Blah another newbie post -- Not exactly but please advise

I have the guts to invest and the risk itself will force me to work harder.

I have a few doubts though, would greatly appreciate some help.

I have found 2 great properties in a city in Texas, but the financials is whats holding me back. I have seen the rental roster, proximity to hospitals, demographic makeup etc. Everything looks bright, plus it is currently 100% occupied.

What worries me is the owner insists (at leans) heavily on loan assumption, the second thing is I dont know if I can get roughly a million dollars from a bank.
I have a steady high earning job (100$k), around 50k in the bank and am prone to excessive research bordering on pedantic obsession before plunging.
So this particular issue is causing me worries.

Another issue yet not that important is the “sales package” style of sale the realtor is offering, this includes a lot of fluff , at least from the look of it , to name a few that cost a lot:
Resident Manager,Advertising, Administration and Maintenance (the last 2 are 4-7% of the gross) which I think can be eliminated.
How reliable is the realtor’s information? especially the occupancy %?

Would someone guide me please, I really need a mentor.

Thanks a lot

I think what you need to is learn how to buy at large discounts Subject to the existing loans and to stop using the services of an Agent…

Never put your credit at risk nor your cash… With today being a Buyers market there isnt any reason to have to… Deals are just about on every corner … Go find them…

Michael Quarles

mac, your post is short on details, but if I understand you, you are looking to plunge into a million dollar multi unit as your very first deal? Is this correct? If so, my suggestion is to slow down and keep your hands in your pockets so you aren’t able to sign anything.

Well not exactly, the very number overwhelms me, but the realtor who I spoke to about the property sent me a ‘prepared package’ with sale information and financials etc. That had the 1 million dollar number.

What sort of loan should I be looking at, and what kind of property?
Should I rather look at 500-600k and 15+ units, fully occupied?Is the occupancy % a big factor? If not what is? Will there be property management outfits for 600k units as well?
I know these questions might be silly, but as im just starting out, my mind is all over the place.It needs time and guidance to calm down i guess.

Thanks a million

~ Eager to earn without compromising to learn!


Ever thought of buying a single family home and selling it?

I don’t want to even THINK about how my real estate career would have turned out if I had jumped right into renting a million dollar property. Wait…I just thought of it…BANKRUPTCY!!!

S L O W D O W N.

Buy a single family first. Get it at a great price and resell it. You’ll learn a ton. You’ll find out THE REAL holding costs of property while it sits on the market. You’ll learn how to deal with contractors, how much things cost to repair, and worst case scenerio you end up renting it. If you bought it right it should cash flow.
Do a few of these. You’ll be surprised by how much your extensive research DIDN’T tell you. Then you can move on to bigger properties.

As far a advice from a realtor reguarding investing??? Run down tonight and ask your local Ford dealer if he thinks you should buy a car? My guess is he’ll have the perfect “INVESTMENT” for you right in the showroom! Same way a realtor “helps” you find the perfect property.

I am looking at the following websites for properties,, and they seem to have good information and tons of properties, but invariably everyone has a realtor listed who charge 2% from either side mind you.

Sometimes being the middleman sounds better that buying and selling!:slight_smile:
Im learning though, I just resigned to not pursue that biggie deal, Ill just keep looking and learning.

Everyone doesn’t have a realtor… and you will find more deals when Realtors aren’t there to screw them up… BTW I am one, I know the lack of training most have and completely understand the Broker issues when their agents try and represent someone wanting to use creative financing to buy property, I am a Broker too.

You need to set in place a marketing program… I bet you would find more deals your first month if you just wore a Polo Shirt that said you buy houses on it. Pass out a few business cards each day…

Network at every opportunity…

Here is the idea… Let say you buy a house for 100,000 in today’s market the seller is most likely paying 6,000.00 in commission and if it hits the MLS most likely its at 100 percent value…

If you purchased that house you would be paying 30,000 plus for advertising and if you spend 30k in advertising you would be buying a lot more then just one…

Then there is the issue of using your credit… Once you get to about 10-14 loans you’re done … You can no longer buy houses using your credit.

Think about all of those investors in Las Vegas who bought track housing and now they are selling them 2 for the price on 1…

Just my two cents…



Operating rental properties is ALL ABOUT THE NUMBERS. So, why don’t you post the numbers here so that we can see how this deal looks.

I need gross monthly rents and purchase price to give you an idea of whether this deal is profitable or not.

Good Luck,


Sure PM, here is one of the properties I liked:
Price: $ 599,000 of course I would try to negotiate this to ~480,000(?) or so.

Gross Income:$99,100

of Units:15

Gross Expense:$63,207
Net Income: $38,929
Cap Rate: 6.5
Occupancy Rate: 100%
Unexempt Taxes: $9,472
Insurance: $5,038
Average Rent :$550

Thoughts please?

As an aside, I must tell you guys, hopefully without bragging that though I have quite a bit of education , confidence cannot be taught , this forum gives one confidence.

I feel much more confident now that I did yesterday, the loan aspect is still daunting but nerves are calmer especially knowing so many have tread before in this way.

I think life is risky, everything is risky , there is no guarantee to anything, but one can use their intelligence to make those risks quantifiable and thus make a good profitable choice.
Thanks for all your help, im still in the research and learn stage, hope to close a deal in Jan, thats my target.

Taking the seller’s income/expense numbers, and assuming a commercial loan of 500k for 20 years @ 8% (monthly payment of $4182), you will be losing ~938/month right off the bat. Doesn’t seem like a winner to me

The last post is a perfect example of why I tell people to start out in this business BUYING and SELLING homes first. I don’t care how much education you have or now many books you’ve read…

YOU WILL NOT LEARN UNTIL YOU actually DO IT with money YOU either saved or signed a pile of papers for!

Just ask people who do it. They’ll tell you…what they “researched” and what the reality was are two TOTALLY different things.

Start out small. Buy a cheap house for half it’s value and sell it to another investor. Yea, your gonna leave a pile of money on the table but that’s your TUITION!!! You can pay it that way, or you can pay by buying a building like the one in your post and losing money on it every month. The rental business is a VERY TOUGH ROW TO HOE. I would HIGHLY suggest buying property managers book and reading every word of it. Residential rentals are a down in the trenches business. In my experience SOME highly educated people have NO IDEA what they’re getting themselves into when they start this type of investment.
I know that is stereotyping but it is based on 20+ years of buying, renting and selling real estate. I can not tell you how many homes I have purchased from Doctors, Dentists, College Professors, Engineers and other professionals who got COMPLETELY overwhelmed by the day to day process of renting HOUSING to the PUBLIC.
Again, I do not want to insult anyone who has worked for YEARS to obtain advanced education. The fact that you accomplished that will help you succeed in real estate because it too is a LONG process.

I had a College Professor sell me a duplex at 30 cents on the dollar because some psycho was driving by his house at night and scaring the living you know what out of his family. This is real world stuff here.
Mike (Propertymanager) does an excellent job of telling his insane tenant stories in his book.

You’re not ready for that yet. You can be, at some point down the road.
Get a few very basic deals done. LEARN BY DOING, NOT BY JUST READING!