All Forum Posts by: Stephen Masek

Welcome.  Of course, you are really a co-owner until you gave 100 percent equity, plus you have all of the legal and regulatory liabilities, while the lenders only risk the remaining balance.

We like the service provided by Craig Hecht and his wife at Hecht Real Estate Group.  You may want to call them to discuss Austin. 

I'll vigorously disagree with Sue above on two points.  First, you do not want to have to approve every penny spent.  Sometimes, as in a water intrusion or pipe leak event, quick action is essential to prevent much greater expenses.  They should be able to spend $250 to $500 without any approval.  Of course that works if they are good managers, not crooks.  Second, we have owned in many states outside of California, and there are good mangers all over the USA.  There are also bad ones, and you have to manage any manger.  It is not armchair investing.  It is best to go see properties before buying.  We've had success not going, but also problems when we did not go.  We've had fewer problems when we did go to look/shop before buying.

Congratulations!  Is there a way to view larger photos?

Cash, with big earnest money deposits, is indeed king.  Sellers know that all kinds of things go wrong with deals involving borrowed funds.  Just think, if you were the seller, which deal would you take?  We have good old sayings because they are accurate - A Bird In the Hand Is Worth Two in the Bush.  

Nice!  I was wondering why you have so much activity.  

One of our properties in Memphis is vacant, and we had some strange vandalism / theft.  They kicked-in the back door and took the white-painted steel registers and register boots from the ceilings (damaging the ceilings), and the AC coil from the furnace.  We've told the property manager to put an armed guard service out there until an alarm is installed.  They have what looks like a good potential tenant application, so it should not be vacant much longer.    

I'm also looking to buy a flip in California.  It is in a good neighborhood and built in the 2000s.  I saw at least four drug needles in the place, and the vandal / drug addict stole the fiberglass and plastic flex ducts from the attic.  Replacing it will cost real money, but the stuff have zero resale value.  How strange!

How old is it and what are the finishes?  You need a good asbestos and lead survey, then you can obtain a firm - fixed price for any abatement which is needed.  The regulations are federal and state, so the building department is not involved.

If you own it for just one minute, you are responsible for 100 percent of the clean-up costs.  To prevent a calamity, you need a good consultant to perform a Phase I Environmental Site Assessment (ASTM E1527).  I'm an active member of the task group for that standard.  Be careful to insist that an Environmental Professional (as defined in the standard and EPA regulations), not some "field staff," performs the site inspection, one of the most important parts of the job.  It should cost $2,500 or so.  Of course, if buildings are present, you will also want them surveyed for asbestos, lead, mercury, PCBS and such.  In what city is the property located?  Unless you are highly experienced with brownfield redevelopment, you could wind up with a property with a negative value and your net worth on the line.  You do not have to share your Phase I findings with the seller, so if it winds up being relatively free of potential soil and ground water pollution or contamination, you may be able to get a below market deal.  By the way, a Phase II Environmental Investigation will probably be recommended for an old industrial property, but start with the inexpensive Phase I.

Selling seems by far the best option, as appreciation in value and rent increases both seems unlikely.  We looked at Phoenix in 2012 and realized we were a few years too late.  Rents are too low relative to purchase price, even for paying cash, and south of I-10 has some real gotcha areas. 

How much equity do you have, and what is the return?  Have you considered that you may have a job as property manager for the "investors?"  If those "investors" are lenders, then you also have all of the liability (the most a lender can lose is the remaining loan balance, while somebidy with equity has their net worth on the line)... Hopefully not, but it is not clear to me reading this thread.