All Forum Posts by: Daniel O.

@Vincent Carroll, it sounds like you have done everything right so far. Or almost everything. You should be documenting each incident of smoking, and any other incidents which violate the lease. But most important of all, you really need to make sure you completely understand the landlord tenant laws where you live, both state laws and any additional ones imposed by the county or municipality you are in. It may be that you are fretting over nothing -- they might actually be planning on moving. 

That said, they might not be, and you should have a plan in place for what to do if they don't move. Consistent with your local laws, you should file for eviction on April 1. If they try to pay rent, you should refuse it firmly but politely. If you accept the rent, you are stuck with them. Document any interactions you have with them, and if possible, only interact with them in front of a witness.

Are you planning to renovate the place when they leave, or are you looking for other tenants immediately?  One way to broach the subject of whether they are leaving is by confirming that they will be out by date X because you are advertising it and want to show it then.  If they have paid through the end of March, they have the right to be in the place undisturbed until then unless the lease specifies otherwise.

Good luck!

@Ben S.. Wow!  I'm not sure if its a good wow or a bad wow. Maybe just a wow! 

I'm sure you have probably already thought of all or most of these things, but let me share a handful of ideas that I had as I read through your posting.

One thing you might consider is offering tenants a month to month lease, assuming they can pass some sort of screening. Even if most can't, you might get a couple who can and who can pay rent while you are working on other properties. This looks like a cash-flow headache, so having a little coming in while you begin the rehabs will help.  

Start the rehabs with the empty place first because they are only going to drag down your potential rents and deter prospective tenants. 

By the same logic, get that trash picked up and keep after it. You remember Alice's Restaurant? Nothing attracts garbage like a pile of garbage. You want people passing by to notice that the area is starting to look better, as that will also help up what you can get for rent.

You might think about buying things like appliances in bulk. Talk to Bray and Scarf and several of the other local places and see what kind of discount they are willing to give you on 10 stoves. They might even be willing to phase the delivery so you don't have to store things before you are ready to install.  Take this approach with everything you are buying, both to save money, but also because standardization now will really help you with maintenance and repairs down the road. Same paint, same stove, same flooring, etc.

If you have a roofer you like, you might consider asking him what kind of discount he would give you if you could give him 10 houses to do that are all right together and all need to be done. He could buy enough shingles to get them at a discount, and he would save on having to deal with moving a crew around etc. Better still, ask a couple of roofers what kind of discount they would give you for this work. Depending on how you phase things, you might also be able to keep a couple of other crews busy on a more or less ongoing basis until the work is done.  But you will need someone to oversee them. Is your Dad ready to come out of retirement?

You might also consider approaching the county about getting a reduction in your property taxes. No idea what you are paying now, but you could make the case that you are really doing the county and the local area a favor. What if you could talk them into giving you a tax abatement for a couple of years? Again, I'm sure others can advise better than I can on this. Even if it is unlikely to succeed, you don't get if you don't ask.

I strongly encourage you to create an LLC for this project and put these properties under the LLCs ownership. There are enough uncertainties and moving parts on this that you should consider segregating these "assets" from your other assets in case things don't work out as planned and you have creditors or a lawsuit chasing you. I'm sure folks here can advise with more expertise than I can, but talking to a lawyer might not be a bad idea.

Good luck!  Please keep us posted as the story unfolds.

As the recipient of a good may direct mail solicitations (and a fellow investor) allow me to offer a couple of suggestions.

1) If you want someone to call you back, be sure to put a phone number on the mailing. Twice in the past two weeks I've received mailings that failed to include a phone number. 

2) Don't try to create some false sense of urgency. But if you must insist on including phrases such as "If we don't hear from you by 2/1/17 your cash offer will be terminated for good" it is a good idea to send the notice in January...not March!

3) Put a return address on your mailings, and include a name. People like to be able to look up who they are dealing with before they respond. Those two things alone may make the difference between something sitting on the kitchen table for later and something going strait into recycling.

4) Figure out whether someone else has already been saturating the area with direct mail solicitations. If they have, chances are you are wasting your money.

5) If you use a call center or an answering service, try calling the number you are sending out to see what your prospective seller is hearing. Does what you are hearing evoke the word "scam"? Some of them do!

Best of luck!

Don't do a credit check until you are ready to apply for a loan. You can get your credit report free from the major reporting bureaus once a year. You just have to write and ask.  

More than 20% down and you likely will not have to pay PMI.

Job does play a role. Having one is essential.

Best month to purchase? The month when you find the right deal. Late Fall can be good because someone may not want to pay utilities over the winter or may not want to stay where it is cold for another winter. But good deals pop up in any month and you need to be prepared to jump when the right one comes along.

When you apply for the loan, the bank is going to want to see two years of tax returns as well as proof of income. If you are in a field where tips make up a good portion of your income and you have not declared all of that on your taxes, that might be a problem.

Good luck!

@Edrian Teodoro, I'm not completely clear on what you are asking. Typically you would see the inside of the home before making an offer. You would make the offer contingent upon it passing inspection. You looking at the house, either inside or out, does not count as inspection. The inspection contingency allows you to have a licensed professional home inspector look at the house and give you a list of any problems he or she identifies. This could be anything from termite damage to problems with the foundation to electrical wiring that is not up to code, etc. You then decide whether you are still willing to go forward with the purchase, ask the seller to fix some things, or walk away. Be sure to talk this through with your agent BEFORE you submit an offer.

I agree, not enough to go on. Who is your target audience if you are flipping? What would market rates be, both for rentals and to sell to someone looking for a primary residence? On its face, and not knowing your area, this doesn't look like a great deal. Really sharpen your pencil on this one. You could get lucky and make 10K, or you could underestimate something and lose 10K (or more).

Others may have additional information, but my guess is that every property is going to be unique. In some cases, the tenants may be putting their rent in escrow, in others they are just hanging on until they get evicted. You could ask them before bidding, but take what you hear with a grain of salt. Even finding out their names can be challenging.

But here's another way to look at it. They are taking care of the place for a while. Nobody breaking in and stealing the copper pipes. No undetected leaks. No kids having crazy parties and trashing the place.

The bank is the current owner. That is why it is up for auction. It is possible that the occupants are the ones who were foreclosed on. That might be humiliating for them, but if you can pick the place up for a good price and market rent is less than they were paying on their mortgage, they might turn into pretty good tenants. 

My take would be that even if it is possible to make something work, you really need to have an emergency fund of at least $1000 before you even think about investing.  What happens if you get a deal going and your car breaks down? Or you need to go to the emergency room? I don't mean to be discouraging, but you don't want to leave yourself completely vulnerable to the things life throws at you. My advice is to keep reading and keep saving up your $. When you have enough that you can make something work without leaving yourself with no margin for error, then you can think about investing in real estate. Others may disagree, and our culture likes to point out the rare story of the guy who turned 25$ into a million, but those stories are INCREDIBLY RARE. The ones you don't hear about are much more common. Like the guy who put all of his money into an investment property and had something happen before it began to cash flow / sold, then he couldn't pay his rent and found himself couch surfing before becoming homeless.  My advice is that you start writing down every tiny little thing you spend money on so that you can understand where your money is going, then really eliminate the things that are merely wants so that you can save. 

Sounds to me like you need to find a new mortgage broker. But why use one at all?  Why not go directly to the bank?  Or look on Bankrate? If your gut tells you something is wrong and your agent tells you something is wrong and you are not getting good service, why stick with the broker?

@Oliver Sparks when people look to partner, they ask what their prospective partner brings to the table. You need to tell us what you bring to the table other than knowledge of where this particular property is. What is the incentive for someone to partner with you?