All Forum Posts by: James Mc Ree

So, you have a prospect with no interest in seeing your property and credit so bad they are in bankruptcy, but you are considering their application? Are you trying to decide which dumpster to use for the application?

That looks like a high probability of disaster to me if you rent to them. It might be different if they showed interest and you got to know your story. I envision someone moving in and telling you, "You know, I am bankrupt..."

@Carlos Lez

I am confused by all this. You wrote your tenants complained about a laundry list of issues that don't actually exist. I am OK with that part. You then express concern about a code complaint that will slow things down. I don't understand that if there are no issues. You should welcome the code enforcement person if there are no issues and ask for them to give you an inspection report specifically focusing on these issues. That becomes some excellent physical evidence for an eviction lawsuit.

I see that you are writing, you have an old Victorian. The issues your tenants are complaining about have nothing to do with age. They concern cleanliness and basic function. For example, screens are there or not and it has nothing to do with age. Your local maintenance code probably requires screens in all the windows. A simple pic showing them there or not is trivial to make that go away.

Have you personally inspected this property prior to their move-in? I always do a walkthrough with my new tenants to allow them to point out any issues. These issues appear to be easily addressed with the tenants, as in they say X, you both look at it together and agree it exists or not.

I am concerned with your multiple references to the property being habitable. That could be just above the line of "uninhabitable." How bad is it really? I don't have experience with someone who is genuinely proud of their property merely describing it as habitable.

These were CfDs and mortgages on regular homes, land and mobile homes, 1st and 2nd position. 

I am a newbie for note buying and still shopping for #1. I have a seller side strategy question.

I've come across several note sellers selling newly created notes with significant discounts, such as a $50k note created in the last few months with an asking price of $40k. The notes are all performing, but maybe only for a short time and some are new with no payments yet. I don't see any obvious problems other than the lack of seasoning, but that might be due to my limited experience. In DD, I ask Seller why such a large discount on a new note with no obvious problems other than it being new. The answer is always the same: some form of freeing up cash for another deal.

How does a note seller stay in business doing this repeatedly or is that a red flag of a scammer? I've seen a few sellers doing this, but haven't looked broadly, and did expose one as a scammer.

What is the pitch for an investor, non-operator? I think operators require special licensing most traditional real estate investors do not have.

I peaked at the Sober Living web site. They list a 2-man room and 3-man room as rental options, but there is no mention of how many men live in th heouse. Do municipality limits of number of unrelated people living together apply for these? The rents they were offering for tenants/patients seemed low, especially for a fully furnished home with high risk tenants.

The Votes feature seems like it tries to get at the value of a poster, but doesn't hit the mark. Someone who posts 1,000 times with 1,000 votes seems valuable, unless the 1,000 votes came 10 years ago and none since.

It seems like a recency feature combined with a way to vote up/down would highlight higher and lower value members. Something like a 90% score would be 90% of the member's posts in the last X months were neutral (no vote) to valuable.

I can see how this feature would be a nightmare to manage and could be worse than the problem too.

Two thoughts:

1. You need to run your business as a business.

2. You are offering a better deal than your tenants can get anywhere. You have room to raise the rent.

You can't solely justify raising your rents because your costs go up. Tenants will relate, but don't see it. They see comparable properties and their rents. However, you can use rising costs as part of your justification which everyone will relate too in conext. Your utilities, groceries, insurance, taxes, and nearly everything else increased in price for you personally and your business over the past few years. I also suspect your vendors didn't ask if that's OK. All of their competitors were also raising their prices which is what made your vendors comfortable in raising theirs since you had no better comparable deal to choose, or so they think. Use the same rationale.

Know the value you offer and make sure your tenants know it too. You wrote that your rents are below market. Do your tenants know that? Embrace that as a marketing pitch to your tenants to make them want to stay. It looks something like this:

Your rent is increasing from $2,000 to $2,075 per month, effective October 1, 2025. I strive to keep your rent as low as possible to offer you the best value. I haven't raised your rent over the past 2 years for that reason, even though my costs have increased dramatically. Taxes, insurance, and maintenance are all much more expensive. I don't want to pass those costs on to you, but it becomes inevitable at some point. I recently looked at comparable properties on Zillow and saw the cheapest 5 of them renting for $2,200 - $2,350 per month. I feel that you still have a great value in your home at your new rent and it will help me to defray these increasing costs we all experience. Let me know if you disagree and we can discuss it.

I think tenants move for reasons related to the property itself or their perceived value of it. You can't do anything about property-related reasons. Examples of these are the tenants outgrew the place, need to move for a job, or to be closer to a loved one. Value reasons are largely on you, but not completely. Value reasons would include rent compared to comparables, condition of the property, your responsiveness to issues and neighborhood safety. You completely control the first 3 value reason examples. You can influence the 4th, but never completely control it.

Tenants will stay longer if they move into a place in great condition with awesome features, at a fair rent that is maintained well. They will like their landlord if the landlord is responsive their maintenance needs and may even recommend the landlord to their friends who are looking to move. These tenants will really appreciate your lagging rent increases (not too lagging!). Remind them of all these things and what you did for them over the past year when you raise the rent. They just might love you and ignore the increase.

Your brother shouldn't really be focused on, "Should I invest in real estate?" at the outset, if he is at the outset. He should first focus on having or getting a financial plan for his goals. Identify specific goals with dollars and income streams associated with them over time. That sets the roadmap. Next comes income and investments to achieve the goals. Does your brother have this in place?

For most people, a W2 and savings plan are the first vehicles. Investments, such as funds, stocks, etc come next and a lot of folks stop there which is fine. What part of the plan is pushing your brother towards real estate? I would recommend pausing if it is "just make a buck." Real estate involves much more commitment in timeline and wealth than just "trying" the stock market or something like that. He has passive/active to think about, types of investments, etc. In short, it's real work unlike the stock and fund investments.

Does he genuinely want to be a flipper or landlord? Does he have a lot of cash or willingness to take on debt for a long term investment? Does he have patience and perseverence? There are a 1,000 more questions to ask, but none of them really matter without the plan and driver. The driver has to be beyond just make money. A REIT might be better if he isn't interested in these things.

A lot of folks get that "it might crash!" sentiment since virtually everything has crashed at some point. It's important to understand the drivers of a drop, as well as an increase, versus constantly worrying into paralysis.

Think of the stock market. There is massive data out there on it and no one knows what will happen tomorrow. It seems to have a big drop every 5-10 years, then comes back, but no one can reliably predict the inflection points. What if it didn't come back? Oh no, I'm paralyzed and just missed a great 10-year run. The long term track record is compelling, but investors have to think long term. Comparing the stock market to real estate shows the stock market wins, but sometimes at great stress. It can feel like a ponzi scheme in which folks hope they aren't the last fool in.

Think of real estate. I don't know that there has been a 10-year period in which real estate investing has lost money in aggregate, but there have certainly been scary times. I don't think they were nearly as scary as the stock market steep declines though because real estate values change slowly and vary by region. 2008 And COVID showed us the stock market can lose a third or half its value in a matter of days.

People don't invest in aggregate except in funds. It's a bad experience if someone doesn't do their homework and buys a bad stock. Likewise, buying in a bad area or a bad property will also be a bad experience. Real estate has more exposure to this since entry and exit is much harder and slower than a stock or fund. A stock investor might never know the company had a problem with a building. A real estate investor will be intimately familiar with the problem.

The driver for residential real estate is largely personal incomes. Interest rates get a lot of well deserved attention, but are largely short term noise. They are high until they are low, then back up again. There is a lot of recency bias with rate opinions. We are currently at about the historical norm for rates, but you wouldn't know that from the market sentiments.

Incomes are the primary driver for prices and rents. They tend to rise over time and with age. The typical 75-80% LTV mortgage limits mean a buyer can leverage income 4:1 or 5:1 depending on other debts, so someone making $100k might afford a $400k home, but a raise next year to $105k and maybe more savings may mean they can afford a $420k home - the same home! As bidders are stronger, prices and rents tend to go up. There are also a lot of first time homebuyer programs that support value and increase these ratios.

Home affordability gets a lot of attention and it always has. Younger buyers say housing is unaffordable. This has been a popular news topic for decades and there is always data to prove it and show that it is worse now than ever before. Maybe it is, but prices continue to rise and those younger people find ways to buy, then move up. Keep in mind there are many more property owners than buyers. I have never heard a property owner wish their property wasn't so valuable.

What does this mean for your brother or anyone? In brief, housing prices and rents are not going down in aggregate over longer time frames unless there is a radical change in USA economics. This will vary by region, but the drivers are directionally consistent.

Incomes are almost always rising. Rents and mortgage payments are related to each other. Incomes are rising and people can afford more which is an inflation driver. Inflation is almost always 2%+ per year and pushes up property values and rents. Housing demand exceeds supply and there is nothing on the horizon to change that. "They" aren't making any more land, so buyers/renters have a very difficult time getting a better place in-region without paying more or commuting further, a trade-off.

I bought my 1st rental in 2013. What a lousy time to invest. I heard lots about risks. We were coming out of the mortgage fraud debacle and prices were just starting to sustainably turn upward (2010 might be the ideal year to buy), but would it last? Everything might happen, just like today. It was actually an awesome time to invest!!! That property I bought for $67k is now worth about $200k. I pulled out more than I invested through refi's and it has great cash flow. Yet, at the time, there were plenty of people saying, "I dunnno.....it might go down...rates might go up....that clogged toilet on Christmas day...jobs, inflation, war, boogie man..." Those people always exist and are especially vocal to every new business owner. Listen, but tune them out. I now have 14, but none of them were slam dunk "This can't lose" investments.

There is always risk and hesitancy - and there should be! Starting a business is a big decision. Your brother should keep in mind that this is starting a business and he should want a business and understand the implications before starting one. Local real estate investor groups are great places to start getting exposure without commitment.

I have not. I was a beekeeper and talked with quite a few other beekeepers and farmers. I never saw a lamborghini in any of their driveways and there isn't one in mine. Most weren't chicken farmers though, so maybe that is what they were missing!

Farming is not known for being an industry that produces much wealth. Massive scale through automation is required to be profitable.

I've read that avian flu is crushing poultry farmers, partly because farmers are required to destroy their entire flock of potentially exposed birds if one gets the flu. Your best lead is probably to find a real chicken farmer venue versus a real estate venue.

It looks like Seller requested you to raise your offer by $20k. You can offer anything you want back, but don't expect to get a deal if you aren't offering $20k more. Get to a price agreement with an inspection clause, then nickel and dime Seller as mentioned above.

A few back and forth exchanges are normal. I haven't had an agent refuse to submit my counter, but I have received feedback from my agent that Seller won't take less than X according to the other agent, so don't waste time. Your agent might be trying to tell you that.