All Forum Posts by: James Mc Ree

The trim looks fine to me.  White is a pretty normal trim color.  Painting the trim a different color could make the house "unusual" - not good or bad, but just unlike the surrounding area.

You could add some additional color with different colors for the shutters or front door.

Jim.

You also have a written record of your intended mortgage fraud publicly available on the Internet.  Are there any whistleblowers out there looking to collect a reward?

Seriously; be honest, follow the rules and you will do well.  Cheat, lie, steal and you will be in jail.

Jim.

I don't see how you have a better alternative.  The buyer presumably needs the financing to buy and can't get it until the process is completed.  You won't get a better deal and/or closure in 10 days or less.  I'd stick with it.

One possible option: You might be able to ask the buyer to cover your property carrying costs if the buyer has breached the agreement by missing a date.  The buyer could refuse and you are headed to court if you really want to fight it out, but the buyer might compromise with you if the buyer realizes the pain being caused.

Jim.

Paying closing costs has nothing to do with disclosure.  The wholesaler will pay for 2 closings if there are 2 closings:

A sells to W and closes (1st set of closing costs), then 

W sells to B and closes (2nd set of closing costs).

Alternatively, W could assign the contract to B, resulting in:

A sells to B and W has no part in the deal and no closing costs (I don't think W has closing costs, but check the deal.)

Jim.

Your HUD-1 form will have the complete breakout of your closing costs. If you bought with an agent, they are supposed to give you estimated closing costs up front which won't exactly match the actuals, but should be in the ballpark.

Some closing costs are fixed, like transfer taxes.  Some are more flexible as the businesses supporting the deal sometimes reduce them.  I've had success in reducing "document prep" charges, for example.  You might also see a charge for an "overnight courier" (these days, that's sometimes also known as the Internet and a printer if they don't really need a physical hardcopy).  Try negotiating those.

It might be hard to get your seller to agree to pay your closing costs if you already have a firm deal.  There's nothing in it for the seller unless the deal itself is threatened, in which case the seller keeps your deposit.

You will usually pay a higher mortgage rate if you choose not to escrow.  I think it was about 0.125% to 0.25% more to waive escrow which is more than you will get in many bank accounts.  Your school taxes are due Aug 31 which is the biggest chunk of your property taxes.  Your title company might just assume you are paying them as part of settlement because they are imminently due or your seller just paid them and you need to reimburse.

Jim.

Don't forget to include taxes, insurance, vacancy, utilities and property management/marketing expenses in your analysis. You should also budget for replacing equipment as it ages, if you are responsible for it (water heater, dishwasher, etc). Check with the HOA on the state of their reserves, if you don't already know, so you aren't surprised by any special assessments that come up.

Here's one unfavorable and unsubstantiated thought on your "hot market" comment.  Your post says prices have gone down over the past 7 years since the units were built.  Be careful that you aren't buying into a bubble as they eventually pop.  You might be able to do better buying a cheaper unit in the same complex that needs work such that you can manufacture value instead of buying it.  Just a risk, not a problem.

Jim.

@Randy E. - A deadbolt that locks with a key on both sides is illegal in some states, such as where I am in Pennsylvania.  The concern is fire safety.  A lot of people will hide a key near the door, then not be able to find it in a panic, fumble it or kids can't reach it when there is a fire.

This can be a U&O issue for the landlord if the property is subject to periodic municipal inspections or the property is sold.   I used to have one of these at my home and was required to replace the deadbolt with one that has a knob on the inside in order to sell the property.

Jim.

Pennsylvania has a 72-hour "Right of Recission" (sp?) law for real estate, but I don't think Florida does.  During that time, either party can back out for no reason at all with no penalty.

If the seller hesitates again, you could force the sale with "specific performance", but that can result in risks to the property.

Maybe asking the seller for a right of first refusal would work more in your favor.  That would allow you to take the high road and let the seller off the hook at seemingly no cost.  In reality, you have locked up the property for whatever term you specify in the agreement.  You could specify that prospective offers are reviewed with you first to see if you want to beat them.  You would have the option, but not the obligation, to buy and could beat any other bidder because you know the competing offers.

Jim.

We avoid most of the up front screening by listing with the MLS. Prospective renters have agents who they run around town looking at properties. Those agents do most of the qualifying and are motivated to do so. We setup group showings for our own leads and do light qualification for anyone interested. Most screening is post-application.

We have 1 rent price regardless of who applies and will be living there.  Be very careful trying to price according to family structure, such as mix or number of children and adults. You can quickly run afoul of fair housing laws.

Many municipalities in Pennsylvania limit the number of unrelated people living together, often to 3.  That would solve your 3+ adult problem if you have similar regulations.

Jim.

I think Section 8 is a great program that has acquired a bad rep sometimes due to a combination of poorly screened tenants and bad landlords.  Don't let that dissuade you, but you absolutely need to do a good job screening tenants as @Ryan Craig mentioned.  I have 3 properties rented through Section 8.

Your property may be held to a higher standard by your local housing authority than your local municipality.  I don't think that is a bad thing as they ask for a higher regard for safety and sanitation than our local municipality in Pennsylvania.  For example, our authority requires carbon monoxide detectors and our municipality does not.  I satisfy that requirement for less than $50.

The guaranteed rent payments are great - direct deposit on the 1st of the month right to your account. Tenants tend to be longer duration. HUD inspects the tenant's standard of living (are they taking care of the place?) and your property (are you taking care of it?) annually. I am not aware of any tax benefits for Section 8 rentals beyond ordinary rental property investment.

The one caution I can share is new tenants might not promptly report issues because they might be living with issues and consider that normal.  I always tell my tenants that; to my knowledge, everything works, nothing leaks and there are no deficiencies; however, they should tell me immediately if they see anything that needs attention.  They shouldn't assume I know about it or I would have already fixed it.  That usually gets me several reports of mostly legitimate issues that I missed in the first couple weeks after move-in, then quiet after that.

I've found the PA housing authority office staff and housing inspectors to be helpful too.  They understand it can be challenging dealing with low income tenants and offer helpful suggestions on how to navigate the system and get a better payment.  This varies person-to-person within the department though.  North Dakota is probably similar.

Good luck!

Jim.