All Forum Posts by: Christian Carson

For what it's worth, the type of "war zone" to which @Timothy Murphy III refers isn't necessarily a Flint, MI-style warzone. Violent crime is a big deal in Cleveland Heights, and a murder is regional news. I have a tenant who lives on one of these "warzone" streets and she complains about how dangerous the neighborhood is--but whenever she elaborates, it turns out she is actually complaining about a constant police presence breaking up rowdy teenage parties. It's a warzone to the people who bought the half-million dollar house three streets over, but not necessarily dangerous to us property investors.

@Ben Stout ,

I decided to stay the course and wait until the 1 year mark. I actually ordered an appraisal on my first property, but the appraiser called and said even if he prepared it, he didn't think it would come back at higher than what I paid. (What a nice guy!) 

A local bank will offer me a HELOC for 7% with no closing costs at all, but they won't do it until we hit 1 year.

 Oddly, no. My net worth is still positive and the debt service on these credit cards is low (under $500, total).

A big pitfall in cross-border investing is tax treatment of income and backup withholding rules from the IRS. I recently dealt with a property manager who was fined by the IRS for failing to withhold tax from payments to foreign investors. Additionally, few people know that Canada and several other countries do not recognize LLCs; instead they will tax them as C-corporations which causes double (or even triple) taxation.

Welcome to the forum, @Billy Hollis !

@Ryan Arth -- yeah, the school board can be a real drag. Believe me, I have no love for the board of revision.

@Alex Cotter -

The definitive calculator for property taxes may be found on the Cuyahoga County website, or by following this link: 
http://fiscalofficer.cuyahogacounty.us/en-US/prope...

Property taxes here are paid in arrears. If you decide to file an application for tax revaluation, they will revalue the tax due from January 1st of the previous year. You will be due a refund on the property taxes you have already paid (even though they won't offer it to you directly -- you have to apply for a refund and make a few phone calls to do it). Last year, I reduced a valuation on a house from $165k to $27k. Filed in March, had the hearing in June, and received a $4200 refund by October.

@Ryan Arth -- sorry to hear your revaluation experience was not a good one. Generally, cases in which an arms-length sale transaction sets the value are slam-dunk cases, but they will almost never grant a reduction without a sale (you have to appeal by phone). You shouldn't ever have to go to the board of revision twice unless there's some critical piece of evidence that you didn't file with the application.

 When the buyer sends you their "list of demands" after the inspection, that's when you come back with an offer of cash in exchange for release. I think J Scott has explained this strategy in the past.

The inspection contingency is a way for buyers to negotiate the price lower after the fact. Any agent or buyer worth their salt is going to push for this kind of negotiation. 

The best way to mitigate wasted time is to play the game -- don't offer to cure the defects, offer a reduction in price in exchange for release of the inspection contingency. Sometimes the buyer will provide a contractor's estimate expecting you to do just that. Of course, if this makes the price too low, the deal is dead. But if there is some wiggle room, make it your goal to have the buyer waive their inspection contingency as soon as possible.

My rule of thumb for what's a good deal is this: take the monthly total rents and multiply by 60. If the purchase price is under this number, it's a decent deal (given that it is a good neighborhood).

This rule is a shorthand way of calculating the price at a 10% cap, assuming that expenses are 50% of rents.