All Forum Posts by: Eric Black

Hi Mary,

I am not aware of any banks that will allow you to pre-pay your mortgage for x number of months so that you don't have a payment during that time, but maybe I am wrong. If, by chance, your bank will allow it then it will still most likely not cut too much off of your payoff time frame. If you can pre-pay 6 months of mortgage payments then you're paying interest on what your balance would be 6 months from now instead of if you continued paying month to month. Unless you have a very expensive house I couldn't see it saving you more than a couple thousand dollars over the life of the loan, so it may shave a few months off.

Cheers!

Eric

Hi Eric,

Without being able to prove which tenant(s) is causing the problem you have limited options. I think the best you could do would be to send a letter to both tenants explaining the problem and reminding them of what they signed. You can "threaten" to raise the rent in the future to cover the costs if the problems continue. Obviously you would have to follow all appropriate laws for giving notice of raising rent, etc. Short of that I can't think of anything except not renewing the leases and finding new tenants who can comply. 

Cheers!

Eric

Hi Casey,

It looks like you've found the resource, now you just need to learn to use it. Use the Search BiggerPockets field in the upper right-hand corner to search for terms related to analyzing properties. You'll find there are a bunch of threads on this site alone. 

You have to do some of the leg work and searching on your own. Under the Tools menu there is also a Rental Property and House Flipping calculators.

Cheers!

Eric

Hi Sean,

I used to work for Mascari Warner Architects (http://www.mascariwarner.com/) and they did great work. It's been almost 10 years since I've worked for them but at that time they were growing. 

Cheers!

Eric

Hi Kyle,

A good place to start is www.usa.com (formely www.citydata.com). While the data may be a year or two behind, it should give you a good overall picture of the economy in that city. You can also reach out to the local Chamber of Commerce and request information regarding job number and population growth or decline. They may be able to give you more recent information than a site like usa.com. 

As far as the best metrics and news, I'd say they all work together. Typically, if you find a market with a growing population and growing jobs, you'll probably find increasing wages but also possibly increasing crime. So you have to look at everything together, not just one or two metrics. 

Cheers!

Eric

Hi Robert,

Read the P&S very carefully. It is not uncommon to sign it before the inspection however there MUST be an inspection clause in the P&S that gives you a certain period of time after the inspection to back out. In some states you can have a clause that allows you to get out of the contract for any reason for a certain number of days, for example even here in (The Socialist Republic of) California it's 17 days. Not sure what MA law is so you may want to check. If you don't see an inspection clause or a clause that allows you to get out for any reason, don't sign it. And if there is a clause of either kind, make sure the number of days allowed is realistic. 1-2 days may not be enough time to get a report back and determine if it's still a good deal, especially if there are repairs that need to be made. On the other hand, you can't expect 30 days to make a decision.

Again, read the contract VERY carefully and ask your agent to point out where these clauses are. As long as they are there, and there are no penalties for cancelling the contract, then you have nothing to worry about in regards to signing before the inspection is complete and you've had a chance to review the report.

Cheers!

Eric

Hi Greg,

That's a tough one. I would also recommend getting a letter from their bank stating that their account has been frozen and with an explanation of why if possible. Maybe give them additional time to pay rent this month without penalty?

If you do decide to use some of the money from the security deposit (and may I also suggest talking to an attorney familiar with NJ real estate law) I would be sure to get something in writing that explains how you will recoup the money to bring the security deposit back to the full amount once the issue is resolved.

Best of luck. Cheers!

Eric

@Alex Corvin

I have found the 1% rule to work in our markets so far. We have had a one or two instances where we had an unexpected major repair that ate up a chunk of our profits for the year but when factoring in the tax advantages, etc. we still have made out okay. Personally in the areas of the markets we invest in we haven't been able to find any solid properties to make the 2% rule work. It seems you can find those numbers in, for lack of a better term, "less desirable" areas so I think both work, it's just more a matter of your investment philosophy and where you are comfortable investing. 

Eric

Hi Kyle,

Partnerships can be a very tricky prospect, especially when it comes to partnering with friends or family. My advice would be to find a good, experienced attorney who knows both partnerships and real estate very well and invest some money getting their advice and having them set up the structure. Chances are there will be a lot of things they will bring up that neither of you have thought about that will be there to protect both of you in the future. If you choose to go it alone then my only piece of advice would be to discuss and outline in the partnership agreement every possible scenario, good and bad, that you both can think of and how every little issue will be handled. Verbal agreements and assumptions have been the demise of many partnerships.

Cheers!

Eric

Hi Alex,

To me your numbers don't seem too conservative and I applaud you for not making a common newbie mistake of tweeking the numbers to make them look good. It's better to be too conservative than to be too generous.

I'm not familiar with your area so I can't offer any input there however, one common way to quickly evaluate a potential deal is to use the 1% rule. If you are going to purchase the house for $145,000 then it needs to rent for a minimum of $1,450 per month. Using this "guideline" doesn't guarantee that you'll make any money on the deal but it increases your chances. If the rule doesn't work in your area then maybe it's time to start looking somewhere else where it does work. 

Cheers!

Eric