All Forum Posts by: James Mc Ree

You have to go through probate if a person dies with a will and is the sole owner of the property. 

A real estate agent job may help you in this space, but getting a job with a real estate contractor will probably be better, in my opinion. For example, a job with a builder will expose you to lots of things: land acquisition, new construction, renovation, trade experience and contracts, financing, permitting, etc. The real estate agent job will give you some exposure to this, but not nearly as much.

I disagree with your statement that real estate investing is primarily networking and marketing. The real estate agent job is a lot of networking and marketing, but that is not real estate investing. It is helping others invest or find a home. Networking will be very helpful for learning and maybe finding a partner.

A seller's disclosure would have some of that information. Your buyer agent should be able to get a copy for you or you can request it directly from the seller's agent. 

Keep your job!

You asked what are some daily things investors do which says to me you don't know what you are getting into yet. Focus on learning what to do, how to do it and finally do it with your W-2 income supporting you. You don't need to be "all or nothing" to try it out.

You didn't indicate how much wealth you have supporting you. It's not a concern if you are already financially free of the W-2 job.

Present the inspection report to Seller and ask them to address the issues. See what they say.

A wonderful thing about real estate law is sellers must disclose known defects in the property. That is a great motivator for Seller to work with you, but expect a negotiation.  Seller is selling a 124 year old home. Don't expect them to put in all new stuff on their dime just because it is aging.

You also should keep in mind you are buying an old home and not be in a rush to update everything. Buy a newer home if that is what you really want.

For example,  cast iron pipes that aren't leaking or about to leak don't need replacement. Consider replacing them if you already plan to demo that area, such as for a new bathroom.

Seller financing favorable to Buyer is always appreciated by Buyer, but not so much for Seller, depending on the situation. Seller already has the property leased to tenants, so leasing it to you doesn't really change Seller's situation. A lease to own approach will depend on how much Seller wants to cash out and eliminate the property liability.

Good luck!

It's good news and bad news. Good - You should have instant revenue if you buy. Bad - Someone else picked the tenants and you don't know their vetting criteria nor the lease terms.

Start with seeing the property like you would for any other property. Review the seller's disclosure and do all of your normal due diligence. Check for how long the current tenants have been in the property and assess the property condition. Do they seem like good tenants? It's great insight since the tenants are living their normal life there versus a staged home.

You may be able to talk with the tenants if they are there when you see the property. Ask them if any maintenance is needed and how much they are paying for rent. I've tried asking if any maintenance was needed in various ways and never got a "Yes" in any form, even when there were obvious problems, such as paint peeling off the ceiling and a wired smoke detector hanging from the ceiling by the wire. Tenants probably don't want to get their landlord mad at them and they don't know the people walking through.

Ask Seller/Landlord if tenant is current on rent and how much they are paying. Is it the same number the tenant told you? Request a copy of the lease for your review if you decide to offer. You can make this an offer condition and review it during your due diligence period.  Also, request the tenant info provided in the application process so you can see the type of tenant who was approved. You will also need this info for contact information, etc.

Request in your offer a letter signed by both the seller and tenant agreeing on the current value of the security deposit. You will get the deposit when the transaction settles and you don't want the tenant coming back later saying it was more.

Try to get pictures of the property before the tenant moved in to establish move-in condition. Seller/landlord should have taken these pictures. You will need them to establish damage claims against the tenant's security deposit when they move out to avoid the "It was always like that...." claim.

These items are what quickly come to mind. I am sure there is more.

I agree with @Markus Shobe. You should have a conversation with your HR Block person as a resource to learn what you should be thinking about. Owning a rental home with or without house hacking is a pretty basic thing that almost any certified tax professional or accountant should be able to handle.

Think a little in a bigger picture about what type of advice you will want: tax, accounting, financial planning? The general accountant can help you with more than just tax reporting. The tax person is taxes only. You might get more value from a financial planner or accountant if you want a little more help, such as retirement planning. Just a thought...

@Isadore Nelson

@Nicholas L. makes good points. In addition, Port Richmond currently has 87 3br units available for rent. Your prospects have many choices before you add yours. You may have longer vacancy times. Your price point of $1,100 puts you below nearly all of the competition mitigating that.

The Philly L&I department has a terrible reputation. Plan for licensing and inspection hassles and delays.

Be careful how much weight you put into a prop mgt company's casual answers about the market. Have you ever gone into a restaurant, asked "What's good?" and they say, "Nothing." If you ask a prop mgt company if they can find you a tenant, of course they can! It's strange that there are 87 similar properties currently vacant, but they can for sure find you a tenant.

Based on your price point, my guess is you are looking at northern Port Richmond. Those properties tend to be older, as in 100 years old or so. They likely have plaster walls, nothing conforming to current code of course, but not illegal either, and rough basements. Bars will be on the windows (crime reference above).

Don't be surprised if your cheap purchase costs that much or more to repair as your repair costs will be much higher than a home built with more modern materials, such as in the 1940s-1950s. Be sure to look the house over well yourself so you know what you are getting yourself into before you are in it. It might be a good idea to bring your contractor with you to look at the property and get a quote to fix it to your standards so you know what you are dealing with before you buy it. That could be a very well invested $100 or so.

Additional expenses I add are municipal inspection fees, inflate the cost of all repairs if your prop mgt company is handling them for their load onto the repair cost and utilities while you hold the property initially and with turnovers.

Overall, I wouldn't say this is a bad idea if you know what you are getting into and are comfortable with it. That's a huge leap though for a first time investor who can't possibly really know what they are getting into. (I'd like to learn how to swim. OK, how about in the shark tank? Sounds good. What stroke should I use?) Finding a local mentor who isn't selling you something would be a very good idea. Consider making a local real estate group your next stop. Don't be in a hurry to buy. You make your money when you buy, unless you buy poorly.

This is a relative value question. Is your $60k purchase + $x in repairs for a total of ??? better than an $80k property in a better area or better condition, for example? You might get $1,400 - $1,500/month rent for a nice $80k property and a higher class of tenant.

Get to know Section 8. Your tenant will very likely be part of the program.

You will probably want to hire a local engineer to help develop the site plan. In addition to grading, you need to consider soil types, impermeable conditions you are creating and the resulting stormwater runoff mitigation. An engineer can help you with all of this.

If you don't know of any good engineers in the area, try calling the local township office to see who is the township's engineer. That doesn't make them the best, but they will very likely know the local ordinances the best which may save you some rework time and cost.