these deals don't really exist ... right?

Question

after talking on the phone with a client a few days ago, he casually mentioned that a family member of his was going to let his house - 3 years away from being paid off - foreclose, because he was sick of paying on it.  My client swooped in, took over payments and after 3 short years - it is now his!

Boy, I'll tell you something - if that happened to me, i would INSTANTLY jump on it, but the problem is this...

it seems too good to be true.

Do you all find deals like this?  Where specifically can I begin looking?  I have looked on the web a lot, and havent found anything anywhere near soemthing like this.

Greg B. · Answer

What part of Texas?  Find a local REI group and network your rear off.  I have found deals just because I know someone that knows someone that knows someone....

Timothy W. · Answer

Sure they'll handle it for you, if you pay for it and after you've found a good one.  I want to be clear though that it isn't as "turn key" as it is often presented and it will get frustrating at times having a vacant property or a late tenant and you wonder what you're paying the mgmt company for....

Texas has some areas with devent sfr prices that look like they could cashflow well.  I'd find a small town with a stable population that you can buy sfr's cheap enough to cash flow and start there.  With an sfr, let's say you decide you don't like real estate after a couple years.  There's a much bigger market for sfr's than multis.

Timothy W. · Answer

What Mike said is absolutley true.  I buy regularly at about 20% fmv, but that doesn't make a bit of this easy.  I still have to manage the tenants, respond to lease violations, chase down rent and all that jazz in order to make a dime.  Equity is nice but tending your landlording business pays the bills.

What state are you in, btw?

Ramsfo - yeah it's just some things I probably SHOULDN'T say after having a few...lol  It's that red wine that gets me....  Seems like such an innocent, classy drink....

Tim

Jason Schmidt · Answer

oh!  i thought a prop. management company would handle evictions, finding tentants, receiving money, etc. for you.  Am I wrong?

Oh, and I am in Texas

Jason Schmidt · Answer

i want to buy and hold - to be a landlord.  i am just nervous to take the plunge - mainly because i don't know where to look!

Michael Shadow · Answer

Sure if you have the faith and confidence that they will put your $150,000 investment at the top of their priority list and take the absolute best care of it to make sure all maintenance issues are resolved quickly and at reasonable rates.  Also that the absolute best tenants that apply are going to be granted a lease.  If you feel that they will do that for you and not for the properties they personally and their friends own, then by all means use them.

On a side note if you've never personally managed properties on your own how will you be able to effectively interview the property management companies?  What kinds of questions will you ask them?

-Michael

Michael Shadow · Answer

Being a landlord doesn't end when you close on a property.  It has only just begun.  I would recommend studying what it means to be a landlord before buying the property.  The day you close on the property you will immediately need to know all the procedures and laws in regards to being a landlord. If you've studied it before hand then the day you sign you at least have a head/book knowledge of what needs to be done.  Landlording http://www.mrlandlord.com/mllshop/management.html#P1N is an excellent book covering what all it takes to actually be a landlord.

Being a landlord includes all of the following topics.  There is a plethora of items under each topic that you must know before you jump in.

1. Financials
2. Property acquisition procedures
3. Property management procedures
  a. Filling vacancies
  b. Tenant turnovers
  c. Tenant request
  d. Changes in terms of tenancy
  e. Lease violations
4. Property maintenance standards
5. Office Security procedures
6. Emergency procedures

-Michael

Jason Schmidt · Answer

thanks for the info, Michael!  A lot of this should be taken care of by the property management company though, right?

Ram Chandrasekaran · Answer

LOL. Tim drinks but still can say the exact same thing he said when he was not drunk.. ;-). Jus kiddin... I guess what he was trying to say is, if you "think" you "cannot" find such deals as it "seems" too good to be true. It is better that you find out for yourself if it "seems" or for real. Thats my understanding.

Correct me if I am wrong, Tim.

To me, that is possible and thats Subject-To where you take over payments and rent it out and sell later, etc. etc.

Cheers
Ram

Timothy W. · Answer

"it seems too good to be true."

It SEEMS so doesn't it?  The answer is in your own words.  Everything seems one way.....until it seems another way.