All Forum Posts by: Haven M.

@Jesse Smith

I understand your annoyance, but put your time and energy into getting a new tenant ASAP vs chasing a delinquent.

The question at hand pretty much describes my current circumstances. I have more than $500, but I am certainly undercapitalized to go it on my own. What you've outlined is the exact course of action I am taking.

I'm currently working through the pre-licensing course in MA (cost $300) and building a list of brokers/agents in my area who appear to invest themselves. Once I am through the course I plan to start reaching out to these brokers to find out if there is a way I can bring them some value while getting some real knowledge on how this all works.  

I feel like first hand experience will be invaluable, maybe I can make some extra money in addition to my full-time gig while developing relationships and trust that I can leverage in the future to start my own portfolio.

You should certainly consider pulling out of the deal, but more importantly you should find out for sure why the water is shut off. If it is because of a leak, what are the costs associated with fixing it, and the extent of any damage that previous leaks have caused to the structure.

Water where it shouldn't be is probably the worst enemy of any structure.

I would think BRRR is even more appealing in your situation. I'm not sure why you would need the high interest LOC if you have the cash to support 5 in the next 12 months.

If you have the cash to cover one on your own, purchase with cash, rehab, get it rented and then finance it at 80% with your local lender. If you buy it right, you can likely get all your cash out immediately and have an ROI through the roof.

Even though you're not in a hurry to scale I don't understand why you would rather leave 20% in every property and earn 4% rather than earn 1,000,000% by leaving no cash in the deal.

 Thanks for the reply, Matt. That's an interesting idea, but not sure buying it at market value would make sense for my wife and me. We are looking to leverage some of the equity into more aggressive investments, but make sure her grandmother is comfortable as well.  

Without a mortgage, Grandmother's annual nut would be pretty low. My wife and I could cover her expenses, but she wants (like anyone) to have her own money.

Do you think an ETF like you mentioned still makes sense if we bought it for $100k over the balance on the mortgage? 

My wife and I currently live in a duplex owned by my wife's grandmother. She is in her 80s with a small fixed income and a dwindling nest egg. 

There is decent equity in the house: $125k or so on the mortgage and current assessment around $420K. She no longer wants to be responsible for paying the mortgage and doesn't want to live on an equity LOC.

She doesn't want to sell and downsize because she doesn't want to live alone or in a retirement type community, and would like to live out her life here. She's considering selling me and my wife the house on the condition that she continue to live here. 

I think it's a great opportunity for us, but I am looking for ideas on how best to go about the purchase. I would like to parlay this into a situation where we can take care of the grandmother and leverage the equity for investment in other income property. 

Thanks for the replies.  I was hoping to get specific ideas for how to do due diligence on a private lender. 

What should I be asking for from him to establish a solid working relationship while proving his credibility as lender?

I have had a couple of discussions with a private lender and have a couple of questions to put to the group.

The basics:

The lender provides funds to cover the down payment and reserves for minor repairs on 2-4 unit properties. The borrower, me, must be eligible for an FHA loan and can manage the project/investment as I see fit. The lender only stepping in if there is a concern about unethical activity. He likened it to me being the CEO of the project and he (and his partners) represent the board, and I can be overruled if they see fit.

As a next step he has asked for three years of tax returns, and my credit score. He has advised that I can redact my returns as I see fit. 

I am not in the habit of giving out my tax return info, so what should I omit in order to ensure that my information is not used inappropriately. He is looking for proof of income to determine the amount of lending I would be eligible for.

What steps should I take in terms of due diligence to ensure that the offer is legitimate?

Thanks Will, that's very helpful. I know that the husband did most of the rehab work himself, he's a general contractor. His wife takes care of the business side of things which, I think, includes acting as the selling agent.

Does doing the work themselves a red flag, iyo, or is it an advantage; or neither here nor there?

Thanks Will- I'll certainly try to stick to the numbers. It's in an area where there usually aren't deep discounts, but rents are generally at a premium.

What are some of your favorite questions to ask When you're looking at a place?