All Forum Posts by: Frank Adams

But insanity is a better defense!

Frank

OK, I guess. I think the most I ever paid for a faucet, other than for my own residence is about $15. I use craigslist a lot and used to cruise a couple of high end neighborhoods that had "once a year community yard sales", deed restricted.

golfgod

I agree with Jeff, your rents are TOO HIGH. The market has adjusted and you haven't. Cut that rent today.

Frank

Even assuming that you can raise the rent $150 next July, this is still a LOSER.

Besides, it sounds to me like you're looking to buy from a more experienced investor. Why is an investor going to LEAVE MONEY ON THE TABLE FOR YOU. Not to put too crude a point on it, but I wouldn't walk 2 minutes to look at a (non) deal like this.

I've sold a lot of houses that I've rehabbed. I always have a very attractive ad that I use. I always get a lot of calls from new investors because my ad sounds so good. As soon as I discern that they are investors I tell them that this is NOT a property for them. Invariably they tell me that they are real smart and that they may know some tricks that I don't. Once they take a serious look they NEVER buy my deals. If any of them ever did I would KNOW that I had underpriced my deal and raise the price on it.

Keep looking.

Frank

Mike has answered your current question, but I'll throw in a couple of things for others who are considering this, and YOU in the future.

1. My lease specified that NO SUBLEASES are allowed. It's right in your lease so DON'T ASK.

2. At lease signing I require the names and Social Security numbers of ALL TENANTS. My lease specifies that they can have NO OVERNIGHT GUESTS for more than 7 consecutive nights without my written permission.

3. Compare your lease with that used by your state Board of Realtors. If theirs has more pages, clauses, terms or conditions than yours does, the problem is likely with YOU. I have not had a rental in about 10 years, yet my last lease was 6 1/2 pages in EIGHT POINT font. I'm guessing that today it would be pushing 9 or 10 pages.

Frank

My rule of thumb is, if I'm buying the seller pays everything, if I'm selling, the buyer pays everything! In reality that seldom, if ever works. But working from your list:

Escrow fee ----
Title insurance owner --seller provides title policy to buyer
Title insurance Lender --buyer pays this end
Recording fees -buyer
Account Servicing Set up fees -junk fee, GWBush should pay
Account Servicing Service fees -same as above
(monthly, quarterly, etc)
HOA transfer fee if any -buyer
Termite Inspection/treatment -inspection buyer, treatment seller-I think in some areas state law may govern this
Septic Certification -seller usually
Buyer’s Home warranty -Realtors always tell seller this will really help their house sell quckly, it's a ripoff (generally), if buyer wants it tell him to pay for it
Survey, if any-if its required for the loan the buyer pays, if the bank will accept my old one I'll let them have it.

New Loan charges -anything having to do with the loan is on the buyer/borrower
Discount fee
Loan origination
Credit Report
Appraisal
MIP
VA Funding Fee, if any--the VA may have some rules on this
New Hazard Insurance Premium

Congratulations on the sale.

Frank

Jay has good advice, IF it complies with your state law! I used to do CFDs (Texas) but then the state changed the law making it a bit more cumbersome to comply with everything. At that time my attorney recommended that I just do fee simple sales. In TX that is a Warranty Deed, Deed of Trust and Note. I prepare all the documents myself (and charge a doc. fee for it) so I make a bit extra on that.

One thing to remember on these deals, there is NO MARKET PRICE. Why limit yourself to $20K? The buyers you're dealing with are not "price" buyers, they are "down and monthly payment" buyers. As long as those two numbers meet their criteria they don't care about the price. A "paid off" price is so far in the future as to have no meaning to them.

Good luck.

Frank

Yes it's normal, but I have a better suggestion. Have them sign a 14 or 15 month lease, that will put their next expiration into the summer-busy season. In fact it would have been better to have done this when they moved in, but next time you'll know.

Also, put an increase, no matter how small in there. If you don't increase it now, when will you? Having a small increase means that much LESS you'll have to increase it next year, and it gets them used to the idea of an increase.

I seldom did my increases in "even" (25, 35, 50) dollar amounts. I'd raise it $17.75, or $21.50/month and tell them, "I didn't really want to increase your rent, but this is the amount my taxes and insurance increased this year. You can understand that, can't you?"

Unless they think you're screwing them you shouldn't have any trouble. And you've GOT TO INCREASE your rents. Otherwise you'll be losing more than you are already.

Frank

Lots of clothes, furniture, art, cars, a long since spoiled butchered deer in a freezer that had been unplugged for about a year. I actually cleaned that out without puking my guts out. Family and long time friends couldn't believe I didn't get sick doing that.

I've made as much as $700 by yard saling "junk" I've found.

I've also found two handguns. One a cheap POS "Saturday Night Special" that looked like it would blow up in your hand. One was a decent .38.

Frank

I'm not sure what you mean by "keep track". Do you just mean an amortization schedule? My amortization software came with my Windows Excel from back in the mid '90s. I just create a new "loan" for each property. Mine are all 30 year amortization, 5 or 10 year balloon.

It takes about one minute per loan to go through and figure our how much interest and "return of principle" I receive each year. I plug that into the worksheet package my CPA sends each December. I also send a letter to each buyer stating how much interest and taxes he paid (I escrow for everything) during the year, as well as his end of year loan balance.

As far as keeping track of the escrow account I just set up an "Excel" file on each property. I list the 12 months down the left side, show the year's beginning balance in one column, each month's addition to the account in the next column, any deductions (tax and insurance) in the next and a running total in the last. It takes a few minutes a year to update and create the next year. This could just as easily be done on a sheet of paper though.

Any other questions just post them here.

Frank