All Forum Posts by: Marcus Auerbach

@Robert Obniski I will send you the information via PM. Owner seems motivated and indicated they are willing to negotiate about the price. Depending on the rent you could get it could be worth looking into it. Too far away for me, good luck!

@Robert Obniski funny, I came across a lead a couple weeks ago for a small manufactured home in the Dells, motivated seller, but not my market and I did not feel comfortable working with them. Any ideas? 

@Albert Thornton let me share with you the perspective from the other side of the fence: the investor buyer who is looking for a deal. I have money sitting on the sideline right now and that does not feel good: I need to find a deal. It sounds weird, but investors will tell you that having money sitting arround and not finding a workable deal can make you pretty anxious. I am driving arround and looking at properties almost on a daily basis. I am making offers where I can (I don't do shotgun lowball, the asking price has to be within reach) and I am really, really, really looking to get something under contract!

If a wholesaler would present a deal to me that is workable, do you think I would tell him that the numbers don't make sense just to see if he would be willing to give up his profit so I can fatten up the deal on my side? No way would I risk loosing that deal to someone else!

If I can live with the numbers I really don't care that how much he is making: I will be happy to sign on the dotted line. I know how hard it is to find a deal that's good enough for an investor - a wholesaler has to do that and then beat that by at least another 5k. That is very hard to do and I respect the guys that have mastered this art!

Like @J Scott said earlier wholesaleing is absolutley not an easy startegy and it requires a lot of hard work and a lot of different skills that most newbies just don't have.

I contact every wholesaler that I come across. I call the number on the bandit signs, I sign up on their web page, I answer all their questions so I can can get on their "buyers list". I even tell then to contact me with every deal they have, even if they think it's a bad one. You may have guessed it, I have not gotten a single lead from a wholesaler. 

And it makes sense. Most of the guys are completley new to the business and are fresh from a seminar. They have been told it's easy, but it's just the oposite. After half a year they disapear again. I know there are some successful wholesalers out there, but I have not met one yet. If someone asks me my advise to get started it would be - safe some money and buy a house, fix it up and rent it out. That's probably easier and wil teach you what you need to know to become a succesful and respected wholesaler - eventually. 

@NA Burkart what a story! You have been very patient and cooperative, but some people take this goes the wrong way. Instead of appreciating an accomodating landlord they just sense weakness and keep expanding the boundaries. I have had my share of this and had to learn to act and respond more like a business and not like ... I owe my tenants something for being willing to rent from me?? It seems like we have to go through a few bad tenants before we learn how to toughen up a bit and become more professional.

Read Mike Butler's book about landlording, probably the best read on the subject. He is talking about treating your tenants not like your customers, but rather like your employees. It's interesting and makes perfect sense to me. You start with an application and an interview, next you enter an agreement. The next step should be an orientation, but this is where most of us fall short. Have you ever told your tenant what happens if she does not pay? 

I my case I actually have to front the payment out of my pocket to pay the bank, insurance and taxes. I have told that a tenant once and they were shocked. They seem to think that because you are a landlord you are sitting on piles of money and you get to keep 100% of the rent.

Finally it comes down to enforcing your policies. The most important one is probably paying rent on time, every time. There are a lot of different ways how to encourage this behaviour and its a matter of preference. I have all my tenanats enrolled in autopay, so they dont have to think about writing a check and mailing it and I don't have to go to the bank to deposit them. All I do is checking my bank account on the 5th and updating my books.

I would not worry too much about not extending the contract. I am just a couple miles south of you and chances are we rent in the same neighborhood. I have no problems finding great tenants, even at higher rents and at this time of the year. Granted winter is not the best time to move, but there are always people moving for a number of very different reasons and there are only so many SF's available. Actually right now almost nothing if you look on craigslist. What I have started doing is to adjust the length of the lease so it expires in spring, for example 14 months instead of 12. Tenants have no problem with that, because they don't want to move either in Jannuary.

Hope I was able to give you some perspective as you were looking for and good luck!

@Steve Babiak I have a feeling that the further east you go the tighter all kinds of regulations get. Really appreciate your comment though, now I am thinking again about egress windows for a fourth bedroom on another property. I think I can ad one for about $2500 and wonder what that would do to adjusted values of an appraisal.

@Steve Babiak  we dont have egress window requirements here for rec rooms, only for legal bedrooms.

@Jim Peret  I am with you and I'd rather see what I buy. Personally I have no concerns with a proppertly braced wall, but a first time buyer might get scared, because they don't understand. The word foundation issue comes up in the inspection report and they might just run for the hills. Leaving some space to access the block wall will allow for future inspections and I feel it's maybe not the smartest way of doing business, but at least it's honest.

We are rehabbing a nice brick ranch in Milwaukee, WI and are planning on finishing the basement. As you can see on pictures one of the walls is braced. We don't know when the braces were installed, but I would guess at least 3-5 years ago. A lousy paint job has been applied in the last couple years (not recently) The wall seems stable, the mortar between the steel and the block does not show any signs of cracks. It also looks like the drain tile has been redone.

We are debating if we should frame right against the wall or if we should leave some sort of crawl space to allow access.  I like the idea of having access and not "covering up" a potential issue. About a third of the wall is in the laundry area and will not be finished, so the braces will remain visible there. At the same time that means to loose about 100 sqft of rec room space, so that would speak for framing right against the wall.

The basement seems reasonably dry, but (not much of a surprise) the pitch outside of the braced wall is negative, which we will correct in spring. The other question is if we should put rigid insulation behind the studs. Technically the right way to do it, but I have never actually seen it done in a house, probably to save cost. I would really appreciate your comments and thoughts!

I don't know Flint, but just out of curiosity I have checked it out on craigslist. Rents are lower than in Milwaukee - most apartments for less than 600, in the city almost nothing above $800. Some SFH in the suburbs that rent for 1000+

On the other hand I have not seen many "move in specials" with free rent etc - that would be a good sign in my book.

I recommend you do some good old research and make a list of properties on a spreadsheet that are comparable to what you want to buy (I assume that's what you are getting to), call and ask everything you want, maybe go to an open house or a group showing (be respectful and don't wast landlords time) and track how long they are on the market before they are rented.

Stephanie, securing financing for your primary residence is the easier task and I would not worry too much about it when adding investment properties. Just make sure they all cash flow and you maintain a good credit score. 

Financing a distressed property is much harder. First of all I would be surprised if the damage is only 30k based on what you describe. It sounds like you have a roof and two floors to fix, plus general rehabbing - I would have guessed at least 50-60k. Make sure you have a good estimate based on a scope of work. A contractor can help you with that, but make sure you are not biting off more than you can chew - it sounds like a project for a seasoned rehabber.

Alright, so how can it be done? First you can try and see if the owner is willing to finance for a year. If not then you will have to come up with cash for the closing. You can also ad from an unsecured credit line, a home equity line or just ask your friends or family if someone wants to partner. Same for the rehab, plus if you are comfortable with the interest rate you can use a credit cards to finance materials short term. If the numbers are good enough you can also consider a hard money lender, who will borrow based on the deal and not necessarily based on the asset - expect 2-4 points and 12-15% interest though.

In any case keep in mind that people and banks are a lot more comfortable to lend you money when you have your own money in the deal as well. This provides them with a safety cushion. If the deal goes sour first you will loose 100% of your money, before they will start to feel it. It is generally called having skin in the game. If you don't believe enough in the deal that you don't want to tie up all your money as you say, why should someone else?

Regardless how you fund the work, you should be able to get it done in 3-6 months. As soon as the rehab is finished and you have a quality asset to borrow against you can get cash out financing from a bank based on a fresh appraisal. You can then repay yourself and any credit lines or partners. Keep in mind that for a cash out you might be limited to 70% loan to value. 

Eran, as far as I have been able to find there are none in the residential lending space without an SSN and a W2. The bank wants to be able to get a hold of you (in the US) and see that you have an income.

What you can do is start an LLC which will allow you to get a TaxID and open up a bank account. You might be able to find a lender on the commercial side. But you are looking at a non recourse loan, so purley asset based and they are hard to come by in the sub-multi-million range.

The other option is to partner with someone who has a SSN and W2, but lack the funds, drive and expertise that you have.