All Forum Posts by: David Albertson

I thought that during the inspection they would do a "rent reasonableness" survey to determine what a fair rent would be. I guess I need to study-up on Section 8.

Anyone? Anyone?

I've recently purchased a 3 bedroom house and have been advertising it for rent. I ran an ad on craigslist for $695 and I put a sign in the front yard. I've had several people look at the property but no one has coughed up the $695 deposit. Anyways I had a lady stop by yesterday and said she had a Section 8 voucher for $850. She said she would bring me the deposit check this week along with the voucher. She told me that I might as well charge the full $850 as she pays nothing towards the rent anyways. My question is, could I get in trouble for telling the Sec. 8 people that I want $850 when in reality I've been asking $695? I know that they will come and do an inspection to determine the maximum rent. I just don't want to be way under the amount they come up with and screw myself out of $$. Any thoughts?

Would this be considered mortgage fraud? I'm in the process of purchasing a rental property ($33,500) and the mortgage company is requiring me to put 10% down. The mortgage is a "construction loan" so I will have to pay to have any work done then go to the bank with receipts and they will cut me a check. My question is if I start my own remodel business (sole proprietorship) and do the work myself, would I be breaking any kind of law? Basicly what I want to do is buy the house, make the repairs and roll all the down payment and repair costs into a 1st mortgage. Am I going about this all wrong?

Thanks.

Does this mean you won't do Section 8? Why?

Mike, thanks for responding. I have a copy of your book. I think this house fits your formulas and I should make good money off it, if they are willing to come down of course. I have a couple questions for you.

1. When you say "a large earnest money deposit" how much do you mean? $5k, $10k, more? I don't understand why that would make any difference to them. They're looking at the bottom line sales price correct?

2. At some point, a new water line was ran to the bathroom (just one) thru the attic (can't do that without heat-trace). I'm assuming the original pipe in the slab went bad, although I've never seen or heard of that. I don't see any signs of settling with the foundation. I was considering a contingency if we found the plumbing to be totally F'd up. Maybe that's not such a great idea?

3. Do the numbers in my first post look OK? Would you be comfortable with a deal like this?

Thanks

At some point, a ridiculously lowball amount will only get the offer thrown out and possibly piss them off. I wonder what that threshold is? What is the best strategy to get them negotiating?

I found an REO that's been on the market 255 days. The original price was $75,500. They currently have it listed for $46,500. The county has it appraised at $79,100. It mainly needs cleaned, painted, bushes trimmed, etc. The only thing that makes me hesitate is one of the bedrooms has had the sheetrock removed from the ceiling, and the carpet was removed from that room and the room next to it. But, we can't find any evidence of water leaking from the roof. WTF? Plus the roof looks like it's less than 5 years old. I'm going back over there tomorrow to take a closer look. Anyhow, here's the numbers.

Projected monthly rent - $675 (I thought $650, realtor and rentometer say $700, so $675)

$675/2 = $337.50
$337.50 - $100 cashflow = $237.50
$35,700 @ 7% for 30yrs = $237.51
$3500 estimated closing costs (probably high)
$1000 estimated repairs (I'll do it myself)
$35,700 - $4500 = $31,200 (the max I should pay, right?)

How much do I make the first offer for? I was thinking $25,000 but that doesn't leave me a whole bunch of room to negotiate. What do you all think?

As an electrician this thread struck my interest. According to the 2005 National Electric Code you are allowed to replace these ungrounded receptacles. But you must replace them with a GFCI and it must be labeled "No Equipment Ground". And as far as I can tell (I hate the way they word the code) you can install the GFCI as the first receptacle and feed the rest from the "load" side of it. In other words, if you have 8 plugs on one circuit, the first must be a GFCI and labeled "No Equipment Ground". The other seven can be replaced with the normal grounded type receptacles but they have to be fed from the "load" side of the GFCI and they must be labeled "No Equipment Ground" and "GFCI Protected". I'm not sure about the Section 8 thing but I'd be willing to bet they only require you to be up to current code. This method of slaving receptacles off the GFCI will get you up to code.

Bartstop

MikeOH, I recently bought your book (good reading BTW) and you say that you should stick to your local market at first. We've been watching the newspaper, freebee classifieds, craigslist and the MLS for a while now. What I've seen is anything that gets listed for 75-80% of FMV and doesn't need much work, gets snatched up fairly quickly. We simply can't find anything that meets the 2% rule. However, if I go 35 minutes down the road, there is a smaller city with quite a bit of manufacturing, distribution, industrial type jobs. If I do a search of the MLS I find 10 SFR's for less than $50k. When I look at the classifieds in the local paper there I see 2br's going for $600 - $650/month. Hell, even a 2br trailer is going for $500/month! I wonder if I should start concentrating my efforts there instead? Do you think a 35 minute drive is too much if I'm trying to do this on the side at first? Thanks.

Bartstop