All Forum Posts by: Steve Vaughan

Great discussion!  Debt does represent risk, so it is healthy to keep a balance for sure and be very aware of it.  Remember 2008??  I listen to Dave often.  I am glad I financed my real estate purchases in the beginning with fixed rate, fixed-term mortgages. His way would leave me maybe buying my first rental now with cash instead of starting over a decade ago and having a nice net worth. Funny how net worth never comes up in his debt-free screams.  A lot of them are debt free (which is great) but renting an apt somewhere.  With that said, I do not have credit card debt or car payments or timeshares or any of that.   Use debt wisely to finance assets that provide income and increase in value.  Avoid negative am loans, variable rates, calls/balloons and land contracts/contracts for deeds always!

Like @Joe Villeneuve  states, use actual numbers. The connecting factor of all posts above is your market and your exit strategy.  Know your market!  In a larger metro area like Tacoma, I would probably at least at first, focus and farm a certain corner I specialize in.  A good deal will stick out like a sore thumb, and you can do like  @Robert Williams  did and take advantage of a great deal . Broaden your farm area as you get comfortable.   The 70% rule and the 2% rule are basically never available to me in my market.  I would have long starved only looking at those.  I like the cashflow per door rule like @KYLE Z.  recommends.  I use a slightly different approach. On my 5+ units I do a break-even analysis.  If it will survive with only  5/7 of the units rented, it is worth looking at.   The terms are as important as the price, especially with single-families.  If I don't have to play with a bank or grind through a single-minded realtor or attorney, I will 'pay' a higher price.  It's all about what works for you.

Welcome @Ally Salinas !  This is a great place to start.  I invested for 12 years somehow without this info.  Wish I found BP earlier on like you!  I like to listen to the podcasts while driving or doing housework, etc.  Learn, learn, learn!  

Welcome @Juan Silva  .  Good to have another buy and hold investor-type from the NW!  I love portfolio properties for long-term but I am open to other exit strategies as property type, property location and seller situations dictate.  Learn as much as you can to have those other exit strategies available to you as they apply .  BP has a great diversity of specialists offering real life tips, experience and advice to help.  RE is a great vehicle to support and help you achieve your goals.  Please keep us posted as you grow! 

Abandoned property laws are very state-specific.  Here, perishables and other un-boxed property worth less than $50 can be tossed if the dwelling 'reasonably appears to be abandoned'.  Bring a witness and take a video.  I get rid of perishables either way in the interests of protecting my property from mold, smells, pests, etc.   Follow your state law. The statutes are usually pretty clear in your state's landlord-tenant law.  You're almost done with this character.  Hang in there!

A lot of those worsts (death, disability, loss of job) aren't specific to RE investing, of course.  I would add to do thorough title searches and get title insurance! One worst would be to buy something from a non-owner, buy something headed to foreclosure, leveraged and liened to the hilt or involved in some blanket mortgage or something.   Also, never buy on a land contract or contract for deed.  It's not in your name until you pay it off.  There you could make payments for 10 years only to lose it because the seller gets sued and the judgement attaches to 'your' property.  Good discussion!

@Richard C.   Nice!  When you are sick of paying the maintenance fees and are done with it, the place you bought it from won't even want it back for free.   There is no market for these things. After you check your budget and are sure vacation is the best use for your dollars, just pay as you go and don't bring it home with you in the form of payments!  

Here are some things I do that don't cost a ton of money:  Put vinyl under all sinks, at the cabinet base.  Even run it a little long and go up the back wall a bit.  Replace all sink supply lines and toilet supply lines with braided stainless.  Stick with high sheen paints inside that wash well.  Avoid fridges that have water/ice hook-ups. I don't even like ranges with electronic controls.    Flush your water heater and make sure gutter downspouts drain water away from the house.  @Richard C. , good idea on the welcome mats!  I even provide area rugs and runners I pick up cheap to place on my wood/laminate floors.

There was most likely title insurance issued when the seller financed or re-financed the house.  If it wasn't 30 years and 2 inheritances ago and the home isn't in an industrial area (i.e. old gas station or something), I wouldn't bother trying to re-insure the title. In my area I research my own titles at first, then order an 'owner and encumbrance' report from my title co for around $120.00 before closing.  They e-mail it to me.  It details all owner's of the property and any existing encumbrances.  Once they caught a blanket mortgage I hadn't seen.  That property was encumbered with 6 others!

A couple other main additional things I do when I buy sub2:  I make the mortgage pmts directly to the lender. I make them through my prop mgt co, but you don't have to have one.   The seller can check online to make sure it's been paid.  The other thing is have the seller add you as an additional insured person on their hazard insurance.  If the seller discontinues property insurance at all the lender will know (and apply their own at an extremely high cost).     Good luck!

@Brandon Hall  Great tip on Form 3115 to claim depreciation after the fact.  Now if I can only figure out where to store that info where I can remember where to retrieve it in 20 years or so...    Thanks!