All Forum Posts by: James Mc Ree

Check your agreement of sale. This should be covered there. Money transfers should also appear on your HUD-1.

You should agree with the seller on handling of the current month's rent and security deposit.  Rent for the remainder of the month may go to the buyer.  You will want a statement from the seller that the tenant has a security deposit of $X and get that signed or otherwise agreed-to by the tenant so there is no disagreement later. 

Get a copy of the lease.  Make sure you are willing to buy that agreement because you are buying that agreement!  You might want to ask the tenant to sign your lease if the initial term of the lease is expired.  Otherwise, consider doing so when it expires.

Good luck!

Your assumptions of a 10% year over year stock market return are very generous.  Typical market performance is 6% - 8%.  I am not writing about the "Trump Bump" or specifically the most recent 7 years, but rather the generally accepted range for the next 20-30 years.

I like the approach of diversifying stock/bond market investments with directly owned real estate and section 506 deals.  Section 506 deals give you a wide range of investing opportunities if you are an accredited investor with timeframes from several months to multiple years.  Going to cash with stock/bond market investments can mean going to Section 506 investments, depending on what you invest in as some don't correlate with stock/bond markets or real estate.

Two big down sides for Section 506 are (1) they are still very new since 2013 and haven't seen a full cycle yet - we don't know how bad it will be in a downturn; (2) Your funds are generally locked-in for the term of the investment, unlike stock/bond market investments that can usually be quickly sold.

They pay 12% interest on your principle for a term, then return your principle at the end - just like an interest only loan.  Fees are built into the operation of the company.  You won't see fees, just 12% if all goes as planned.  The investment is secured by the notes in which AHP invests - no guarantees!  In fact, they explicitly disclaim virtually everything and write you can lose your entire investment.  That's not likely, but possible.

I just invested with them a couple months back and all is good so far.  As I read about them, it seems like they have a solid track record so far, but it is short and during an awesome real estate market.

It looks like the agent was doing a bit of extreme negotiating.  Asking for lots of fixes is a common negotiating tactic.  The agent and his buyer may have agreed the agent should be aggressive to get the best deal.  Texting late into the night and threats are a little less ordinary, but you didn't write that you told him to contact you at other times.

You had a deal and dropped it.  That's OK if you really didn't want the deal, but most sellers have a goal of just selling the house for their price.  It looks like you ultimately got your agreed-upon price and are just looking to get out of the deal  Realtors deal with this kind of behavior often.  You might want to reconsider representing yourself if you don't want to deal with this kind of behavior.  There is a reason realtors are paid a fee and this is only one of them.

You should be careful in what you say to the buyers about the agent.  I recommend nothing.  Telling them their agent broke a contract is probably factually wrong, may open you to liability and does not benefit you at all.  Contacting the buyers to let them know you would love to sell your house to them if they have different representation might be a better idea but they might not be able to do so if they signed an agreement with that agent to represent them.

Consider asking your agent-friend for a "finder's fee" if that prospect buys the house you found with the agent; otherwise, a free lead for the agent.

I concur with the prior posters and would not be especially concerned if this wasn't creating a material problem.  I can see at least two approaches to try to save the lease:

1. Previously mentioned - Guest writes a letter attesting he is a guest and not a tenant.

2. You write a letter to the tenant stating that he is a guest and not a tenant as to your prior conversations with the tenant.  He may visit, but has no tenancy writes unless you and your tenant agree to add him to the lease.  Invite a written response if this is not correct.

#2 Puts you more in control and serves the notice that you are aware of him and he is only a guest.

I have 3 SFR properties in Section 8 with no real issues. Vetting tenants is essentially the same as regular tenants, but expect lower credit scrores, bankruptcies, etc. People who qualify for S8 are poor. There is no getting around that. Try to get a feel for the stability of the tenant's current situation and recent past.

You will probably find a lower standard of care than you might apply to the property.  I encourage my tenants to actively report everything that needs maintenance.  Some folks have gotten used to low quality landlords that don't fix things and think that is normal.  I had a tenant (not S8) that thought it was OK to let the faucet leak and run across the basement floor.  Education is a wonderful thing - make sure your prospective tenants have some and motivation.  Try to get a look at how they are living in their current home.  That is what yours will probably look like.

You will probably experience more drama in rent payments, but that isn't guaranteed. Regular tenants have drama too. In my case, the 3 properties are paid for by HUD at 33%, 75% and 85%. That makes late payments less impactful on e, but still emotionally draining. It is not at all uncommon for 1 of my 3 properties to be late as the tenants are trying to stretch their checks to meet the end of the month. This month, all 3 were late.

HUD does have a maintenance standard that is higher than the local government where my properties are. It is not at all unreasonable and I like it. You get a month to fix whatever they find. For example, the local government rental inspection walks through and finds no issues. The HUD inspection the next day finds a water stain on the ceiling and fails the property. I have to fix the leak and stain. That doesn't bother me because it wasn't there when the tenant moved in. I want to fix it and appreciate the extra set of eyes. Others may see that differently.

There is no additional paperwork except the initial rental contract. HUD will only approve market rent and rent the tenant can afford which can be a limiting factor for you. The direct deposit on the 1st of every month is a wonderful thing!

Those are some quick notes.  Good luck!

The "no cash" BRRR method is based on forcing value. Example:

$50,000 - All-in purchase cost

$60,000 - Rehab cost

-------------

$110,000 - Total investment, but property is now valued at $150,000 because of the great job you did

-$112,500 - 75% LTV mortgage applied for 6+ months after purchase based on $150,000 value. Appraisal needed.

---------------

-$2,500 - Your total cash investment (negative: you got money back and are 100% OPM).

Obviously, for the project to work out like this you have to invest less than the ARV or cash will remain in the property. The 25% not in the mortgage might be your "sweat equity". This example ignores refi costs which will likely eat your $2,500.

Good luck!

You may find that the amount you are learning starts to taper off until you start "doing".  A local mentor, such as from your real estate group is a great approach to go from seminar/reading to the next level of RE knowledge.  Your mentor can bring you along to properties he/she has and you can assess repair costs together, for example, instead of just reading a table in a book about repair costs.

It seems like you might have a "warranty call" on the original work if the contractor provided a warranty.  Check your original work order.  If it said something like, "Fix the broken sewer line", you might have a claim.  If it said, "Fix the broken sewer line 30 feet from the house", you might not if this is 8 feet from the house.

Did the contractor provide a before and after video?  You may be able to show there was a problem and it was fixed, but now this is something new, post-settlement.

You might be able to get the buyer's father's plumbing company to leverage their relationship with the contractor if there is a question of professional responsibility.