Ok , maybe everyone can provide some general insight into strategies or tips for my new venture.
Anyway , i'm looking at buying properties to use for a hold-then-flip strategy. I've found several properties i can buy at 60-75% FMV.
I need to know good , effective methods for finding quality renters and the paces to put them through to get the best. I'm planning on offering owner financing/land contract for the property if i can do it in a timely manner once the property has been refurbished for renting.
The basic methods of advertising that have been sugguested have been Craiglist , the local classifieds, premise sign and a few rental websites. Are there any other good sugguestions for sources to advertise?
Now , for screening , i'm under the assumption that the basic things that should be followed are credit, criminal and a past landlord check. I'm also planning on dropping by the current homes of potential renters to valuate their quality of life before acceptance.
Another thing that was sugguested is making the renters responcible for the first $25 of any repair on the property , thus keeping down my expenses and their complaints. A thought i had was also getting a home warranty , my cost is going to be around $370/yr with a $55 deductible , covering everything outside of roof of the property, with the other strategy , my cost per covered repair will be $30. Would this be a good plan at a cost of $30ish a month for warranty?
One note on selling on land contract (contract for deed). I had an investor tell me the IRS looks at land contract sales as if you have sold it that year and you owe tax on your profit, even though you are receiving your profit over years through monthly payments. Not sure if it works that way in every state or he just did it wrong, you just may want to look into that with a knowledgeable accountant before using that strategy.
Contract for deeds fall under installment sales, which means you pay on what you receive that year. If you sell it within a year of buying it then the entire term of the loan is taxed as a short term capital gain, but still only on what you receive in that year.