All Forum Posts by: Andy Collins

Cheap money is the way to make more money, and right now with mortgages as low as they still are, they are very cheap money.

If I can mortgage a rental property for 5%, the question is would it be better for me to use my money (thus making a 5% return on that money), or mortgaging as much of the property as I can, and pay 5% for money.

I think I can do much better than 5%, so I put traditional mortgages on everything (I'm only at 7 mortgages so I have 3 more)

I don't see where you came up with the $20-$40k figure.

As a 'buy and hold', a $170k house that rents for $1150 is horrible, it wouldn't cash flow enough if you bought it for $100k (which I would consider a good deal if its really worth $170k and needs $25k in repairs).

So it has to be a flip,,,I'm not a flipper, but first it would scare me that with the problems you have described, there might be a LOT more deferred maintenance you haven't found yet,,so the rehab cost could be much higher.

As many have stated, just contact the owner and see if he even has an interest in selling, until you find that out I wouldn't spend a lot of time on it, you need a motivated seller, so he has to be interested in selling or it won't ever work.

andy

There is an area close to the area I like to buy rentals, it has a lot of "half plexes", its funny to drive down the street and see one structure with totally different roofing on each side.

I refer to buy in areas where there are few rentals, most homes are OO, so needless to say I stay clear of anywhere with duplexes, it is obviously more leaning to rentals.

This is a question for Steven or someone like him, spend a few dollars, go to someone that is an expert on tax law, this isn't something you want to do yourself.

Same on protection, find an attorney that has spent time dealing with these things, nothing against anyone on here, but everyone's situation is different

A normal individual reading tax law is about like me reading on the internet how to do surgery on myself,,,,its a good way for bad things to happen.

andy

The 2% rule won't work in many areas, I try to get 1.2-1.4% in my primary area, and those cash flow just fine. The small town I live in right beside my primary area is more upscale, the cheapest I could ever fine a house here would be $200k+, as much as I would love to have a rental here (extremely high demand because of school district), it just wouldn't cash flow,,

It's always tempting because of high appreciation here,,but it just doesn't make sense,,so I continue with $100-$120k houses "next door" and the formula works great.

For me to get 2% I would have to go in more 'war zones' and that doesn't fit in my model either.

andy

I like @BriannaSchmidt idea about the open house, I work full time and the only time I have an issue is when I have a unit vacant, but I deal in houses that just don't have much turn over, screen my tenants well, and the average tenant stays 2+ years, so that isn't much of a problem. What I had been doing is scheduling people wanting to 'look at the house" every 30 minutes on a Saturday morning, after one or two of those you should have a tenant.

Having good contractors is key, I am currently in the process of buying a property that needs to have a pool removed and foundation work. I will go by on my way to work and check on them and check on them after work (sometimes at lunch), but generally the people that I work with have my cell and call me if there is a problem.

I haven't see my insurance agent in a few years, I have an electrician I have used for years, and same with a plumber,,,they aren't the cheapest, but they are honest and I trust their judgement, if they have an issue at a property they just call me.

Most of us you have to work full time to be able to continue to qualify for loans,,,I have discussed cutting back on my fulll time schedule in 2014 to spend more time with my rentals, and possible a flip or two.

andy

if you boil it all down, its the cost of money. If you can get a mortgage for the 4% mentioned (actually should be closer to 4.5% for investment deal), then what sort of return can you make in real estate.

If you can make considerable more than the 'cost of money', then go for it (keeping in mind the normal reserve requirements etc),, deals that make great sense with a 4% rate, may not make sense at all if interest rates were 7%.

One reason deals have been so good the last few years is locking in extremely low interest rates for long term. If I can get a locked in, 5% rate for 30 years,,its fairly easy to make money, and I leverage myself out,,if rates go up, I get more conservative with cash.

Obviously your situation in life and your investment objectives should always be taken into account.

andy

I bought a security system from Simplisafe.com, you don't need a telephone line, but do need electricity. If the alarm goes off it alerts me and calls the police.

I put a wireless sensor on the front and back door, then put a motion detector in a place someone would walk by,,,it cost a couple of hundred dollars, the monitoring is about $30 a month, but when I'm between projects I just have the monitoring shut down...

Its very simple, about as cheap as I could find, and it works great

andy

You don't have to have your realtor involved to make bid, my 'account" has her listed as my agent, so she gets notified when I make a bid, but doesn't have to actually do anything herself.

I am in the process of buying a short sale from hubzu now, hopefully anyway. My offer was a few thousand over the 'reserve' however the bank has never approved it.

My problem is the listings are deceptive. This particular house only had a picture of the front of the house, in a great neighborhood, and the listing shows it has a pool. It doesn't tell you the pool has to be taken out because one end is 3' out of the ground (has a deep end and obviously left the pool without water). The day I went to look at it I was sitting talking to my realtor (she and her husband are old friends), while we talked we saw at least 3 other appointments show up to see the house (it is occupied).

The house wouldn't come close to traditional financing, in fact getting any liability insurance until the pool is removed is a little challenging even for me.

We are scheduled to close the 27th, but the bank still hasn't approved the short sale, so I know it will end up being approved or turned down until January,,and I am refusing to get the engineers report on the foundation (already have a quote) until it is approved.

It is a hassle, but many times those are the best deals,,I had a short sale two years ago (not hubzu) that took over 3 months, but it is still one of my best deals.

andy

I am not an expert on houses that old, but I would really look at those rehab numbers, a 5k sq. ft house built in 1865 could be a money pit.

Is there a market to sell the house, you say another house in worse shape is listed for $150k, so that gives you more of an idea what this house is worth, but how long has that $150k house been on the market.

Is there a rental market in the small town, or would it be a summer rental only?

Remember your holding cost will be expensive with the size of the house (utilities) and those taxes, if you miss getting it leased or sold next summer you could have to wait another year.