dealings.Think of it as free money that you are not going to be getting if I end up with this deal at another brokerage.I will do no assigned floor time, however, I will be happy to answer the phones when I am already on property doing research for me.  Everyone of those phone ups will be passed to you personally.  I will not pay a desk rental, however I want the ability to access the MLS from a computer.  My "footprint" on your office will be next to nothing.I will pay you nothing directly ever, no monthly fee, anything.  When I buy, if it is a repo where a buying agent earns no commission, you are my agent, and you take all of the buyers commission, and work the deal.  When I can earn a commission, I will work the deal, run it through your office, and give you 30% of the buyers commission.  It's free money with zero additional work on your end, and I am 100% exclusive to you.I was prepared to give up 40% of the buyers commission on my deals. I figure that getting anything is better than the nothing I get now. Even 3 OF MY OWN deals a year where I only get a share of the buyers commission more than paid for any costs I would have in a structure like this.At the end of the day, 3 Brokers jumped at the chance. One of the brokers that jumped I had never spoken to before in my life.

You can't get what you don't ask for.

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Couldn't you just pay a broker under the table to get your RE license and cut the year time table out? Probably not but I remember someone telling that they did something like that where they didn't want to be a RE Agent, just buy properties for themselves and rehab and sell..

Click to expand...

Alright, here's a request of the main posters in this thread. Jeff, Ninja, Mike, Bass...I want to become your pet project. I'm starting the real estate classes on Monday, but since I have to finish out my current situation (working for my brother) until the end of June, I won't finish the real estate classes until the end of July. One class in June and the other three in July. By August 1, I'll have my license.

The thing is, I've just learned that even when you've got your RE license, you still need to work for a broker. Crap! Anyway, I've already got my eye on a few properties. I want to do rehabs, be a landlord, and be a residential sales goon. I want to do my own thing when I want and where I want. I'm stubborn that way.

The good thing is that my brother's best friend is a big time real estate broker here in Columbus. The bad thing is the aforementioned tendency toward doing my own thing.

My first question, AS YOUR NEW PET PROJECT, is what do I go into the meeting with Bruce (the broker) to get him to sponsor me? Obviously, it's going to be mainly a financial decision for him, but there's a strong personal connection there. So I've got that going for me, which is nice.

I don't want to be a sales monkey, so do you think it's possible that I can be affiliated with him without giving up half of everything I do?

Click to expand...

Homer,I had the EXACT same concerns.

I had a short list of Brokers that I already worked with. I went to each of them, and laid it out like this:

I am getting my License because I want the ability to Manage property for others down the road. I have to hang it somewhere for at least a year before I can take the brokers test. I will not be selling any of MY property while my License is hung with you, however, if I do, I want you to list it for me, and take the commission (Selling as an Agent here requires me to provide a Year warranty, and an Agent cannot sell a property in an "As-is" condition, I would want someone else to list it anyway). And I am busy enough will my own properties to take a listing, SHORT of it being one of my best friends, if I get one, it's yours.I already use you (Broker) to buy houses. If you hang my License, I will run every deal I do through you. I want to be added to your E&O insurance (the cost is MUCH less than having your own policy), I understand that I will pay dues, and the MLS fees.I am in this for myself, to build my company, and not be a working agent. You don't have to train me, I will not be selling or buying for other people, I will only buy, and everything will be run through you/your office so you can sign off that everything is correct in my dealings.Think of it as free money that you are not going to be getting if I end up with this deal at another brokerage.I will do no assigned floor time, however, I will be happy to answer the phones when I am already on property doing research for me. Everyone of those phone ups will be passed to you personally. I will not pay a desk rental, however I want the ability to access the MLS from a computer. My "footprint" on your office will be next to nothing.I will pay you nothing directly ever, no monthly fee, anything. When I buy, if it is a repo where a buying agent earns no commission, you are my agent, and you take all of the buyers commission, and work the deal. When I can earn a commission, I will work the deal, run it through your office, and give you 30% of the buyers commission. It's free money with zero additional work on your end, and I am 100% exclusive to you.I was prepared to give up 40% of the buyers commission on my deals. I figure that getting anything is better than the nothing I get now. Even 3 OF MY OWN deals a year where I only get a share of the buyers commission more than paid for any costs I would have in a structure like this.At the end of the day, 3 Brokers jumped at the chance. One of the brokers that jumped I had never spoken to before in my life.

You can't get what you don't ask for.

Click to expand...

Couldn't you just pay a broker under the table to get your RE license and cut the year time table out? Probably not but I remember someone telling that they did something like that where they didn't want to be a RE Agent, just buy properties for themselves and rehab and sell..

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I don't know, I would never broch that subject with a Broker.For me, we are talking $100s of thousands of dollars (Over a Million in Holdings Debt), enough to bankrupt my family and maybe turn me into an Hourly employee for the rest of my life if it goes wrong (My last name is Anderson, not Trump). I wouldn't want to work with a Broker who is willing to bend so many rules as I don't want them bent against me.

In Homer's case, it's a trusted family friend, but still, not a risk I am going to take.

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Mike, thanks for the analysis.

The only thing you were off about was the renter situation. Both sides are currently occupied. The MLS # is 2554391 if you want to take a look at it.

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Alright, here's a request of the main posters in this thread.  Jeff, Ninja, Mike, Bass...I want to become your pet project.  I'm starting the real estate classes on Monday, but since I have to finish out my current situation (working for my brother) until the end of June, I won't finish the real estate classes until the end of July.  One class in June and the other three in July.  By August 1, I'll have my license.

The thing is, I've just learned that even when you've got your RE license, you still need to work for a broker.  Crap!  Anyway, I've already got my eye on a few properties.  I want to do rehabs, be a landlord, and be a residential sales goon.  I want to do my own thing when I want and where I want.  I'm stubborn that way. 

The good thing is that my brother's best friend is a big time real estate broker here in Columbus.  The bad thing is the aforementioned tendency toward doing my own thing.

My first question, AS YOUR NEW PET PROJECT, is what do I go into the meeting with Bruce (the broker) to get him to sponsor me?  Obviously, it's going to be mainly a financial decision for him, but there's a strong personal connection there.  So I've got that going for me, which is nice. 

I don't want to be a sales monkey, so do you think it's possible that I can be affiliated with him without giving up half of everything I do?

Click to expand...

Homer,I had the EXACT same concerns.

I had a short list of Brokers that I already worked with. I went to each of them, and laid it out like this:

I am getting my License because I want the ability to Manage property for others down the road.  I have to hang it somewhere for at least a year before I can take the brokers test.  I will not be selling any of MY property while my License is hung with you, however, if I do, I want you to list it for me, and take the commission (Selling as an Agent here requires me to provide a Year warranty, and an Agent cannot sell a property in an "As-is" condition, I would want someone else to list it anyway).  And I am busy enough will my own properties to take a listing, SHORT of it being one of my best friends, if I get one, it's yours.I already use you (Broker) to buy houses.  If you hang my License, I will run every deal I do through you.  I want to be added to your E&O insurance (the cost is MUCH less than having your own policy), I understand that I will pay dues, and the MLS fees.I am in this for myself, to build my company, and not be a working agent.  You don't have to train me, I will not be selling or buying for other people, I will only buy, and everything will be run through you/your office so you can sign off that everything is correct in my dealings.Think of it as free money that you are not going to be getting if I end up with this deal at another brokerage.I will do no assigned floor time, however, I will be happy to answer the phones when I am already on property doing research for me.  Everyone of those phone ups will be passed to you personally.  I will not pay a desk rental, however I want the ability to access the MLS from a computer.  My "footprint" on your office will be next to nothing.I will pay you nothing directly ever, no monthly fee, anything.  When I buy, if it is a repo where a buying agent earns no commission, you are my agent, and you take all of the buyers commission, and work the deal.  When I can earn a commission, I will work the deal, run it through your office, and give you 30% of the buyers commission.  It's free money with zero additional work on your end, and I am 100% exclusive to you.I was prepared to give up 40% of the buyers commission on my deals. I figure that getting anything is better than the nothing I get now. Even 3 OF MY OWN deals a year where I only get a share of the buyers commission more than paid for any costs I would have in a structure like this.At the end of the day, 3 Brokers jumped at the chance. One of the brokers that jumped I had never spoken to before in my life.

You can't get what you don't ask for.

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Couldn't you just pay a broker under the table to get your RE license and cut the year time table out? Probably not but I remember someone telling that they did something like that where they didn't want to be a RE Agent, just buy properties for themselves and rehab and sell..

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Another question for my new mentors.

As of right now, I've got a good credit score--740 or so--but I'll officially be unemployed right after July 4th.  But I'll actually be working for my brother under the table at half salary, which combined with a company car and unemployment compensation should leave me okay for a few months.  There's a duplex that I want to buy, listing at 120k with both sides rented for $575 per month.  That's $1150 income on a payment of about $850...looks like a good deal.  Anyway, I'm thinking about grabbing this (pending inspection and appraisal) while my financial situation still looks good to the lender. 

I'm cashing out my 401k (around 12,000) and have over 10,000 in available credit, so I can withstand a few months without renters, or even move in myself.  Plus, I have siblings and parents that would help at the drop of a hat.  The only thing I don't have is a sizable down payment.

Here's the listing (I hope you can get there from this link).

MLS Listing

It was listed for a couple of months, then showed up as "sale pending".  Now it's back as available.  Not sure what that's all about, but I'm seriously thinking about buying this in the next few weeks.

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First thought: With a 740 and no job, you can still go no Doc, and make it work. You WILL pay a higher interest rate if you play it straight. I am a big believer in playing it straight and sleeping well at night. Surely at least on Mortgage broker will suggest other ways of structuring your information when the time comes and they see your set up. It's done all the time, and no one ever seems to get caught, but I like sleeping my my home, not one with lots of roommates that is federally owned. Someone will likely try and steer you a wrong way with a great score and no documented income. Don't be that guy who's brother creates the VOE.The only way I see a $850 a month payment is with nothing down at 7% or so, or 10% down at 9% or so. How are you seeing this?

At 10% down, or $12K, you are eating into your reserves pretty hard, and may struggle on the back side.

Pro Ninja would have to answer this, but a No Doc, with Zero down may be doable with a 740 score???? I don't know. 2 Years ago, absolutely, but lenders are tightening up.

Now, take the $850 a month (Will you have PMI?), I can't seem to pull up the listing (Please post the MLS number so I can find it another way, I already know you are in C-Bus), but if it is out by say Dublin, your Taxes will be OUTRAGEOUS. I don't know what part of the city, so lets just assume say 1,800 in taxes???? Like I said, don't know, but I remember that C-Bus was higher than my market. (I have a best friend who is an investor in Columbus, and works at OSU, I have helped him in the past)

So, 1,800 is another $150 a month. Then FIRE insurance, that is what you want, not replacement cost, or you will have zero chance of making this work. So Insurance of another $900 a year, or $75 a month. Might be as low as $600.00 or $50 a month, I don't remember your area?

That would be $850 + $150 + $75 = $1,075 outgoing a month.

Now, Incoming, $1,150 fully rented out with no expenses or down time.

Really, you have already stated that you will take the place empty, and will have no income. Lets assume this as a BEST CASE. You get it rented out ASAP (not going to happen), but in a best case, you rent it out fast, and year after year you have a total of one month down time per unit. Some years going forward, you have zero down time, and some years going forward you have a few months between renters. Anyway, assuming each unit has a vacancy for one single month a year while you clean, advertise, fix, etc. That drops the monthly incoming to $1,055.00

At this point, you are losing $20.00 a month for the privilege of dealing with renters.

But we haven't looked at repairs. Water heater goes down, Furnace needs repair, roof gets a leak, how is the wiring? Up to code? Basement in good shape?

Start up costs: Every little thing to get a renter costs money every time you have turn over. From the littlest things like a new battery for the smoke detector, window repair, screens, Cleaning costs, or at least cleaning supplies if you do the work, paint when needed, carpet replacement and cleaning, advertising, and it costs to run an add in the newspaper, more than you would think it should. These costs can spiral out if you don't know what you are doing.

Sure, some repair costs can be put back on the tenant's deposit, but one professional tenant can cost you a grand or more over the deposit, and force you to evict them with more down time.

I know I went into some detail here, but this looks like a huge dog to me. Just quick and easy math, Based on it's potential as a rental, I would say it's overpriced by $25K.

That is the way a rental oriented mind like me or Bass is going to look at it.

Perhaps Jeff or certainly ProNinja can look at the different ways to buy this property and see a deal? You make your money when you buy, and I can't see a good way to buy this property at it's current cost.

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At this point, you are losing $20.00 a month for the privilege of dealing with renters.

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Can we just stop right here?

I love that phrase:

the privilege of dealing with renters

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Mike, thanks for the analysis.

The only thing you were off about was the renter situation. Both sides are currently occupied. The MLS # is 2554391 if you want to take a look at it.

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Mike, thanks for the analysis.

The only thing you were off about was the renter situation. Both sides are currently occupied. The MLS # is 2554391 if you want to take a look at it.

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That is a Great looking place, and being Brick, has alot less maintenance. TONS of extras!Given that it is right downtown off the business district, three bed each side, with replacement windows, A/C, the works, the $575.00 a month seems low to me. I would want to do some research on the going rates, but I could almost get that here, in a much softer rental market than your location has to be in my mind.

Are you looking right downtown? Me? I LOVE right downtown properties, most prefer the 3 bedroom ranch in the suburbs. At say $25K less, that is a property I would hurt myself jumping on to.

Very nice.

Tell me about the area you want to invest in? Is it this kind of property right downtown, or have you given it much thought?

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Another question for my new mentors.

As of right now, I've got a good credit score--740 or so--but I'll officially be unemployed right after July 4th.  But I'll actually be working for my brother under the table at half salary, which combined with a company car and unemployment compensation should leave me okay for a few months.  There's a duplex that I want to buy, listing at 120k with both sides rented for $575 per month.  That's $1150 income on a payment of about $850...looks like a good deal.  Anyway, I'm thinking about grabbing this (pending inspection and appraisal) while my financial situation still looks good to the lender. 

I'm cashing out my 401k (around 12,000) and have over 10,000 in available credit, so I can withstand a few months without renters, or even move in myself.  Plus, I have siblings and parents that would help at the drop of a hat.  The only thing I don't have is a sizable down payment.

Here's the listing (I hope you can get there from this link).

MLS Listing

It was listed for a couple of months, then showed up as "sale pending".  Now it's back as available.  Not sure what that's all about, but I'm seriously thinking about buying this in the next few weeks.

Click to expand...

First thought: With a 740 and no job, you can still go no Doc, and make it work. You WILL pay a higher interest rate if you play it straight. I am a big believer in playing it straight and sleeping well at night. Surely at least on Mortgage broker will suggest other ways of structuring your information when the time comes and they see your set up. It's done all the time, and no one ever seems to get caught, but I like sleeping my my home, not one with lots of roommates that is federally owned. Someone will likely try and steer you a wrong way with a great score and no documented income. Don't be that guy who's brother creates the VOE.The only way I see a $850 a month payment is with nothing down at 7% or so, or 10% down at 9% or so. How are you seeing this?

At 10% down, or $12K, you are eating into your reserves pretty hard, and may struggle on the back side.

Pro Ninja would have to answer this, but a No Doc, with Zero down may be doable with a 740 score???? I don't know. 2 Years ago, absolutely, but lenders are tightening up.

Now, take the $850 a month (Will you have PMI?), I can't seem to pull up the listing (Please post the MLS number so I can find it another way, I already know you are in C-Bus), but if it is out by say Dublin, your Taxes will be OUTRAGEOUS. I don't know what part of the city, so lets just assume say 1,800 in taxes???? Like I said, don't know, but I remember that C-Bus was higher than my market. (I have a best friend who is an investor in Columbus, and works at OSU, I have helped him in the past)

So, 1,800 is another $150 a month. Then FIRE insurance, that is what you want, not replacement cost, or you will have zero chance of making this work. So Insurance of another $900 a year, or $75 a month. Might be as low as $600.00 or $50 a month, I don't remember your area?

That would be $850 + $150 + $75 = $1,075 outgoing a month.

Now, Incoming, $1,150 fully rented out with no expenses or down time.

Really, you have already stated that you will take the place empty, and will have no income. Lets assume this as a BEST CASE. You get it rented out ASAP (not going to happen), but in a best case, you rent it out fast, and year after year you have a total of one month down time per unit. Some years going forward, you have zero down time, and some years going forward you have a few months between renters. Anyway, assuming each unit has a vacancy for one single month a year while you clean, advertise, fix, etc. That drops the monthly incoming to $1,055.00

At this point, you are losing $20.00 a month for the privilege of dealing with renters.

But we haven't looked at repairs. Water heater goes down, Furnace needs repair, roof gets a leak, how is the wiring? Up to code? Basement in good shape?

Start up costs: Every little thing to get a renter costs money every time you have turn over. From the littlest things like a new battery for the smoke detector, window repair, screens, Cleaning costs, or at least cleaning supplies if you do the work, paint when needed, carpet replacement and cleaning, advertising, and it costs to run an add in the newspaper, more than you would think it should. These costs can spiral out if you don't know what you are doing.

Sure, some repair costs can be put back on the tenant's deposit, but one professional tenant can cost you a grand or more over the deposit, and force you to evict them with more down time.

I know I went into some detail here, but this looks like a huge dog to me. Just quick and easy math, Based on it's potential as a rental, I would say it's overpriced by $25K.

That is the way a rental oriented mind like me or Bass is going to look at it.

Perhaps Jeff or certainly ProNinja can look at the different ways to buy this property and see a deal? You make your money when you buy, and I can't see a good way to buy this property at it's current cost.

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I wouldn't be as quick to pass this by as Mike. I know in my market, I'd be all over this. If this is the best deal around, I suspect the financials will improve as mortgages rates drift higher via rent increases. If you don't own a home, I'd consider making this my primary residence for a brief period of time to capitalize on lower interest rates and less money down. Appreciation really is something you need to attempt to figure in. Most of my investors last year were flat on the income side, but knocked out 1%+ a month returns on the appreciation side. My point is that sometimes you have to take what's available and there are no universial rules as each market is it's own entity. That side, Mike laid out all the questions you need to ask before proceeding forward. Have you comped this deal to the last dozen or so in the market that closed?

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Mike, thanks for the analysis.

The only thing you were off about was the renter situation.  Both sides are currently occupied.  The MLS # is 2554391 if you want to take a look at it.

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That is a Great looking place, and being Brick, has alot less maintenance. TONS of extras!Given that it is right downtown off the business district, three bed each side, with replacement windows, A/C, the works, the $575.00 a month seems low to me. I would want to do some research on the going rates, but I could almost get that here, in a much softer rental market than your location has to be in my mind.

Are you looking right downtown? Me? I LOVE right downtown properties, most prefer the 3 bedroom ranch in the suburbs. At say $25K less, that is a property I would hurt myself jumping on to.

Very nice.

Tell me about the area you want to invest in? Is it this kind of property right downtown, or have you given it much thought?

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That part of the city is called Olde Towne East, just outside of downtown. Parts of it are still the 'hood but there are pockets where it's really really nice. Beautiful old houses just waiting for the young professional crowd to move in, and they are...it's just not happening overnight. Tons of potential there, and that's where I'll be focusing my energies...it's where the deals are.As for the rent, I think $575 is low as well, but to be honest I haven't done a lot of research yet.

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Great call on the Living in one side of it. Jeff would have nightmares, but I was able to start doing this for a living by buying a Duplex, and living in half of it. Tax breaks, live next to rent free, the works.

It's how I got started.

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