All Forum Posts by: Aladdin M.

I have already had the too good to be true issue occur in Indy.  I bought a duplex that was already leased and cash flowing from a gentleman that claims to have 40 properties under his belt.  "Why are you getting rid of this one?" I asked.  He replied "I am aging, tired of fixing little things, and just need to have fewer in my portfolio to manage."  So, I figured immediately that there's something wrong and I need to be very careful and wait for the inspection report.  The inspection report came out fine.  No mention of the feces in the basement, no mention of the nearly brown ceiling that the smoking heroin addict had in their unit, none of the roach infestation, nothing like that.  Which is fine.  Inspectors are looking for functionality not details that you will probably need for later. $5000 worth of little things to repair (turned out to be $3800).  Anyhow, a month after the transfer, one tenant, let's call them "Smoky the bandit", refused to pay rent while the other tenant cannot pay on time.  Supposedly, both tenants paid on time all of the time according the owner, but it couldn't be proven because the leasing and accounting documents had recently been destroyed in a pipe burst flood.  I know.  I know.  Red Flags.... I'm learning.  Anyhow Smoky has been evicted, leaving their bedbugs and other issues behind.  After all is said and done, this property will still cashflow, but dealing with the minutia and the aftermath of this seller has been more of a pain than I would have liked.

TAKEAWAYS

- Never trust the too good to be true property.  Assume it is getting offloaded due to some unforeseen issue.  Mitigate that issue with due diligence.
- NEVER NEVER NEVER SKIP A DUE DILIGENCE STEP! Assume any seller is not completely forthcoming and mitigate that with research. In my case it was verification that rent has always been paid and on time.
- Assume that the contractors, sellers, etc. will try to take advantage of out of state investor money.  Vet and plan accordingly.

THE BRIGHT SIDE

A silver lining could be that this tenant could have been a functional addict and continued to pay on time and the issues that were hidden could have stayed hidden and gotten worse over time.

@Adam Larkin

DM me and I will be happy to give some contacts.

I would be happy to chat with you guys if you can set aside time for a call.

DM me if when you wish.

@Ravi P.

Not a very mature or productive comment there “big boy”.

Welcome Erik!

Is there any particular return you are looking for or expecting in your search?

@Daniel Whitmore

What Joe V states is true.

Build your infrastructure before you walk across the bridge.

Also, if you are more risk averse, try your first deal in a smaller out of state market.

BUT BUILD THE BRIDGE FIRST no matter where you invest.

@Nathan Christensen

I do not recommend auction.com as a purchasing platform UNLESS you know that you are going to place an incredibly low bid and be disciplined to stick to that low number. Remember that if a property had gone to auction.com it means that no one bid what the bank was asking for at foreclosure. That, in itself, usually means that investors saw it at the courthouse steps and didn’t move on it for what are probably good reasons. Once it goes back to the bank, they are more willing to wheel and deal to get it off of their books. Some properties get listed, some go to auction.com. If a property goes to auction.com it is safe to assume the property could not be sold if listed because people will see it and it is in such bad shape, no one would buy it. With auction.com, you cannot set foot in the property, so the bank can hide issues.

So, in summary, if you know that you are willing to go the long haul and rehab the property no matter what the case may be, you must get it at a price that meets the expectation of “everything must be fixed”. Only then you can use that platform without reservation.

Larry Nutt is no longer at Centier Bank.

@Marcus Holloway

@Erik Chapman 

Erik knows and stands by a contractor he uses for work like what you have described.  So far my interactions with them have been pleasant and they are reasonable. They are currently working on a duplex I purchased, so I can update the thread with their results.  But, I will have to say, if Erik trusts them, I am inclined to trust them as well.