I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by JohnG

Real Estate Investing Real Estate Law
#1

Posted by Ben (NJ) on April 08, 2000 at 21:50:51:

I swear some people’s goal is to live for free as long as humanly possible. I just had my first experience of a professional deadbeat, I purchased a tax lien at a big discount from another guy who had held the lien since 1993 and never wanted to foreclose. This means that the property owner had not paid taxes since 1992. It then got better, during my foreclosure I discovered a private mortgage holder who had bailed the guy out of a PRIOR foreclosure with a refi loan and had not received even ONE payment. This was done in 1990. The mortgage holder was also too busy or too stupid to ever foreclose. I figure the prior foreclosure probably took two or three years before it got to the point where the guy got bailed out. All told this guy went for at least 12 YEARS without paying a DIME to live in a decent neighborhood in a decent house. I got paid off by the mortgage holder and he is continuing my foreclosure so its still not over, (I just heard the guy is considering BK (again!).

#2

I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by JohnG

Posted by JohnG on April 08, 2000 at 15:27:45:

If you keep your nose to the grindstone then every once in a while you come up with a real sweet deal.

I happened to find out about three- fourplexes that were for sale for 69,900 per unit - thats 17,250 a unit - a real steal.
I bid 70,000 a unit (100 over asking) sight unseen, no conditions, all cash offer.

I thought - no matter what shape these things are in - I can renovate carpet, appliances, paint, roof etc and still make a good buck.

I just took possession Friday night. I pulled into the little town where they are and as I turned in a street I said to my partner “Man, I wish those units were the ones we are buying”.I was joking and expecting the worst as far as these units were concerned - what can you buy for 17 a door anymore ?
Well, guess what - they were absolutely beautiful - no garbage in the yards, no holes in the walls, no wrecked floors etc etc etc. These were foreclosure and get this - there were 11 vacancies out of twelve and the reason for that was the bank really had no interest or desire to manage these and get tenants in there.

So, as of Monday, I will be ripping out old carpets, painting,new lights, newer appliances, we will increase the rents and based on the new rent roll(all 12 units will be rented) in 90 days we will offer for sale at a real nice profit.

Man, it feels good when it all comes together.

#3

Re: I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by ScottE

Posted by ScottE on April 09, 2000 at 13:44:54:

John,

Congratulations!

How did you find this deal?

Scott

#4

Re: Did you pay $210K cash for 12 units? Time to talk to Ed Garcia! - Posted by Millie I.

Posted by Millie I. on April 09, 2000 at 24:12:33:

John,

How did you know this was a good deal? What state are you in? What is the fair market value for each 4-unit before upgrades? How much do you have to spend to upgrage per unit? and how much can you sell them for after the upgrades, holding costs, and rental & selling expenses. Personally, I won’t pay out that kind of cash, or flip so quickly unless I can make at least $100K profit right away, otherwise you may be throwing away a gold mine.

If the properties can bring in sufficient positive cashflow, you should try to refinance to get most of your money out, let the rents pay the mortgage and give you a monthly profit for the next 15 years or more. Using OPM (Other People’s Money) like a mortgage loan is the best way to minimize your out-of-pocket costs, and maximize your ROI (Return on Investment). You should always try to use as little of your money as possible to create as much income as possible. There are landlords in this group that nets over $100K profit a year from rents, do you think they worry about tenant problems?

If you don’t want to deal with tenants, you can hire a property management company to handle it for you. There are a lot of professional landlords here that started just like you, scared of tenant problems, but as years go by, and experiences build confidence and expertise, they don’t see them as problems anymore, just day-to-day operations. You don’t see veteran landlords complaining much, just budding landlords, why? because the longer they deal with tenants, the more control they have over the business, and less and less tenant problems they will have. Check with MR. LANDLORD to learn about Landlording.

When you see the money pouring in month after month, a few hours of customer service a week is gonna be well worth the trouble, but you must be smart enough to learn from the winners, not from the cry babies or weak hearted wanabes that always have a reason not to do anything.

Good Luck,
Millie I.

#5

Re: I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by JD

Posted by JD on April 08, 2000 at 20:53:46:

congratulations. You must be in a very large market (?). If three 4 plexes were being foreclosed upon at one time in my market, everyone would know about them.

#6

Re: I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by ScottE

Posted by ScottE on April 08, 2000 at 17:34:38:

John,

Congratulations!

How did you find this deal?

Scott

#7

Re: I found the next SWEET DEAL - 11 vacancies out of 12 units !!! - Posted by phil fernandez

Posted by phil fernandez on April 08, 2000 at 16:03:54:

John,

Nice deal, but why not hold and rent the units for the positive cash flow. Once you sell you have capped your oil well and have ruined your money machine.

In selling you’ll have one payday. If you hold for the cashflow you will have many paydays. And who wants to pay IRS taxes on your gain from the sale.

#8

I have a severe case of “tenantitis” - Posted by JohnG

Posted by JohnG on April 08, 2000 at 19:03:35:

I hear you.
I could refinance and take out some cash and keep the cash flow coming.

I have developed a severe reaction to tenants - I break out in large red rash all over my face everytime I listen to another story of why the rent is late. I firmly believe that a lot of scammer tenants could make a million in creative writing- if they would just use their talents properly instead of trying to scam everyone they meet.

Seriously, I look at places that I have bought, reno’d and sold in the last 3-4 years and I made a nice profit on the re-sale, but if I had kept them I would have made 3 times the money on re-sale today.