All Forum Posts by: Ed O.

If you own a property that shares a property line, it's great. As I see it, you have 2 options if you don't:
1. Sell it to the neighbors - hopefully they won't realize you're limited.
2. Mow it every 2 weeks for the rest of your life - err. I mean until the market comes back.
I recently scooped up an empty lot in a slightly nicer neighborhood than your describing, and it butts up to one of my rentals. It will make selling the home a synch when the day comes. The seller was driving 10 minutes each way for 8 years to mow it himself. Barf. Keep this in mind when negotiating. Not many buyers for this sort of thing.

the way to ensure the work gets done is:
1. Clearly written agreements on the scope of the project
2. a timeline, with financial penalties per day for missing the deadline.
3. holding onto money as long as you can. The person that has the money, has all the control. Don't pay the final installment until all inspections have passed too.

I highly doubt it. These programs usually amount to political points and re-election fluff. The first one was difficult and failed to help people it should've helped. I see no reason why this one will be any different. The lenders don't want to touch these either. Their restrictions were brutal when I had an on time, perfect paying borrower that was under water trying to refinance a home they owned for 5 years. They had a 700 score and a job. Perfect opportunity. No lenders would touch it. The programs are all smoke and mirrors in my experience, so the politicians can say "we helped homeowners...."

If the ARV is 135:

and you put 70 into it, you would be doing the seller a favor to pay $65k for it. Due to the amount of resources this project will take, I doubt the pool of buyers is big. Have you completed a project like this? Do you have the funding and reserves to pull it off? If you have not done a handful of major renovations, I would caution you against pursuing this deal. Repair estimates are almost always under estimated. I would add 10-20% to your repair costs as a buffer. You won't know the extent of some damage until the walls are open, etc.

Have you factored in your carrying costs while the massive rehab is under repair? Utilities? Taxes? It sounds like you have experience working on homes, but this one sounds like a big place that has been deferring maintenance for 30 years. I agree with your # on windows - 20k sounds high, unless you're putting top of the line windows in a rental, which is a total waste.

I'd look around for lower hanging fruit myself, (a place in much better condition, needing a lot less work for around the same price) unless you could get the place for a substantial discount, which, like I said, it appears you're not. It sounds like the seller is unrealistic. Time on the market will change that, as will the winter months.

Microban is known as one of the better products for cleaning and treating mold.
A bigger issue to consider is where the moisture is coming from and how to reduce it. No excessive moisture, no mold. Simply cleaning it up could allow it to happen again.
Have you examined the home for areas where moisture could enter? Are the downspouts getting water away from the home? Is the foundation cracked? Is there a plumbing leak?

Completely disregard the ASSessors value. It could cost you big time, if you look to it for a home's value.

In my market, they asses a 25-35k at a value of 70-75k, in an effort to drive up the tax base to pay their nice fat pensions. When you appeal, they take the approach of "we're smarter than you and we know the values better than you," even in the face of solid proof to the contrary.

For what it's worth, Mitch makes some good... actually GREAT points regarding the often overlooked upside of renting in slightly nicer areas (non war zones.) As a landlord with one unit, this advice could make you money years down the road.

I don't think he was looking to "hijack" your thread.

Have you looked into or researched the added costs and considerations to be mindful when managing lower income area rentals?

Quoting you: "what is your opinion"

you got what you asked for.

What's your exit strategy?

Doing some light research on accelerated depreciation of rental R.E.
Does anyone use these techniques? Are they sound from an IRS standpoint. Also, can someone describe the person this technique would work the best for? I'm guessing someone in the higher tax brackets would get the best results from this. Is this true? Thanks in advance, and yes, I realize 99% of us are NOT CPAs.

I would begin marketing the property now. There's a lot of tire kickers that plan their moves months in advance. Have you considered section 8 renting?

I'm currently building my own procedure manual for my own procedure manual for my rental business. Below, is a rough, unpolished part of the marketing and leasing procedure. Take it for what it's worth, but hopefully it will help.

1. Determine desired / likely tenant (s8, market, student, etc)
2. If s8, list vacant home on housing authority's list, which is distributed only to section 8 eligible prospects. Consider using social serve.com's free vacancy listings. The downside is the large number of calls from low income very poor credit applicants. They will waste your time.
2b. If looking for market tenants, put a sign in the yard. On the sign, include rent, number of bedrooms, and date available. (Learned by mistake, lots of "how many brs?" Calls. Other free listing sites are out there, craigslist, etc. I have had some extremely crappy apps come in from cl...as in 5 evictions in the last 2-4 years.
2c. Mention to tenants and other landlords that you'll pay $100 for a tenant that moves in. Oddly enough, this has been really good for me in the last 12 months. People on section 8 hang out with like minded folks. CAUTION: Be careful to not let your long term, trashed the home in 3 months section 8 tenants know you have a nice unit ready for them to move in blow up. I have a trashy tenant always asking if I have one open, she wants a nice unit, now that she's wrecked hers. My safest response is that "I may have something coming up, not sure if they will renew."
3. Incoming Leads
A. Use a line other than your own. Kall8, a cheap 800 number works, google voice is good too.
4. Lead handling: Return all inquiries from desirable tenants within 48 hours.
4a. Have a script ready to prescreen and filter out the duds.
4b. Have a prearranged time set to show the home. Tell prospect the home will be open from 2-3pm for showings.
4c. Press for deposit, application fee, and/or landlord packet (section 8) if tenant seems desirable.
5. Upon receipt of partial deposit (nonrefundable holding fee) tenant shall sign:
-Lease(s) all 3 if section 8
-Landlord Packet
-Holding fee form
-Agreement to pay remaining deposit
-Any other leasing incentive agreements

1. Determine likely tenant.
2. Market according to perspective tenants.
2a. Section 8 list and / or sign in yard
2b. Online resources
2c. Seek tenant or peer referrals
3a. Set up alternate phone/answering service
3b. Set up a web site with an online application
4a. Develop a script for handling incoming leads.
4.

Leasing packet:
1. Application
2. Lease
3. Landlord packet (if section 8)
4. LBP Pamphlet
5. LBP reciept form
6. Reservation fee form
7. Property Incentive form
8. Property inspection form