All Forum Posts by: Edward Burns

My first reaction (tongue in cheek) is great that will rid of us two problems (congress and section 8). But realistically, getting rid of section 8 is not feasible. Now modifying the program, say reducing the by x% (after taking into account any regional rent increase) a year might be an alternative. It is a complex problem and no easy solution exist. It someone believes there is an easy fix, they need to join the real world.

Very hard to tell from the picture, but if it is drop-in ceiling tile it may have the name, or manufacturer or something to indicate source. Then try to search the internet for the product based on that info.

Assuming your rentals are in Alabama, the law there is:

Alabama SECURITY DEPOSIT

You need to check out local and state laws. If I remember correctly., Illinois, only complexes containing 25 or more units are required to pay interest. In addition, state law does not require accounting for deposits for landlords with less than 5 rentals.

First off, personally I would not even consider any offer that did not include at least 10K as non-refundable earnest deposit if I was the owner. Second, can you afford a million dollar deal. There are always pitfalls and you must be able to survive them as you encounter them. If you can't you will set back your goals by years trying to recover. So essentially I am saying at this time with my resources, I would not even consider it.

Ali,

I appreciate your position, but with $40K 2-70K houses could be bought and rented out. We'll assume you make $140/month over expenses on each house or about $3400/yr. So it will be 6-7 years before you can buy the next property (assuming only these funds are used).

But by buying a $30K house, fixing into a $70K house and then getting a $45K loan against it, you can repeat the process every 6 months. So theorectically after 6 years you could have 12 $70K homes and still have your original $40K you started with.

If you look I have turned the $40K into over $800K - mortgages (about $500K) or $300K. In the meantime you have turned the $40K into $140K in houses - remaining mortgage (lets assume $70K) + rent profit ($40K) or a total of $110K.

There is no right answer for every situation, and buying turn-key properties, yes I would agree mortgage to the hilt when you buy. If buying fixer-uppers and you have the cash, by paying cash, fixing the home and then (after 6 months of holding, take a loan out on the property, you can recoup your investment faster to reinvest.

I would do the same thing you did with the first property. Buy with cash, fix up, rent and take out the equity.

First, You have a system that seems to be working (at least on the first property). Why try to fix something that is not broken?

Second, this gives you another out if the property for some reason can't be rented and allow a profit, you can sell it and recoup your money plus hopefully make a profit on the home.

Third, you do not have to worry about mortgage payments while fixing up the new property. Eliminating one headache if things take longer than expected.

If you (the landlord) is paying those bills they are already rolled over into the rent. If the rates for those services go up, then raising the rent to cover the increase is justified. Just be sure to include a brief explaination with your notice of rent increase. IE. Unfortunately the city has water and sewer costs forcing us to raise the monthly rent by $10/month. We hope you understand and will continue as a tenant at XXXX. (blame the increase on the someone else, the government, big business, etc.)

I am doing a lot of assumptions here.

First, with the rent being $9K/yr., I am guessing you are clearing about $1500/yr. on the rental. You should be able to roughly calculate that merely by subtracting the mortgage payment from $4500.

Second, I am assuming you do not have a problem making the current payments on the $20K you owe.

Third, that you have the discipline to put those payments into savings (or investments) if you pay off the loans (ie just make the payments to yourself)

Fourth, that the interest on the $20K is double digit.

Assuming the above are correct, or mostly correct, I would probably sell the rental come early spring, spending a little time and money on sprucing up the property before selling. Touching up paint around the windows, making sure gutters are not clogged and securely fastened, and other little things that can enhance the appearance. Also, if you do not have them separated already, separate out expenses related to the rental and copy them for a potential buyer. Include information on repairs and or replacement of major systems.

After the sale, pay off all your debts, put the payments and any excess from the rental sale into savings, and then strictly put yourself on a pay as you buy regiment for everything (does not mean not to use credit cards, just make sure you pay them in full monthly and are not charged to use them) except for maybe new rentals and automobiles (Autos only if the interest rate is 0% or less or equal to what you can get with conservatively investing the money). Just the knowledge of knowing you are debt free can work wonders.

Wait it out until the actual loan papers are signed. Usually at the property closing. In addition, since buying a property and moving creates a substantial upheaval in life, adding a job-change just will increase the stress load.

A pre-approval means that the bank believes your current circumstances to be such that a loan is probable but they base this decision on preliminary information. Only when the loan is applied for do they do full due diligence and make their formal decision. If the information changes while they are processing the loan papers and they become aware of them they would have to start the process over.