All Forum Posts by: Jeff Bridges

I think it would be silly to outbid yourself no? They are trying to bid you against a sheet of paper that states the property is worth $X, not another buyer willing to pay $X. Maybe they forgot to mention to appraiser all of the repairs that will be required to make it move-in ready. You can ask to see the appraisal report, pick it apart and show all of the repair items they missed that affect the current appraisal and show them that the appraisal is worth less than the sheet it was written on. Did they state there were competing offers? Regardless of competition, if you think you submitted your maximum allowable offer based on your rehab estimates and ARV, your spot on where you need to be. Let the bank make the counter offer after they submit it to the bank. Since the owner is doing a short sale, they honestly shouldn't care less about what you are offering, rather what the bank will be willing to accept part of the short sale agreement. The owner won't be taking any proceeds after the sale, therefore there is no reason to be greedy.

I think the seller saw the appraisal and thought maybe they can actually sell it as a non-short sale and getting too excited and think they can get a buyer to match the appraisal. Its funny because, people usually end up dropping the offer price to meet a low appraisal, but I've never seen someone ask you to raise the contract price to meet a high appraisal. If it were a reasonable price, maybe they should have asked for that in the first place in the listing. Bold move by the seller...

Tell them they are holding on to your best and highest offer, and if they are serious about selling their house, they will submit all viable offers to their bank for short sale consideration. If they submit however, be prepared to transition to negotiating with seller bank to justify your short sale offer with them and market value. I've negotiated short sales with banks before and in one case, held my ground and listed out the total repair costs and photos to support my offer valuation vs. their BPO report. sometimes they might not budge and you might have to walk away if bank refuses to go down to your original contract price. Short sales can be lucrative if you are patient, but they are always a crap shoot until you get to the closing table. So don't get too emotional along the process when something can and does go the other way... these are low odds deals unfortunately... good luck!

Skip the notarized letter about the father promising to pay rent. If the Father doesn't want to co-sign the lease, then you have no applicants actually able to qualify by having 3x the rent in income. Since the applicants don't qualify on their own, they don't meet your criteria or sign the lease with you. You'll otherwise be evicting 2 tenants and 2 dogs in the near future....

I have an accordion for hardcopy like warranty forms or other documents, but I scan in as much as possible to dropbox where I keep a folder for each property and subfolders to hold the scanned docs in neatly organized sections. Closing docs, insurance, tenant info, and onward. everything is easy to get to and at my fingertips at whatever computer I am using anywhere in the world. I use quicken property manager to manage my finances. Others use quickbooks or free accounting software like wave accounting. You shouldnt need to make a new folder each year if you are using one of these online accounting suites that tracks income/expenses and is linked to your banking accounts associated with the rental.

I think if there is a lawsuit against your wife for the house, selling the house does not make the lawsuit go away. They could file to block the sale, or the title could be clouded from the lawsuit already and you might not be able to close. Have you been served papers by the attorney for a court date or are these just threats? Don't sell the house just because you think that might make things go away. You might just have to ride it out in court and defend your case for ownership no matter how frivolous the lawsuit ends up being and then counter suing for your attorney fees you spent to represent you during this court case. This would have to be taken care of and guided by an attorney on your side. consider consulting one for best plan of action. Every state and city laws are all different and only a local attorney can guide you on the most prudent path to get you out of the muck.

Your attorney might tell you that even though you dont have a proper lease in place, she is an at will tenant that has to be evicted once you settle the ownership dispute between family. good luck!

what was the agreement she made with grandma when she said she would take ownership of the house? I'll pay of your taxes if you let me keep the entire value of your house? Were they subsidized rental terms or market rate? How old is grandma and how many more years do you expect her to live? Could you afford to have her live rent free for the remainder of her time here? Maybe that is not too far away and allowing her to live there rent free in exchange for allowing her to continue residing there until her death seems like another option. She won't have to sue you and you won't have to throw her out on the street and be homeless. You could explain to her that she would have had her house sold at tax sale if your wife didn't come in to help pay back taxes and be homeless anyway. I don't see too many other options. Otherwise, I recommend consulting an attorney if the threat of a lawsuit is real. But you would be one cold heartless guy to toss family on the street. There is a golden landlord rule never to rent to family or friends for this very reason.

I don't think it will matter much. OK so lets run those new numbers. You now have a 74k cash investment + 3-4k closing costs~78K total cash investment. 5k NOI/78k= 6.4% ROI. 1% additional return for putting down 55k more of your money. This doesn't bump up your return that much and now your unable to invest 78k of your capital in other projects. I think leverage is your friend. Ideally you use leverage to allow you to make a small up front investment, then let the tenants build up your equity. Further, it allows you to make future investments without tying up all your capital in a single low cashflowing unit.

What happens if/ when condo fee goes up unexpectedly in 2-3 years. a $50 increase would mean $600 less cashflow for you each year. So you're down to $1000 in positive cashflow. I think others will agree its not a screaming deal with low cashflow and could actually be a liability for you in the future if condo fees go up and rent doesnt increase that much with it.

I think you could and SHOULD find a better opportunity that can put more cash in your pocket, especially for your first deal. Strive for better value and better cashflow. I think you could even use your realtor in your area to hunt down some gems that will be better investment options. single family houses possibly....

Your assumption about the NOI disregards vacancy, which while it is currently occupied, will eventually become unoccupied and you will spend 1-2 months touching up interior and re-renting. You should not assume NOI based on perfect circumstances but based on more conservative figures like 8-10% vacancy (about 1 month vacancy while you find new renters if they were to move out each year). This way, even if you had someone move out each year, you still wouldn't lose money. anything above that would be bonus. Even with your 5k NOI, your cashflow after debt service is 1.5k AND you have 20k+ parked in an investment that you will not recover until you sell. Also, lets say you move and need a property manager and can't sell due to market conditions. There will be no margin to pay for one without losing money each and every month.

I honestly wouldn't look past the cashflow potential and be distracted with things like if appliances are included or what the condo fee covers because if you lose money or are just breaking even on a 20k investment, then what's the point? Those are cashflow neutral aspects. I only explore these other aspects if the cashflow analysis passes muster and meets my personal criteria. You are analyzing a business, not a personal residence after all. Good luck!

These are two excellent guides that will teach you the basics of renting out your house without needing a property manager. Read these and you should gain some confidence and decide if you have time, discipline and patience to follow these edicts:

http://www.biggerpockets.com/renewsblog/2013/01/04...

http://www.biggerpockets.com/renewsblog/2013/01/27...

I manage 2 units on my own and use craigslist and rentlinx.com (this also helps to create a professional craigslist listing for you) to advertise and usually have no trouble finding applicants between both. Tenant screening is very important for a smooth landlord experience, just follow the screening guide, make sure you find a tenant that gives you good vibes and passes all criteria in the guide. If not, keeping it vacant is better than moving in bad tenants that will make you miserable and cost you money.

Williampaid.com is good for electronically collecting rent. others like erentpayment.com or others which charge 3-5 dollars per month to accept rent via direct deposit. I like to develop processes that automate and reduce my effort dealing with tenants. read the BP blog and archives. they are all filled with landlord tips! Plenty more to be told!

Good luck!

your gross income is $10,200/ yr- Effective gross income after 8% vacancy is $9384.

Your annual expenses are $4500-5000/ yr depending on age/ upkeep of property. Dont forget to add in your landlord insurance and licensing expenses in analyzing your deals.

Your debt service for a $59.2k loan @ 5% interest for 30 year fixed is $3813/ yr

Your total annual income will be $590-$1000 depending on how many repairs are required throughout the year not covered by condo fee like interior appliances etc. A couple of major service repairs to HVAC, water heater or appliances will wipe out this positive cashflow.

Return on investment is 1k/20k total investment= 5% each year. It will take you 20 years to break even on your investment. Is this return worth the work managing tenants and  collecting rent each month? That's up to you but I wouldn't if I were in your shoes.

This doesn't seem like a good investment or good use of your 18-20k (more since you will incur closing costs/ loan fees/ renovation and make ready costs. Assume closer to 20k for your initial investment. My criteria for buying a rental is about $5000 a year positive cashflow, however others have criteria as low as $2400. I'm a condo investor so they can be a good vehicle but they tend to only be good investment vehicles in cosmopolitan areas where the higher rent can offset the condo fee and other expenses that can wipe out any potential profit in lower rent communities. Your cashflow would be $2100 higher if this was a house and all aspects were the same.

I suggest you look at SFRs or duplex units where you can live in one and rent the other while keeping a owner occupant mortgage. The low prices of condos can seem lucrative, but you need to capture higher rent income to make up for the higher expenses you incur from condo fees and many will not produce good cashflow. My rents are about 65% higher, which is why condos work well for me. pardon the math, I read 20% down by accident, but everything is pretty close to 25% down.

I like the software. I've used the 2012 version and now recently the 2015 version since they only provide online account downloads to the software for 3 years after the software version introduction. I connect it to a bank account I have exclusively for each rental property and have it perform auto-update of transactions every week or so. You can also use your regular credit card or debit  card, download those transactions automatically for expenses and label that expense a rental expense for property #X so you can co-mingle personal and rental expenses if you aren't incorporated. I then go in once a month and categorize the income/ rental expenses that were downloaded and tag each expense to a specific property that were downloaded and add any notes to each entry if needed to describe the expense further. At the end of the year, I generate a schedule-E report using the program, which after reviewing for errors, send to my CPA to process my tax return along with any other expenses.... I hear quickbooks is also helpful for some people but might require additional training than this software, which is not too complicated. some of the online property management software websites will also do this for you but I found them to be much more expensive to small time landlord with less than 15 units. 

It's not the finest software package, but its really the best thing I've seen so far that doesn't charge monthly fees or other subscriptions based service requirements. requires minimal organizational checks to categorize transactions but otherwise pretty low effort once you setup the account info, properties, etc...