All Forum Posts by: John Stevenson

There was a good article in July from Bloomberg. It was titled "Foreclosure wave signals strengthening U.S. housing market." In part the article said, "Initial notices of foreclosure, the start of the process, jumped 6% in the second quarter from a year earlier, the first annual increase since 2009, according to RealtyTrac Inc."

It gave this as a reason, "The housing market’s rebound has been restrained by the so-called shadow inventory of homes with mortgages at least 90 days delinquent, in foreclosure or already owned by banks, while foreclosures had been stalled since late 2010, when state attorneys general and federal regulators began investigating abuses by banks, including lost or doctored paperwork. They started to pick up again after the nation’s five biggest banks settled the probe for US$25-billion in February."

Another reason why lenders are slowly releasing foreclosures is to stabilize the market. If they flooded the market with all their properties, this would drive prices even lower to stimulate demand. That is good for investors who are snapping up properties, but it is not so good for the overall economy and the average homeowner.

Here is the link to the whole article: http://business.financialpost.com/2012/07/12/surge-in-foreclosures-signals-strengthening-u-s-housing-market/

Hiring a part-time RE agent at least proves that they have experience and real estate knowledge. Since they are an agent and not a broker, you will have to make sure that he/she does not violate any confidentiality with the Broker he/she works for.

As to a background check, I always have my applicants provide phone numbers to previous employers. Then I make sure I give them a call. If they would hire them again, then that is a good sign they must be honest. If you are really concerned, you could have them bonded.

Think about your market and what else is available. If a renter is shopping around, they will probably be looking at apartments also. It is hard to find a 3 bedroom apartment. Usually they are only 2 BR. So if a tenant is already looking at 2 BR apartments then a 2 BR house will have good market appeal.

Plus, you are absolutely correct, 2 BR homes sell for less. Usually the difference between rental rates for 2 BR and 3 BR are not that great so your properties will yield higher returns. Sounds like a good long term investment decision.

Steve Babiak Sorry, you are absolutely correct. LOL MT is the abbreviation for Montana. Whoops guess I should go back to school.

K. Marie Poe These are listed properties that area available for purchase. They include REO, auctions and pre-foreclosures.

Sometimes we focus too much attention on the "illegality" and not why the Federal government wants those who practice real estate to be licensed. It is not to "persuade their agenda or prevent those from moving forward in their endeavors in real estate" or "give the other man the benefit of the doubt in their intentions" as Henry M. said.

Rather real estate licensing is mainly to protect the uneducated consumer from us in the real estate field that know the ropes well enough to scam someone. (Don't get upset, I am not saying anyone in this forum is doing this - but we have the knowledge, if we wanted to use it.) Real estate licensing forces those in the profession to conform to a set of ethical standards and gives the consumer the legal recourse if they do not. It is an established system of checks and balances.

It is the same in the medical field. I know a lot of "educated" friends that are willing and able to tell me how to treat this or that. But if I have something seriously wrong, do you think I will trust my physical health to someone who is unlicensed? No way. The same can hold true with those who entrust us with their financial health. If someone does not know what they are doing, you could kill someone financially.

It is good to every now and again step back and look at the bigger picture.

Bill Gulley makes a good point about conventional financing and appraisals. Appraisal standards state that if a home has 2 of the 4 walls below grade (i.e. up against earth) then it is not calculated as part of the Gross Living Area. In other words, Fannie Mae and Freddie Mac consider an earth home to be living in a finished basement with nothing above grade. This is a problem.

To complete an appraisal acceptable to use for bank financing, the appraiser needs to find at least 2 comparable sales within the market area that also do not have any above grade area. This is very rare.

Honestly, unless you plan to hold this property as a rental or live in it yourself, I would not buy this as an investment property - no matter how cheap the purchase price.

That is true. In Wisconsin, there's no statutory limit on security deposits at the state level, but check your city and county laws to see if your municipality has set a cap on security deposits for residential rentals. It may be mandated on a more local level.

If not then that makes it a little easier for the landlord to assure a tenant will not trash your property. 4 Months of rent is a pretty good incentive.

Well, it can be done... I guess. As to rehabbers being too busy to search the MLS; if there are few private motivated sellers outside of the MLS then the MLS is where rehabbers and investors are going to hang out.

Additionally you may find out very quickly that low balling every property is going to get you a flood of quick rejections and leave a very sour taste in the mouth of many realtors. Generally a seller knows what they need to get from the property and many are willing to wait out the game till they get it.

I wish you the best of luck. Let me know how it works out for you.

If the two other tenants are agreeable to signing a new lease then that could make the paperwork much easier. You will want to make sure that you find a way to void and nullify the first lease. Your property manager should be able to assist you with how to do that.

That is what I have read also. If that is the case then a cap rate of 7.01 is great. Let me explain why: The smaller the cap rate, the higher the value.

Steve L. gave you the formula: Annual NOI / Purchase Price = CAP Rate

At a 5% cap rate, you would purchase the property for $2,840,000
At a 6% cap rate, you would purchase the property for $2,367,000

So, a cap rate of 7.1% or $2,000,000 is very good. Now compound the future developmental potential of the land and you could have a very good investment. Just make sure you follow Will Barnard advice to make sure the financial statements are accurate.