All Forum Posts by: Carl Millsap

@Doug Ohman there are banks out there who might be willing to let you put less down, but you'll have to make a lot of calls. 

Check local and regional banks, credit unions etc. for portfolio lenders. 

Do you have any equity in your current duplex? If so, check with a few banks about refinancing so you can get the money for your next down payment. 

Where are you living now? Do owner occupied on your next duplex, some banks will require less down if its owner occupied. 

@Dieudonne T Nsabishaka the numbers look good, but I would encourage you to look at small multifamily. It may cost you a little more to get into it, but you increase your return and spread your risk out over 2-4 tenants instead of 1.

If you have a single family and that tenant doesn't pay rent you have to cover the expenses of the property. If you have a duplex or a four plex when the other tenants pay you reduce the amount you have to pay out with a duplex, and with a four plex you may not have to pay anything personally. 

I looked on realtor for the Des Moines market and found several pending for less than $200k. I even found a multifamily for $99k which is $10k more than what you're doing your practice on. 

Pictures didn't show much but if you could buy it for the same $89k you're practicing on you're ahead of the game.

https://www.realtor.com/reales... 

@Aristote Kalenda are you getting the results you want? 

While the activity (sending postcards) is important if it's not getting the results you want then I'd say it's not enough.

I wouldn't just send more postcards to the same owners...I would do the following:

a. Test the message on the postcard. Try a different message to see if you get a response.

b. Send postcards to a different set of absentee owners.

c. Establish a sequence to your message example:

We sent a letter that said "Mr. & Mrs. X, my name is Y, I'm interested in buying your property at 123 Jump street. I know it's not on the market, but if you're interested in selling please call / text XYZ." Respectfully, Y

The next letter said "Mr. & Mrs. X, we recently purchased 245 Main street, the seller walked away from the closing with $60k dollars. I'm still interested in your property, please contact call / text me at XYZ." Respectfully, Y

This message worked in our market but we also tested a few different letters, some using headlines, some without.

You can't create desire in someone; our message just happened to hit the sellers when they were thinking about selling.

Keep mailing letters, test your message and measure whether or not you're doing enough based on your desired results. 

@Danny Garrett check the thread Inheriting Tenants Help with Introduction Letter Please

I shared our introduction letter and some other investors shared some good do and on't items.

 Hope this helps.

@Bobby Balentine in the mutli-family space they use RUBS. 

In essence you bill the tenants for the utilities based on size of their apartment, or some other logical reason that can be applied fairly to recoup utility cost. 

Check local laws etc. but whatever system you use ensure it's in your lease and that you apply it consistently across the board for all tenants involved. 

@Mura Octelene are they currently on a lease or are they month to month?

If their lease is still valid ie. it was signed October 1, 2020 and expires September 30, 2021 you can't raise the rent until the lease expires.

If the lease has expired and they are on a month to month lease then we provide 60 days notice that rent is going to increase. 

We send a letter that states something to the effect that their current rent is $300 below market and it will increase by $XXX amount starting May 1, 2021.

As a new owner, make sure you address maintenance issues etc. before you increase rents. Just a recommendation. 

Also, I see you're in New York. Not sure where the property is, but check your local laws about rent increases. In some high cost of living / renting areas rent increases are capped. You don't want to run into problems out the gate. 

Congrats on your purchase.

@Jon Hundley  yes, buying properties off market in my opinion is better than buying from the mls.

1. Little to no competition. You don't get into price wars...i.e. provide your highest and best offer.

2. You can set the price.  

    a. Point out the seller doesn't have to pay a real estate commission.

    b. Find reasonable maintenance issues. i.e. the roof needs work, the deck will need to be replaced, factor that into your offer price. Most sellers know they have deferred maintenance. Give them an estimate of what those repairs will cost, then offer with that in mind.    

3. You can find out what the seller's bottomline is / true motivation. Sometimes it's not about financial gain. If you can find their pain point and solve their problem you can get a better deal then you would from buying on MLS.

These are just a few reasons for buying off market. 

@John Andrews it depends on a few things:

1. What is the cost to rehab the property and what will it be worth when completed?

2. How much will it rent for as a buy and hold? How long will it take for you to get your investment back from the rent?

3. What is the neighborhood like? 

4. What is the cost of ownership i.e. if it's in a flood plain cost will the rent provide enough to cover flood insurance, insurance, etc. and provide a return on your investment?

I wouldn't worry about what other investors may or may not find value in. 

Some of us don't have the skillset you have so the cost of rehabbing a house hit by a hurricane / flood doesn't financially make sense; for you it may be a home run opportunity because you can do the work and therefore the numbers may work.

@Colin Williams you're welcome. The three most common are:

1. This contract is contingent on a satisfactory inspection.

2. This contract is contingent on the buyer qualifying for a loan.

3. This contract is contingent on the seller providing a clear and marketable title.

The inspection clause is specific enough, but broad enough that you can terminate the contract for just about anything. 

Example: When I was just starting out I terminated a contract because the seller didn't make a repair to sheetrock in the basement per the contract. I was just starting out, and in my mind it was the principle. If they didn't make that repair per the contract what else did they neglect to fix correctly?

I regret that decision.

1. I was supposed to walk away from closing with $5,000. 

2. The lost rent / tax benefits over the past 10 years.

3. The equity I could have gained / used over the past 10 years. That building has appreciated a good deal from my purchase price.

All of the above missed opportunity for a $50 repair. 

Do your due diligence, put contingencies in place and then execute. 

Good luck.

@Prasad Gupta 

1. When is their lease up? Give them the proper notice that when their lease ends you do not intend to renew it. If they don't have a valid lease, then file to evict after giving proper notice. The key is to follow all procedures / timelines to the letter. You don't want to lose an eviction case on a technical issue. 

The CDC Covid restriction says you can't evict for non-payment of rent, it doesn't prevent you from evicting for other violations of the lease or for not having a valid lease. - Check local laws, I'm not a lawyer. 

2. What does the lease say about repairs and entry?  If a tenant submits a proper maintenance request, but is unresponsive when it comes to sending a repair tech then give them the required notice to enter i.e. 24 / 48 hours that you or your management company will open the door for a repair tech. - Check your local laws given COVID.

3. What does your lease say about covering temporary housing? Our lease specifically says we don't cover cost of temporary housing for ANY reason. Probably to late in this case, but add it or ensure whatever property management company you use has it in their lease. Again, check local laws, consult an attorney.  

Your lease or the lease of your property management company can make your life easy or difficult. Make your lease as detailed as possible. 

Every time we get the short end of the stick on an issue we learn and then add a clause for it in the lease. It prevents future tenants from jumping through the same loopholes.