All Forum Posts by: Frank Adams

I notice you're in Florida. Didn't Governor Bush DE-regulate the insurance industry. His brother George sure did in Texas and we got screwed. 10 years ago we sold our SFH in TX, about 2200 square feet, sold for $230,000. In 2007 we had paid $1600/year. WITH THREE PERCENT DEDUCTIBLE. Think for a minute at what point you'd file a claim with that deductible.

We live in Colorado now, our house is worth about $375K in today's market and we pay $1100/year with $1,000 deductible.

I've never heard of inheritances affecting social security amounts. I receive the same $2900 per month regardless of other income. Also AFAIK local offices have nothing to do with determining benefits, that is all done at the central (Washington?) location. Also they would have no idea about inheritances which are a function of local and state law.

I do know that earning too much, over about $180,000 taxable can affect ones Medicare premium. This happened to us once when my wife was on Medicare and I was still working and my commissions got too high.

My sister lived in Palm Desert for about 20 years and she passed away in January. Because we had been considering having a second, warm winter, home I asked my niece about my sister's house and the possibility of buying it out of the estate. What she said shocked me; my sister bought the house in late 2006 or 2007 and was upside down on the house. I would have thought the place would go for $450-$550K but my niece put me in touch with a Realtor who said the place would likely bring $260K TOPS. And the place needed a complete cleaning and painting (CATS). When I talked to my niece she told me she had been upside down on her condo, also in PD, until just recently when she had refinanced. She had also bought her place in 2007.

That said, I don't think the CA economy is in danger of collapsing due to people moving out. I just thought there would have been more demand for warm winter location houses of the type my sister had: Patio home, gated community with rec center and pool.

Someone above suggested using your state's Realtor's Association approved lease. That's what I used in Texas but I retyped it into my computer so I could easily add things I wanted and make the changes when the laws changed. I didn't want the word Realtor on my paperwork. I had the "no unregistered vehicles" in mine pretty early but I also added "no boats, power or otherwise, or motorhomes may be stored or parked at the property for more than 24 hours at a time". 

I also had a section that the renter had to sign agreeing to all of the terms, conditions and FEES listed on my repairs addendum. The prices are what I used on the last lease I did in 1997. The tenant had to initial next to each item on the addendum that everything was in order:

1. Each door has a doorstop to prevent damage to walls. Cost to replace missing doorstop $5.00 each

2. There are no holes caused by doorknobs adjacent to any door. Cost to repair holes: $75.00 each

3. All interior and exterior lights operate. Cost to replace any light bulb: $15.00 each

4. The yard is clear of any animal waste: Cost to remove animal waste: $15:00 per scoop

5 The yard is newly mowed and the shrubs trimmed: Cost to mow the lawn $75.00

You kind of get the idea. I once had a couple complain after moving out about the poop scooping fee. I said we could take it up with Judge Yeoman and ask how much he might charge if he came over and did it. Then they complained about the yard mowing fee because there were people that mowed lawns in their neighborhood for only $30.00. I told them they should have hired one of them and that those people did it that cheap because they knew they had a steady clientele that they mowed every week. I didn't have such a contract, but I had to load up my mower and gas and drive it over to their house to do what they should have, and had already agreed to have done.

A couple of other things that I've found to be important:

1. Be prepared to show comps about how you arrived at price.

2. Have a sales agreement ready and KNOW HOW to fill out the entire thing.

3. Get someone who knows how to stage your house do so. One of two times I've used an agent to sell, house was in a gated community, I used an agent that I knew wasn't great, almost none are, but was a trained interior designer. She convinced my wife to get rid of or hide a lot of stuff, paint the kitchen and dining room the same color and spent $400 or so at Target on a few decorating touches. Except for a slip cover for the sofa I believe we were able to return all of the rest of it.

House sold to the first lookers for full price, 6 months into the 2007-2010 recession.

The minimum people expect when they buy a home is a roof over their heads. That said a lot depends on the local market. I have put architectural grade shingles on houses where everyone else had plain old 3 tabs and since my houses always showed better than others in the neighborhood, paint etc, I feel I got my money's worth. Maybe not in a straight cash on cash return but in ease of selling. The street where I live now every house but one has a tile roof. The exception had original cedar shakes and they just replaced them with architectural grade asphalt. The house still looks out of place but I doubt if it would matter on a sale.

A friend and I both did flips in the same neighborhood at about the same time. He decided to put a standing seam metal roof on. After studying on it for a few weeks he paid someone to do it for him whereas had he just put 3 tabs on, like I did, he would have saved money. 

There are a lot of discussions about how, when and where but just as important is the willingness TO ACT. That doesn't mean to pull the trigger on a deal before you understand the downside as well as the upside, and it doesn't mean to make a deal just because you've invested your time in analyzing a deal and don't want that time to go to waste. It means when you hear about a deal you go find out about it NOW. You don't stop to ask your buddies, you don't go get a haircut and you darn sure don't sleep on it.

Here's a story about a deal that I did back in the early 1990's. I lived in Houston and had a good paying job and also had my Realtor's license, strictly for being able to attend the RTC auctions in person. One Friday at lunch I picked up The Greensheet and was sitting at my regular job desk when I came upon an ad that read: "ABC neighborhood (about 2 miles from my office, 7 miles from my home, so within my active farm), 3/2/2, $35,000, discount for cash. Call xxx."

Since cash was how I was doing my deals I was very interested. I called the number (cell phone were an expensive rarity) and the message told me to leave a number and my call would be returned after 5:00 PM. I went to the Realtor's office and used the criss-cross directory and found the name of the phone number's owner. Then I looked on the Harris County Appraisal District by his name and found not only where he lived, but 3 houses on one street in the neighborhood in question. 

I drove to the street and saw 3 FSBO signs and determined which of the 3 was the 3/2/2. Confirmed with the neighbors that the other models (tract homes built in late '70s) were 4 bedroom. Gave the house a good going over from the outside, determined that short of being a wreck inside that this could be a slam dunk as a buy and hold rental. I called the guy back and left him a message that I was very interested and he could page me back from wherever he was or that I'd be at the house from 4:00 PM onward. He paged me about 3:30 and said he was leaving his office and heading over. By the time he arrived I had already filled out a purchase agreement leaving the price blank.

He showed me the inside and it was in pretty good shape. Re-paint a couple of bedrooms, clean the carpet, general cleaning and it's ready to rent. I asked him about the "discount for cash" mentioned in the ad and he said he'd discount the $35,000 by 20% ($7,000!) for cash. The following is the way our negotiation went, notice I'm not a very smooth negotiator!

Me: So, 20% of $35,000, that would make the net price, um, I'm not great at math but about $23,500?

Him: No, that would make it $28,000.

Me: Are you sure? I was thinking it's more like $24,000, more or less.

Him: No. It's $28,000!

Me: Well, let's just say $25,000 and close enough.

Him: Look fella, the net price is $28,000. If you don't want it say so.

Me: OK. I've got a purchase agreement all filled out, I just need to call my termite inspector to come over, and he can be here in 30 minutes or so and we can wrap this up.

Him: Uh, how about I make it $26,000 and you skip the termite inspection?

Me: Well now I want the inspection more than I did a minute ago! "I'll run to the 7-11 and page him, he'll be here in 30 minutes."

Him: Hey, if you've got that kind of cash are you interested in the other house? One is under contract but the other isn't.

Me: As long as it's going to $35,000 or less.

Him: I can let you have it for $32,000 cash.

Me: Let's go see it.

Now, here's the point of my story. I headed to the Realtor's office to do a few things and make some copies and two of the other agents said: "Hey, there's an interesting ad in the greensheet. 3/2/2 in ABC neighbor, $35,000, discount for cash. I think I may call the guy tonight or tomorrow."

I just smiled at them and said, "yeah, maybe you should do that." About an hour later one of the agents came up to me and asked why the ****-eating grin? You already have that house under contract, don't you? I said, "no, I have TWO of his houses under contract. The greensheet came out at noon, I had seen the house by 2:30 or 3:00 and had both of them under contract by 5:00. If it sounded like a great deal to you why were you 'thinking about it' at 5:30?'

I called my brother in CA to tell him what his end of the cash would be. The first one rented for $650/month and the 4 bedroom for $700/month. We sold them both, seller financed, in the 1995-2000 time frame for $77,000 and $83,000. 

In the Marine Corps they have saying that they have a "bias toward action". You have to do the same to get the deals

I'll expand my earlier answer. I'd add a 1/2 bath at minimum. In the small space you mentioned you could do that and maybe add an extra closet. I've done a couple where I added 1/2 baths and probably earned close to $15,000 on each of them. A lot depends on your construction skills and how easily you can expand the plumbing. One that I did sat about 4 feet off the ground and it was so easy to do that it probably cost me less than $100. IIRC the  biggest expense was for the toilet mounting flange, the T-junction to tie into the pipe into the septic system and the new roof jack. I may have had to buy one length of PVC but between my excess stock and the pieces in the storage unit on the property I really just needed more PVC cement.

I bought a pedestal sink (discontinued model) at Lowes and a $2.00 toilet at my community wide yard sale. 

I almost turned down a great deal on a 3/1 because it was on a slab and the concrete work and plumbing would have been a nightmare. Then a buddy told me about one that he was doing where he just added a "raised platform" in the room which allowed enough room to put most of the plumbing above the slab. Then he built a half-wall in the garage to carry all the drain lines through the garage, while keeping them hidden) to a point where it could be tied into the main drain. I did almost exactly the same thing. IIRC I paid about $400 to the plumber to do the final tie in. The rest cost me less than $1,200 to do the work myself. 

Bought the unit for $110K, did that and did a layover of the roof, about $800 and added insulation in the attic. Sold the place about two months later, after some cosmetic interior paint for $165K. Not bad for a couple of weekends work.

Back in the '90s I started charging a higher amount, higher than a month's rent, for security deposit. That way people "should" have realized that they were not paying the last month's rent. I also added an addendum to the lease that spelled out that this was a DAMAGE/SECURITY deposit and COULD NOT BE APPLIED to rent in any circumstance.