Step one of my plan requires financing and cash to even get my self storage venture off the ground. I decided to turn houses. Initially the entire plan was to fix and flip. While that will still be apart of the plan, an opportunity presented itself that I could not pass up.
By chance my buyers agent came across some tier 1 property flippers. These are the folks that pick up properties as low as 30 cents on the dollar. They fix the properties then turn around and sell them to investors for wholesale prices. Why not full market value? Simple, they can turn around more properties this way rather then holding on to a few.
We have lending in place for 0 down and closing costs rolled into the loan. I will be picking up two properties at once. The reason is to get these properties all at once so my debt to income ratio will take one hit and not two. This allows me to lock in lower interest rates for both. 6.5% currently, but will likely rise before the deal is inked.
Property 1 we will pick up for 99k. The tenants are locked in 1 year contracts for 950/mo. Property management in place at 6%. Making assumptions of 8% vacancy (1 mo), $500 maintenance annually, $750 taxes. The property will cash flow for about $50/mo. Current market value is 120k. This neighborhood dropped 25% in value last year and this particular property sold for 125k in 2001.
Property 2 we will pick up for 100k. FMV 120k. Sold in 2006 for 160k. 1400/mo rent. All other values are similar. Cashflow around $350 mo. This property is slightly different. It has a mother-in-law loft above the detached garage that rents for $400 and the main house for $1000. Both tenants in place. The nice part about this property is it will cashflow without the other unit rented. Slight downside is the street isn't exactly great. When we sell it will sell below comparable in the area. The 120k takes that into account.
If these two properties work out for us, our goal is to get into 3-4 more properties this way before years end. We will sell at least one after 1 year for cash reserves and tap into equity on the others plus our own home equities to begin our SS venture. We still plan on flipping at least 1-2 houses this year for further cash reserves.
I should be going under contract tomorrow and already have the nod from the investors.
I have checked their reputation as well as my buyers agent. These folks have a great way of doing business. I'm very excited about the prospects of this, sorry if the post is a little bit jumpy.
By chance my buyers agent came across some tier 1 property flippers. These are the folks that pick up properties as low as 30 cents on the dollar. They fix the properties then turn around and sell them to investors for wholesale prices. Why not full market value? Simple, they can turn around more properties this way rather then holding on to a few.
We have lending in place for 0 down and closing costs rolled into the loan. I will be picking up two properties at once. The reason is to get these properties all at once so my debt to income ratio will take one hit and not two. This allows me to lock in lower interest rates for both. 6.5% currently, but will likely rise before the deal is inked.
Property 1 we will pick up for 99k. The tenants are locked in 1 year contracts for 950/mo. Property management in place at 6%. Making assumptions of 8% vacancy (1 mo), $500 maintenance annually, $750 taxes. The property will cash flow for about $50/mo. Current market value is 120k. This neighborhood dropped 25% in value last year and this particular property sold for 125k in 2001.
Property 2 we will pick up for 100k. FMV 120k. Sold in 2006 for 160k. 1400/mo rent. All other values are similar. Cashflow around $350 mo. This property is slightly different. It has a mother-in-law loft above the detached garage that rents for $400 and the main house for $1000. Both tenants in place. The nice part about this property is it will cashflow without the other unit rented. Slight downside is the street isn't exactly great. When we sell it will sell below comparable in the area. The 120k takes that into account.
If these two properties work out for us, our goal is to get into 3-4 more properties this way before years end. We will sell at least one after 1 year for cash reserves and tap into equity on the others plus our own home equities to begin our SS venture. We still plan on flipping at least 1-2 houses this year for further cash reserves.
I should be going under contract tomorrow and already have the nod from the investors.
I have checked their reputation as well as my buyers agent. These folks have a great way of doing business. I'm very excited about the prospects of this, sorry if the post is a little bit jumpy.
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