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MARKETPLACE REO Turnkey - Cash Flow positive with Property Mgmt in place

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
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Philadelphia
Our properties are for the 'hands-off' investor - for someone who recognizes the opportunity of the current market but may not have the time, know-how, or local opportunity to take action themselves. We make turnkey investment properties available to investors at a significant discount. The properties are tenant occupied, with property management in place!


• Consider the many tax advantages investment real estate has to offer
• Step into Instant Equity of $25,000 or more upon purchase
• Let experienced investors – who put their own money where their mouth is – do the work for you



The buy & hold strategy is the oldest trick in the real estate book. It has made more millionaires than any other real estate investment strategy. It will not make you rich overnight but it has proven to build substantial wealth, time and time again.


Start building Wealth Now!
 

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phlgirl

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
173
85
Philadelphia
Instant Cash-Flow and Equity! Tenant Occupied with Property Management in place!


This property is rented for $989/month and property management is in place. We have an appraisal, which was performed last week, for $122,000.

The Fastlane price for this property is $87,500.


  • 3 bedroom/2 bath home
  • 1 car garage and carport
  • 1626 sq feet
  • Brand new Kitchen
  • Updated Baths
  • All new carpet/ceramic tile flooring
  • New paint inside and out
  • Over-sized den with fireplace
  • Large, fenced in, rear yard
  • Cash flow positive

Please see the attached spreadsheet for more details.

We, along with our partners, have about 6 houses for sale right now. If you would like to see pictures or request additional information, please feel free to contact me.

Check out the website! We have a some new video footage!

Thank you for your time!
 
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phlgirl

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
173
85
Philadelphia
Income from rental properties is passive income but it is NOT tax free income.
Thanks so much for the constructive feedback, CashFlowDepot.

You are correct - and I should know better - my terminology was poor.

What I should have said is that real estate brings the opportunity for significant tax advantages, depending on your financial structuring. For example, I have not been taxed on a single dollar of real estate income, for the 10 years that I have owned investment real estate. It has also reduced (or completely eliminated) the amount of tax I have to pay on other types of income.
 

andviv

Gold Contributor
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Jul 27, 2007
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It has also reduced (or completely eliminated) the amount of tax I have to pay on other types of income.
I assume this applies to you as a Real Estate Professional, given IRS's definition, right? Or am I missing something else?

P.S. I like this opportunity.
 
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phlgirl

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
173
85
Philadelphia
I assume this applies to you as a Real Estate Professional, given IRS's definition, right? Or am I missing something else?

P.S. I like this opportunity.

Hey Andviv! Nice to *see* you. :)

Yes, now that we have the Real Estate Professional status, it does allow us unlimited property losses; however, prior to that, when I was W2, the RE losses permitted (so long as you stay below a certain income amount - AGI less than 150k) were $25,000 for a single person and $35,000 for a married couple (95% sure on these numbers). While I was employed, our portfolio was fairly small, so I/we never hit the limitation.

After building our portfolio in FL, we now have significant annual losses (thank you depreciation!!!). We can bring in a pretty good chunk of change before we even have to think about tax.



****Which reminds me, JScott - have you started implementing Part II of your plan yet? That is, are you holding any of those little gems you are picking up in GA? Not sure how they cash-flow but you might want to think about it....don't want to miss out on this insane buying opportunity. I am already looking back, wishing we got more, but that party is over for us. :)

Although it may not feel like it now, it won't last forever. It never does.
 

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
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****Which reminds me, JScott - have you started implementing Part II of your plan yet? That is, are you holding any of those little gems you are picking up in GA? Not sure how they cash-flow but you might want to think about it....don't want to miss out on this insane buying opportunity. I am already looking back, wishing we got more, but that party is over for us. :)

Although it may not feel like it now, it won't last forever. It never does.
I haven't yet...unfortunately...

I need to start meeting with local banks again to figure out a long-term financing plan. I currently have short-term financing in-place for the flips, but because of the self-employment thing, I don't (yet) qualify for long-term conventional financing.

I'm sure there are some local banks that will overlook the self-employment situation and provide a long-term financing solution, but I haven't been diligent in trying to find them (i.e., I've been lazy).

Come next year, I'll have two years of tax returns to prove 2 years of profitability in the business; at that point, we should be able to qualify for long-term financing pretty easily. But, I agree that waiting until next year is probably a bad strategy and I need to get on the ball much sooner.

Thanks for the prod...I'm adding the bank visits to my to-do list right now...I'll have an update for you in the next week or two!
 

CashFlowDepot

Gold Contributor
Speedway Pass
May 16, 2009
711
1,268
385
Central America
if you got financing for 100% which is completely unrealistic, and your interest rate is 8.5 which is the going rate for investment properties if you have a 720 FICO, then your PI ( with 30 year financing) would be $672.80. Add $300 per month for taxes and insurance and your payment would be $972. Assuming a low low 5% management fee about $50 - that puts your payment at $1022 -- a negative cash flow.

Add in a 3% transfer fee for florida + closing costs + loan fees it is looking like this "deal" is on thin ice.
 
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phlgirl

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
173
85
Philadelphia
Is this lady serious!?! lol

Jackie - did you even open the spreadsheet? I have detailed the tax, insurance, mortgage and property management expense (12%). No one said anything about 100% financing - those days are long gone. $5000 (high) have been allocated for closing costs.

This is based on 80% financing (20% down) at 6% (which is where our last 5 buyers all locked in).

This is for a hands-off investor - that is the intent. Not EVERYONE wants to flip/wholesale/rehab houses. They may however recognize that real estate can be an excellent, long term, wealth building, investment and that this market has potential for great opportunity.

I have no problem with your challenging the numbers on my deals but, at the very least, do your homework, ok?
 

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CashFlowDepot

Gold Contributor
Speedway Pass
May 16, 2009
711
1,268
385
Central America
I did not open the spreadsheet.

Hmmm -- don't know of any non-owner occupied financing for 6%. Even occupants are having a hard time getting 6%

You CAN get 100% financing here if you buy at 65% of market value or less but non-owner occupied loans are in the high 7's to mid 8's%

12% management fee? You've got to be kidding. I've never heard of a fee that high. 7-8% maybe but not 12%. maybe things are different on the east coast of florida.

Hands off? what does that mean? Does that mean that you make their mortgage payment when the house is vacant? Do you cover any repairs if the property is messed up? Does that mean that the owner will never hear from you if the AC goes out and you will fix it for them?
 
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phlgirl

phlgirl

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
813
173
85
Philadelphia
I did not open the spreadsheet.

Hmmm -- don't know of any non-owner occupied financing for 6%. Even occupants are having a hard time getting 6%
Too bad, you might be missing out.

You CAN get 100% financing here if you buy at 65% of market value or less but non-owner occupied loans are in the high 7's to mid 8's%
Sounds like a great opportunity, for a hands on investor. We took advantage of similar opportunities, while building our portfolio.

12% management fee? You've got to be kidding. I've never heard of a fee that high. 7-8% maybe but not 12%. maybe things are different on the east coast of florida.
Yes, things are different on the east coast of Florida. Of course, everything is negotiable and, with volume, these rates come down; however, there are only a few solid, reputable, property management companies in the area (2nd or 3rd generation companies) - they charge a premium and provide a good service. Having managed our own portfolio for nearly 3 years, I can testify that it is some of the best money I have ever spent.

Hands off? what does that mean? Does that mean that you make their mortgage payment when the house is vacant? Do you cover any repairs if the property is messed up? Does that mean that the owner will never hear from you if the AC goes out and you will fix it for them?
No, No & No. However, we do make sure that all of our investors are completely aware that issues can, and frequently do, arise. We talk to them about evictions, repairs, insurance and learning to manage a healthy relationship with their property manager. We also encourage a reasonable reserve account. We make it clear that it is important to do your own due diligence.

The hands-off investor (as I see it) is someone who does not have the time, know-how, local market or desire to do the majority of the work themselves. They do not wish to spend their spare time researching deals, negotiating contracts, putting together a rehab crew, finding a tenant, etc. Instead, they prefer live their own lives and leverage others to do the leg work, in their absence.

All that said, Jackie, I am not claiming (and never have) that this type of investment is for everyone. As we discuss here all the time, there are many ways to build wealth. This investment structure does tend to be attractive to people who would like to leverage the tax benefits of owning real estate, while building cash-flow and equity growth, over time.
 

JScott

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Speedway Pass
Aug 24, 2007
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Hmmm -- don't know of any non-owner occupied financing for 6%. Even occupants are having a hard time getting 6%
Jackie -

You should start working with local banks in your area.

My owner occupant buyers are seeing 30-year fixed at under 5% for FHA and at 5.125% for conventional loans.

In terms of investment loans, as soon as I hit 2 years of tax returns for my business, the bank I use will provide 20-year fixed investment loans at Prime + 1.25% (what I'm currently paying for my short-term loans right now). I know other investors who are getting 6.0-6.5% portfolio loans from local banks and credit unions (30-year fixed, non-owner occupied).

If you're paying in the high-7's and 8's, you're likely dealing with the big banks who don't provide their own underwriting standards, so you're getting screwed on both the rate and the underwriting stringency.

Just a suggestion...
 

CashFlowDepot

Gold Contributor
Speedway Pass
May 16, 2009
711
1,268
385
Central America
I have never gone to a bank to buy an investment property and never will. There are too many other ways to buy which don't require bank financing.

I have however worked with hundreds who have and these are the rates they are getting around here.

credit unions seem to have the best rates now and they only charge $175 loan fee - no commissions.
 

JScott

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Speedway Pass
Aug 24, 2007
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I have never gone to a bank to buy an investment property and never will.
Jackie -

In my experience, the best way to determine what loan products are available is to talk directly to the lenders, as opposed to taking other investor's word for it.

You see, investors who are looking to buy your properties won't always tell you the truth about what financing terms they are receiving; they may tell you that their rates are higher (and therefore their payments are higher) than they really are to encourage you to drop the price of your deal. They do this to improve their negotiating position and to try to take advantage of you!

So, if your buyers are telling you that they are getting rates in the 7's and 8's, they may really be getting rates in the 5's and 6's; if you've never visited a bank yourself, how would you know?

To take away this negotiating edge your buyers may have on you, I would recommend that you visit a few local banks to educate yourself on the rates they offer and the terms they provide; this will not only help your negotiating position, but will also give you the information you need should you ever want bank financing and help you provide educated information to your buyers who may be looking for financing.

I hope this helps. Let me know if I can provide any further info...
 

Russ H

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Jackie-

We just got a $500K building loan from a local S&L that we're paying less than 5% on.

Granted, it's got a floating rate-- but we'll be out of that loan and into something else before it tops 7%.

-Russ H.
 

Bilgefisher

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Aug 29, 2007
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Aurora, Co
I can't vouch for phlgirl's program although I have bought two rentals from turnkey sellers the same way with very similar numbers described. Property management in Denver is 10%. I don't think 12% is totally unrealistic depending on their services.
 

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