All Forum Posts by: Denise Evans

@Laura Tabarez, I'm so sorry that happened to you.  Please pm me and I can probably help, and give you some advice on how to proceed in the future to invest profitably and avoid those kinds of risks (no charge).

@Sam Michaels, If you can afford a duplex or triplex in a less desirable market then you are anticipating selling it to another investor. That investor will buy based on the Net Operating Income and prevailing cap rate.  The bulk of rental properties do not involve tenants for whom school systems are an important factor.  So, I'd say go with the less desirable neighborhood that is, nevertheless, a stable rental market.  The more stable the rental market, and the longer term you have tenants (who are not constantly looking for a house to buy and then moving out) the lower your cap rate will be.

@Sam Michaels, that's perfect. Duplex, triplex or fourplex. You get all the benefits of cheap and easy home mortgage money but in an investment property, and you have hands-on management experience and the ability to fix problems quickly before they turn into expensive crises.  Rule Number One, though: This is business. Resist forming relationships with your tenants. If they default, kick them out. No sad stories. No extra time.  THAT will kill you.  You might as well rent to family if you're going to get personal with your tenants.

@Sam Michaels, if you do not need current cash flow, but are building for the future, then buy, fix, hold, sell personal residence strategy for 4 or 6 years. THEN invest in a small multi family property, maybe a fourplex.

@Sam Michaels, I agree with @Twana Rasoul. There is WAAAYYY too much risk for a newbie investor to start out of town.  Buy something locally, fix it up and live in it for two years, and then sell tax free under current federal income tax laws. Do that several times to build up capital, and then start buying modest rental houses within a one hour commute.  It is enticing to take your available cash and make down payments on 4 or 5 rental houses in Alabama (as opposed to one in SoCal) in order to spread your risk, but that is illusory. You magnify your risks by relying on out of town people for acquisition and management.  Buy locally with some deferred maintenance, supervise rehab personally, and manage personally. You'll be a lot happier.  If you insist on investing immediately, invest in one of the REITs.

Governor Kay Ivey previously banned law enforcement from executing eviction and ejectment orders. The stated purpose was to keep people inside their homes during the COVID-19 crisis. The order did not have an expiration date.

She has now lifted the ban, effective midnight on June 1, 2020.  You can read the proclamation HERE.  Alabama landlords, tax sale investors, and foreclosure investors may now proceed as normal with legal steps to oust tenants and former owners from properties.

@Nicholas Groover. The topic Alabama tenant laws is huge. What particular question do you have? I have six hour class that hits the highlights. In law school, could be a semester course.  There's just too much for a "rundown."

@Donald Francis Reese Jr., renter's insurance with $40,000 of contents coverage and $100,000 of liability coverage typically costs $19 per month. Landlords can often include it at "no charge," but also price the rent at least $25 a month above market.  It sounds bizarre, but most tenants (a) don't know how cheap the insurance is and never ask; (2) have been turned down for insurance in past because of poor credit and so don't like to risk being embarrassed, so never apply; and/or (3) made monthly insurance payments, missed a payment, were cancelled, nothing bad happened, and ended up feeling like they wasted their money.  That's why many of them never obtain the insurance.

If you offer it "at no additional charge" then you pay the premium each month, credit scoring is not a factor, you know they have it, and you appear more competitive than other landlords. It's smoke and mirrors of course, but most marketing and market positioning is smoke and mirrors. Are Chiquita bananas really any better than non-branded bananas?

...ON the state inventory, not ONE the state inventory, above. :(

@Arnold Finkelstein, there is a trial-level decision in Jefferson County that says the Rioprop time limit runs even while a property is one the state inventory.  In other words, if someone has not taken lawful and exclusive possession within 6 years after the auction, then the former owner can get the property back and not have to pay the investor anything at all.  The decision is not binding on any other courts, but it is an indication of how other judges might think about this.  On the other hand, if trial judges were always correct about the law, we would not need appellate courts, would we?

I think, to be absolutely safe, someone should not purchase anything from the state inventory that will not be capable of filing an ejectment lawsuit within 6 years after the auction date.  Filing the lawsuit is enough. You don't actually need your ejectment order within 6 years.  But, since we are real estate investors (and not Treasury bond investors) we are okay with some risk. For any particular property, you just need to ask yourself (1) is the reward worth the risk and (2) what can I do to minimize my risk, such as getting a quitclaim deed from the former owner.

There is an appellate decision that says if a property has been on the state inventory for more than 20 years, the former owner can get it back, at no charge. That is the only appellate decision in that area.