All Forum Posts by: Bill Wallace

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Personally, there's no way I'd do that. Too much risk with a newer investor on both your parts. He doesn't have a track record and you don't have experience with this kind of transaction.

If you do want to move ahead anyway I'd want documents showing past deal successes and something showing how he's guaranteeing the loan.

Might look at this guide from BP - 

http://www.biggerpockets.com/renewsblog/2013/08/24/real-estate-agents-working-with-investors/

Well I'd still go more with my plan with something like the following - 

- Call them personally to tell them in early July. Tell them that they need to vacate on August 31 but that you'll give them 100% of their deposit back (plus interest if mandated by law) on the spot upon move out assuming no damage. If they don't have to clean tell them that too as that will seem like a bonus. On top of that you'll give them $200 for moving costs at the same time and serve as good reference for any calls from landlords. Do reinforce that they will still pay August rent.

Richard has a valid point but I guess it depends on whether you consider giving a tenant 55+ days notice to vacate (as I suggested) as trapping a tenant. 

My goal was to protect your income stream while at the same time trying to be as considerate as possible to the tenant. 

Heck, anyone who has been a landlord for a while has had to tell a tenant that you weren't going to renew their lease. I had to do so this past fall so I could put my wayward son in a property vs. having him live on the street. As I told my tenant, I was very sorry to do so, I'll be the best reference ever for any future landlord that calls me and I'll be very quick to give you your security deposit back. There are certainly ways you can try to soften the blow of having to ask them to leave.

Buying "as is" shouldn't be a deal killer. A lot of homes are sold that way. It just means you need to do your due diligence ahead of time.

Yes, you should get it inspected. Yes, you should bring in contractor(s) ahead of time to get a solid handle on expected repair costs. And yes, you should make sure you feel confident about the cost of holding, selling & final sale price. You said "the house is actually open" but I would advise to always get the owners permission before entering. 

To many investors it's this kind of house that they seek out. No typical owner occupant will touch it and even many investors don't want to take on homes that need more than carpet, paint & appliances. The bigger the project the more opportunity to profit on it if you do your numbers right up front.

I'd try to get a better handle on your expected rent (450-750 is a big range) & your expected costs but on the surface it sounds like it is a very good deal. I'd probably pay for a home inspection too.

I agree with Mark that there's no reason to feel like you have to start with wholesaling. That model doesn't fit lots of people and I'm sure the vast majority of real estate investors started straight out with being a landlord.

Pros - 

• Get the commission on your deals
• Possibly work with other clients to earn commissions
• More ingrained into industry to understand the process and how to value deals
• Access to MLS
• Possibility of writing off more expenses on taxes

Cons - 

• Cost & Time of getting license
• Cost & Time of maintaining license - MLS fees, E&O insurance, desk fees, Association dues & training costs add up to thousands per year
• Share commissions with broker
• Must follow strict licensing rules per state & Realtor codes

Personally, I don't think it makes sense unless you are buying or selling 3+ deals per year (or helping others). You can always do a couple deals without it and then make a judgement about it after you learn more.

The safest way is to tell Tenant 2 you'd like to renew them on a month to month lease starting May 1 at their current rent.

Then, assuming you have a 30 day cancellation, I would tell both tenants on July 5th that you are ending their leases on August 31st. That will give them plenty of time to find a new home but ties them into staying through August.

I'm not an agent in CA so you may want to wait for their advice but personally I would price it "at" the market price and not below. If it's a seller's market and houses are moving quickly that should get you offers anyway.

As far as language goes the one thing I'd put in the listing is that "offers won't be reviewed until x days on market". Basically you want to give enough people the chance to see the house and get an offer in instead of just accepting the first one. If there are going to be multiple offers this gives it enough time to see if people want to write on it. I'd probably use 3-4 days as the "x".