All Forum Posts by: Greg Scott

@Jeff Sitti  I hope you are a true friend to this person.     The first thing you should tell him is never go around telling people you have $100K and do not know what to do with it .  That is a recipe for disaster, and if it gets around there are hundreds of people that will provide him compelling ways to lose it all in "good" investments.

Alas, financial self-education is something that is hard-won and severely lacking in this country.   I would encourage him to take a lot of time to assess, take small risks at first, and learn as much as he can along the way.

Be careful guys.

The real rocket ship ride was for those who invested in downtown Detroit 10 years ago.   Those people made massive returns on speculative investments.

There are still great opportunities.  I'm a huge fan of SE Michigan, but please get educated on the different communities, their laws, and the potential for growth.  You have to buy the right property in the right places at the right price, just as you would in Boise or Tacoma.  

@Yakima L coles

Making an offer on the property without notifying the owners won't do you much good.  What you need to do is get in touch with the owners.   Try a skip trace service.  You can google many.

You've probably heard the saying "A lawyer who represents himself has a fool for a client."   

In my experience a good public adjuster will get you way more than you "save" by not having one.   Plus, with all the other craziness going on in your life, why not hand off the critical negotiations to an expert that has done it many times?

A HELOC is not a long-term solution. They usually require being renewed every 5 or 10 years and the bank can close your line at any time. If you your plan was a flip or short-term hold, then a HELOC might be an acceptable solution.

However, if your plan was to do a long-term hold, you will likely end up having to do two closings, one to buy, one to refinance.  

Personal recommendations are great, but if you don't get many, I wouldn't search Google.   Here is a better place to search.

https://www.narpm.org/   Look for people with lots of designations

@Lynn McGeein

I agree with your assessment on condos.    I owned one as a rental that worked out fine, but have seen the downside too.

My wife lived in a condo before we got married.  She had carefully budgeted her expenses but got socked with almost every year with two large and unexpected "special assessments".     That property would have looked like a good rental on paper but would have been terrible in reality.

@Ryan V.

If this guy is a retired lawyer, I would DEFINITELY have my own lawyer look it over.    You likely won't have an issue but you don't want to get suckered by a devious lawyer who knows how to use legal mumbo jumbo to create problems later.

Yes, a Realtor will want, and should get compensation if you bring them into the deal.  I'm sure you can have the seller pay for it out of proceeds but only if you raise your purchase price to cover that cost.

I am not a lawyer but a long-time investor who has tried to learn a lot on this topic.  So, this is how I view things.

An LLC is NOT my first line of defense against getting sued. There are many layers .

1) Run the property right.   If I quickly repair all safety concerns and manage the property well, I will eliminate most issues.

2) Have property insurance.   I always get $500K liability

3) Have a mortgage.   While it may be harder for a lawyer to find out all my other assets, a paid-in-full rental property is an easy target in a tenant lawsuit

4) Have an umbrella policy.  I have an umbrella liability policy for $2M.  It covers anything over $500K and protects me against non-real estate issues like a car accident

5) LLCs probably come in about #5. Just remember it isn't enough to have one, you would have to maintain it correctly. Some of my friends also like to put a house in an LLC and then put the LLC into a master LLC. Personally, I feel comfortable having my SFRs covered by just items 1-4. Although apartments I always put into an LLC.

I suppose I could add an item zero.   0) Nobody is going to bother suing you if you are broke.  Think of it from the lawyer's perspective.  They sue to make money.  So, if you have limited assets right now, you probably don't have much risk either.

A Realtor is not necessary to close a transaction, but for newbies, they are often helpful to have engaged in the process as they can flag unusual items in the sales agreement.

Is the seller using a standard sales agreement or do they have something they made up or pulled off the internet?   I would definitely engage a lawyer on a non-standard contract and possibly even on a standard one.   Just make sure they are a lawyer who is regularly engaged in real estate transactions.

You didn't ask about this, but have you done full due diligence on the condo's HOA fees? Many HOAs keep their monthly fees low but have regular "special assessments" for big projects. You don't want to think you are getting $500/mo cash flow and then have a $6K special assessment every year.