need advice on how to buy 18 houses at once - Posted by Jerry

Posted by John on October 21, 2005 at 07:33:31:

your gross rent x 37 seems like a load.

need advice on how to buy 18 houses at once - Posted by Jerry

Posted by Jerry on October 20, 2005 at 22:41:17:

I have an opportunity to buy 18 houses from an 86 year old investor who wants to retire.The problem is I only make around 60k per year. Credit score 760-780.
I’ve bought 2 houses since finding this site 2 years ago.I used most of my cash to buy the first one out right, so I don’t have much cash for a down payment, only around 30k in equity in the 2 rentals. I don’t want to start negotiating with the seller until I know I can get financing.

Is there any possibility of getting a bank to finance these with out much down? I’m looking at around 400-500k to do this deal.He hasn’t maintained the houses for a while. Rents in the area go for 375-550 per month.Taxes are also low.
Is there somthing creative I could do with the seller? remember he’s 86

How would one approach A banker about this deal?

I’m sure this is A lost cause, but I thought I’d at least ask for ideas before giving up on this deal.

Thanks for any advice.

ecurrency phentermine - Posted by ecurrency phentermine

Posted by ecurrency phentermine on January 21, 2006 at 16:25:44:

phentermine 37.5 mg 180 tablets phentermine western union order phentermine with cash on delivery phentermine pillstore phentermine 30 mg buy phentermine usps phentermine 37.5 tablets cheap phentermine within 24 hours phentermine cash on delivery order phentermine online cod phentermine 30 mg phentermine uk phentermine all states phentermine with saturday delivery phentermine hydrochloride phentermine accepts cod phentermine hydrochloride phentermine american express c.o.d. phentermine phentermine online stores phentermine free shipping 1800 phentermine paypal phentermine with saturday delivery phentermine 37.5 overnight phentermine with saturday delivery phentermine 37.5 90 buy phentermine usps online phentermine stores ecurrency phentermine phentermine 50 states phentermine uk order phentermine with cash on delivery phentermine priority overnight ecurrency phentermine phentermine 30 mg 180ct phentermine order phentermine online cod extra cheap phentermine phentermine 37.5 paypal cheap phentermine no script phentermine free shipping 1800 phentermine hydrochloride phentermine 37.5 paypal phentermine all states phentermine free shipping 1800 phentermine 30 mg buy phentermine usps phentermine cheap cash on delivery online phentermine stores phentermine priority overnight phentermine online stores phentermine free shipping 1800 phentermine accepts cod phentermine 37.5 mg 180 tablets phentermine online stores phentermine 37.5 paypal phentermine 37.5 overnight phentermine for $79 phentermine 37.5 paypal phentermine cash on delivery

Re: need advice on how to buy 18 houses at once - Posted by options

Posted by options on October 21, 2005 at 12:13:09:

Could you make a profit if you sold them retail or slightly below market for a quick sale? If so, set up the deal with a “rolling” option or an option or options to buy the homes one or as many as you want at a time over a set period of time, say a year or two. First purchase just a couple of the houses (or whatever you can afford) which you spiff up and then sell to pull out cash profits, and then repeat again with maybe three more and so on. At some point you should have created enough cash for the downpayments to finance the balance of the rentals. This way the owner gets some money up front with the first purchases and periodically gets more which should make him happy as you steadily exercise your options to purchase until you have completed buying them all within the agreed upon time period. There are a thousand variations on how to set this up depending on the actual situation and the deal that you can strike.

Re: need advice on how to buy 18 houses at once - Posted by Lee in LA

Posted by Lee in LA on October 21, 2005 at 02:00:52:

Hi Jerry

Here are some thoughts from an investor who some think is “dry” behind the ears. Wink wink

You said “from an 86 year old investor who wants to retire” I say irrelevant!
His/ her age does not matter in your financial future.

Your investment (purchase) should not exceed a multiple of “37” of the properties monthly rents.

Expounding for the public here…
Yee shall not pay more than the monthly GROSS rent (X (times)) 37.
GROSS RENT X 37 months = Value (+ or -) for SF rental income property.
(I have violated that rule but try to stay as close to it as I can.)
In (your example) 375.00 Rent per month X 37 = 13,875.00 (Total price to be paid) for the property
or on the high end, $550.00 Rent per month X37 + $20,350.00 (Total price to be paid) for the property.

You said ?He hasn’t maintained the houses for a while? (there is a reason for that)
I say, ?Your CASH FLOW will pay for his neglect? unless you subtract the cost to catch the repairs up, from your offer, otherwise, don?t buy them. Don?t be greedy though, or you won?t buy the property(s) from him.

You may want to go see each of his properties and do a courthouse search.
Find out what you can about purchase amount that he paid, persent market value, county and city tax assessment amount, who he owes, how much he owes, who (if any), his co-owners/ borrorwers are etc.
Knowledge is (negotiating) power.

Choose ONE in the best location and the best condition and make him an offer on that ONE.

A 30,000.00 cash deposit in his account, to him at this time in his life, may be just what he is in the market for.

As long as your offer closely adheres to the above criteria (for you), he may be happy to take it and let the other 17 properties go to someone else.

Note: Consider what the weather is going to do to your cash flow. Call your insurance agent and get his/ her openion of the trend for your area rates and include those amounts in your future plans, those costs are inevitable.

One more thing
The borrower is slave to the lender, don?t borrow!

Good luck with it
Lee in LA

Re: need advice on how to buy 18 houses at once - Posted by Will

Posted by Will on October 21, 2005 at 24:13:38:

Lost cause? No way.

Let me get this straight…you bought a house outright…AND you only have $30K in equity in 2 rentals? I’m not sure I’m following. Unless you bought a really cheap ($20K?) house outright…

Do you own THREE houses–one that you live in and two rentals?

How much equity do you have in the house you live in?

Also, when you say $400-500K to do the deal, that means you are buying a whole slew of $25,000 or so houses? And they are renting for $375 to $550 per month? That sounds like awesome cash flow.

If you’ve got $30,000 in equity in rentals AND you’ve got another $20,000 in equity in your home, you might try a HELOC to get enough cash.

Better yet, see if the guy would carry a second. I know, he’s 86 years old, but if he’ll even carry a $50,000 second for 3 years, you can make this thing work.

The cash flow is too good for you to give up easily!

Re: need advice on how to buy 18 houses at once - Posted by Kristine-CA

Posted by Kristine-CA on October 21, 2005 at 21:34:50:

Lee: I’m with Will on this…when was the last time you bought in CA
for 37 x gross monthly rents? In 2000 and 2001 I bought some of the
scariest, yuckiest stuff in the central valley desert for less than 50K.
And rents there were 350-400, so I guess they fit into your formula.
But they needed real repairs at that price. But rents in the central
valley where I buy now are 600-800 and even when I get a deal at 50%
of FMV, it’s still over 75K. My specialty is real deals but cash flow is
not a consideration these days for me.

So what are you buying where you are? And are you buying where you
are? I’m always looking to figure out how other CA investors manage
the buy and hold thing. Kristine

Re: need advice on how to buy 18 houses at once - Posted by Mike (Seattle WA)

Posted by Mike (Seattle WA) on October 21, 2005 at 09:53:08:

x37 gross monthly ~= x3 gross yearly ~= x1.75 net yearly.

Wow, that’s setting a high bar for cashflow alone. That’s Capping just north of 20%. But there are areas of the country where this is still possible so I’ll give you that. Kinda gives you perspective when the coastal regions average transaction is x5-x20+ worse than that. Good 'ol appreciation shopping and such… I’ll keep this in mind when cashflow shopping - thanks.

37x ? In Los Angeles??? - Posted by Will

Posted by Will on October 21, 2005 at 08:03:58:

Are you serious? When was the last time you bought something for 37x rent? Are you dealing strictly in undesireable properties in undesireable neighborhoods?