All Forum Posts by: Eliot M.

@David Hanson Hi David. Others have given solid feedback, but I'll throw in my 2cc. You've asked the age-old question of "how much is enough" or "what's good enough"? It's a subjective question with a subjective answer. But the answer to your question is what are all your other options doing in terms of ROI? Can you go get a bond that'll pay over 5.8% return? The long term stock market returns roughly 10%. You need your real estate investments to beat this number or else why don't you just buy index funds from your computer at home, as opposed to going and doing work and searching for deals for a measly 5.8%? All investing is is buying future cash flows. You want to buy the cash flows that'll provide the best bang for your buck, and you shouldn't care where that cash comes from (as long as it's legal and ethical). If you can do flea markets and eBay and get 50% on your cash, then why mess around with real estate?

Personally my answer to your question would be if it's not getting a 10% return on your money, it's a pass.  Be sure to accurately calculate your "net" profit (after vacancy, prop tax, escrow, maintenance, accruals for capex, etc), and divide that by what you came out of pocket for the property (down pmt + closing costs + repairs).

Y'all are really helpful and these ideas are so creative! 

@Taye N. I don't think the city the property is in has codes for nuisance, light, or ventilation. I have called the city 3 times now and the only thing they seem to care about is grass height. I love the idea about egress though! Calling the fire department tomorrow first thing. 

Thank you all for your creative answers and help. I should mention that he is not only current on his taxes, but still faithfully paying a mortgage payment every month!  I'm mailing him a letter today with some of your ideas in it.  Wish me luck!

@Katrina M. This house could have been a grand slam for me (keeping faith that it still might be).  The guy doesn't have much room on the economics, I know that.  If he was staring at a $50k profit on his house he would not be acting this way.  I agree with your point on not letting it drag out indefinitely.  If he won't move on it I'm very tempted to just take a base hit on this one and getting the heck out of there, instead of waiting on a grand slam.

Here's a pic, hope it works.

@Jim Adrian love it! You may be on to something. I could paint it the color of his house. It would take me half a day, be uber cheap and might camouflage it enough to sell. Thanks!

@Jay Hinrichs thank you, and that thought crossed my mind as well. Before she visited she was giving me comps of $61/sqft and after she visited her estimate decreased by $60k down to equivalent of $24/sqft. That to me is pretty drastic. Just one persons opinion, but then again there is a reason I called her.. that brokerage is "the" one to call in this little area. 

@Account Closed hmmm very creative! I like it!

I closed on (bought) a flip a little over a month ago. At about the same exact time, the house right next door had every one of their windows and doors boarded up with plywood. As it turns out, the neighbor vacated the house over 6 years ago. I called him and asked him about the situation and he was surprisingly welcome to the conversation. He told me the city told him he had to do it or they would've done it and charged him for it. So he drove in one weekend and did it himself - and in so doing, singlehandedly brought down the value of the neighborhood by a good 20%, if not more. I asked him if he was just going to leave it like that and he said no, that he had a contractor that owes him money that was going to do it. I thought, "yeah right." So I made him an offer to purchase. He declined. Sure enough, 1 month later and nothing has moved. Still boards on windows. Meanwhile, my rehab project is almost done on my flip and I called a realtor to come look at the house. She had very bad news for me, basically saying that the house is unsellable until the neighbor does something with his house. The ARV on the house would normally be around $150k, but she said I'd be lucky to get $95k for it, and $60k-$70k would be more realistic if I were to just unload it. Those were dire numbers even in my most pessimistic days. Obviously I'm not going to do that and will probably just rent it indefinitely until this guy gets his act together. So, this is FAR from ideal... I'd rather take my flip profit and go home.

So my question is, do I have any recourse here? There is no HOA. I've called the city and complained and they said (to the best of my recollection) that the boards are not illegal, but I can complain about grass growing too high, debris, etc. So I did that (because the grass was about a foot high at the time). I've spoken to a few of the neighbors and there seems to be a petition underway. Hopefully that might start things up... but I don't know what the petition is about, and if it will actually do any good... So does anyone have any other creative ideas for this? Do I have any other recourse I could try? I called him back about 2 weeks ago to make him another purchase offer... left VM message and no reply yet... All I really need to do is put new windows/doors on so it's not so painfully obvious that the house has been abandoned... it's just a complete eyesore as-is. It can't just STAY like this... can it?

@Mike Dymski thanks Mike. I'd feel good about Gregs feedback if it weren't for that one pesky line about getting commissions for as long as tenant is in possession. Are you saying  that in your opinion if I were to challenge them with a legal battle that I might have the upper hand?

@Greg H. Thanks for your reply!  After researching this for several hours now, it seems like the one line in the contract that will cause me to lose in court is this one:

"Owner shall owe Agent commission so long as tenant remains in possession."

So, unless any attorney friends here can post a reply and say that this one line is not enforceable, or otherwise won't stand up in court, it looks like I'm screwed.  I thought about cancelling, giving them the 60 day notice, paying them for 2 months in advance (~$150) and then managing it starting now, but it still looks like that one line above will haunt me, and cause me to owe them the 10%/month.

@Jon Q. thanks... not sure I agree with you calling it a "mistake", though.  "Oversight", maybe.  Not being careful, yeah.  After all, the whole idea around PM is so you can be hands off... if I had to drive 2.5 hours to go personally sign every lease that my PM generated, it would completely offset the (alleged) "benefits" of a PM.  

To your points #3, and #4: I already have.  And I already do.  On multiple props... ;)

@Jon Q. The lease agreement was signed between the tenant and the PM.  The mgmt agreement was signed between me (owner) and the PM.  Does that answer your question?  And they're not technically calling it an "eviction", rather they are interpreting my discontinuance with the PM to also include discontinuance with the tenants.  That was never and still is not, my intent.  But they won't have any of it.  They say if I leave PM, PM will interpret that move as a non-renewal with the tenant, too, and will move the tenant out.  I guess b/c the tenant is "theirs" and not "mine".   

I have never paid (and never will pay!) a "finder's fee" to the PM, only a 10% fee per month.  The "finder's fee" is their "concession" to me by "letting me out of the contract and keeping the tenant".  Funny, I don't consider it a concession at all...