After talking to him, my mind just went into overdrive. For the remainder of the night, and each time my wife and I got up to feed the twins, I did nothing but think and think and think about these 12 properties. I finally reached a consensus that instead of narrowing my choices to only 4 properties (and then only 2 of those), I am actually going to try and get ALL TWELVE. I will still do my due diligence (and do a second and third time for good measure), so I'm not saying I'll get all twelve, but I'm not going to limit myself just because most are out of my farm area. One huge reason was that from all the supporting data I've gotten over the last 6 months suggests that property values will be increasing in central Texas - in some cases, by a LOT. Now, I'm not one to speculate, and I'm not going to do so this time, but having that extra bit of knowledge may influence my decision of whether to go or no-go with any/all of the properties.
My only barrier now is time. I'll need a LOT of time to gather info on all these properties and make a precise analytical result on whether I can do them. There are numerous unknowns at this time that I hope to get answers on from the owner, mainly about the rents: amounts and terms. I'll also have to no doubt take out a pretty big loan from my 401(k) for holding/acquisition costs - something my wife has already vehemantly said "NO" to before.
Edit: I got an email from the owner a short time ago with only some of the information I requested. He asked that I contact the property management company for some of the other info (i.e., lease dates, PM contract). Some of the other information I requested was just flat-out ignored. One thing he didn't respond to yet was my repeated request that I would have to take these properties Sub2 and if he was okay with me doing so. I'm guessing his refusal to answer the question but continued dialog with me can be substituted for "Yes", although, it would still be nice if he would say so. :-)
Based on the data I got so far, I was able to make a pretty good ballpark estimate on six of the properties. Taking the properties Sub2 and selling via owner financing would give me the following projected net profit figures:
Property #1: $ 20,413.37
Property #2: $ 38,267.80
Property #3: $ 12,399.41
Property #4: $ 11,350.98
Property #5: $ 22,130.99
Property #6: $ 42,806.97
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TOTAL $ 147,369.52
The other properties are harder to figure out since I am trying to formulate market conditions in areas I have no clue about.
I am a littl euneasy about Properties #3 and #4. I set a minimum profit of $15,000 for each property I purchase for now on, and those two fall below that criteria. If they make-or-break the entire deal, I'll take them, otherewise I'll probably pass on them.
3 comments:
I'm guessing he probably didn't take the time to respond (or commit) to all of your questions because there is either some doubt in his mind that you really are all you're cracked up to be, or either that perhaps he's still in denial a little about his situation. But, the more you talk to him, the better his level of trust in you will be. And, you might also continue to subtly add "reminders" of his precarious situation in your communications with him.
Thanks Trisha. He really seems a bit odd about the situation - that's for sure. The email forwarded to me from the birddog written by the owner sounded like he was at the end of his rope financially, physically, and emotionally. So, I thought he'd jump at the chance to have someone take interest in his property. It even sounded like he was earnest in our initial phone conversation. Now it almost sounds like he is in no hurry. I sent him two follow-up emails yesterday late morning regarding the properties, and I have still not heard back.
dunwoody - That's exactly what I am going to do today. I'll write the offer, with contingencies, and send it to him electronically. For now, I've narrowed down the 12 properties to six. I'll post on this in a seperate entry. Thanks much for the suggestion!
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