All Forum Posts by: Account Closed

The more properties you have, the easier it is to carry costs if you have a vacancy.

Don't get me wrong, you still need to have reserves and savings for the bad times, but if you have one house with cash free and clear (net of expenses) at $200/month it's easier to apply that $200 to the other house that isn't currently rented and that you're trying to clean up for the next tenant.

A vacant home is still going to have overhead - you're going to have property taxes you have to pay twice per year, you're going to have to insure it (in case folks steal your air conditioning unit, copper pipe, copper wire, etc.), and you're going to have to pay utilities - even if they are just the base charges (electric has to be re-certified if it's been off for more than a year).

Once the house is rented, you're going to have a tenant paying all those expenses for you.

The trick is, when you're starting out (or if you've been doing it for a while and can) to let the money snowball and accumulate - continue to save money like you did for the first one and apply any and all profits from your portfolio of houses to the next house.  In a few years, you'll have a group of homes paying for themselves and paying you in return...at which point you can evaluate if you still want to grow, if you want to upgrade into better properties by trading up (§1031 Trades as a tax advantage), or if you want to retire.

@Mindy Jensen - not a lender but I did see it happen once a while ago.  There was an investor that bought a foreclosure across the street and one house over from my personal residence.  My understanding is this investor was telling banks that the houses he was buying were "vacation homes".  I was told he had seven rentals in this situation.

DOS was invoked and he lost all his rentals - this was in 2007. Chain of title at the assessor's office indicates LaSalle National Bank took title to the property

Short answer is NO.

Your home is something you need to live in.  Keep doing what you're doing as it a roof over your head takes priority over investing and most other things.

The money you invest is money that you don't need.  You don't need it to live, you don't need it to survive, if you get laid off, get sick, etc. you can walk away kicking yourself in the arse with regrets, and start over.

Don't risk the roof over your head to make a few bucks. 

Samy, I think you have to evaluate the risk.  On one hand, if you send out noticing ($300) on a $300 lien, you may lose money (not the $600 out of pocket but whatever you don't receive in interest and principle, net of any transaction fees charged by the county), but if they don't respond to the notice, you may be able to obtain a property for about $3,500 - $4,000 that is worth more.

I would also chalk this up to a learning experience.  One strategy I've employed is to buy liens where I know the same person owns multiple properties that are under lien.  As an example, I own liens on seven properties owned by the same person - two of those properties I am working on foreclosing on this year, and five are up for foreclosure/redemption next year.  My strategy is they may challenge the two I am foreclosing on in court this year - but I'm willing to bet if they do, they will be paying off the five that are up for redemption next year.  In the meantime, I'm saving my pennies anticipating I'm going to have about a $15,000 legal bill next year if I do in fact need to redeem the other five properties (and I plan on marketing the two I acquire this year as quickly as possible to cover that bill for next year).

For what it's worth, I did have one lien that was paid off after noticing this year....my net loss was about $35.  Not that much of a loss...but a loss nonetheless.

Operating funds are separate from cash reserves.

Operating funds = Checking Account

Cash Reserves = Savings Account or Money Market Account

My reserves are in a revolving account - property tax reserve for each property gets paid out/trued up twice per year (when I make the payment. Repair reserve gets paid out when I need to make repairs. Capex reserve gets paid out when I need to replace capital items. Legal reserve gets paid out when I have legal fees due to evictions, etc. The list goes on. If you plan to pay out the cash (or if there is a risk of having to pay out the cash) within a year, then this is where that money should go.

My "operating cash" relates to pure overhead.  This is where cash that isn't reserved settles.  Payments go to credit accounts, bank fees, insurance fees, paying myself, new projects, etc., etc.

My experience has been that no matter what I buy, a tenant will replace the shower head and not tell me. 

That being said, what I've learned to do is I take advantage of offers from the local public utility for these things - many times they offer free low flow shower heads, discounts on L.E.D. light bulbs, etc.  Check your water utility website and check your electric/gas utility website for rebates and incentives.  Your electric/gas utility may be offering shower heads (I don't know why - I think it's part of some State or Federally mandated energy conservation program).  The same goes for toilets, swamp coolers, appliances, etc.

If it were a flip, I'd put more thought into it.

Yes...and I fall under the 2% rule quite well.  Though I'm not doing this in Denver or Colorado Springs, but here in Colorado, I'm doing it in Fort Morgan.  I'm also doing this in Indiana and I've seen a TON of properties in the midwest (from Kansas to Ohio) that all qualify under the 2% rule.

Overpriced markets like Denver - they are EXTREMELY difficult to find.  It's very possible in Colorado Springs, Fountain, Pueblo, and even if you follow I-25 down into Raton, Albuquerque, Santa Fe, etc.

I'm following the story of the house explosion that happened earlier this morning. Apparently two people were found dead in the rubble, two adults and one child were transported to local hospitals.  Since there's a rental registry in Evansville, the press has tracked the house down to being a rental owned by a local investor who owns 33 other homes in the city.

Then, this afternoon, it turns out the tenant was being evicted and was supposed to be out of the house next Monday.

http://www.courierpress.com/story/news/2017/06/27/resident-house-explosion-under-eviction/103241296/

Forget about clogged toilets in the middle of the night.  I think this is my worst nightmare.  I feel for everyone involved, and hope this wasn't something malicious, or that the reason for eviction wasn't for the manufacturing of controlled substances (Meth or Hash).

@Samy Nasreddine what you've mentioned is consistent with my experience with tax liens and lawyers.  Usually $300 for noticing (some pay upon noticing and it is not refundable).  Then you pay a retainer and it's $3,000 - $3,500.  First they skip trace and start service through the courts, then they file to foreclose if no response.

That's the process I'm familiar with in other jurisdictions (I don't have CT liens).

 It's working out very well for me.  Karan genuinely cares about her tenants and the results are very well maintained properties.  If there's a problem or potential issue she isn't afraid to point it out and we work it out.  She has her own crew that can do handyman type stuff and she's got a great network of folks that regularly do work on the properties.  I'm extremely pleased.