All Forum Posts by: JD Martin

Answer: You don't. You will have to see when you get there or invest elsewhere. 

I don't know the value of these houses and the rent they command but that is going to be a really big project. Not only does the tree have to come down and the stump ground - and you have a massive grind there - but the roots under the drive way will rot and eventually collapse where the driveway is, so to do that right you really need to dig up the roots at least at the driveway. I hope you got consideration in the purchase price for that problem! If you did, then you're out nothing if you got remediation money on the front end in the sales price. If not, I think you have to weigh return vs. cost. 

Sometimes in real estate you have to leave problem remediation to the next guy, and I'm not talking about hiding problems or covering things up. It's like fixing up a used car. If you sell used cars, paying for a complete body & paint job on a $3000 car is going to bankrupt you in short order, whereas the guy who wants to have a nice car can put that into it and still be ahead vs. buying a new vehicle. Someone who bought the house to live in could very well get some consideration and still have a great deal. Someone who bought the house as a business venture (you) might lose your shirt to go down that road.  

I live in one market and work in another. The market that I work in 1% is non-existent, but if you can break even you stand to make some serious appreciation money. The market I live in 1% is simple, 2% is very difficult. 3 of my units that rent for $650 each have all-in (purchase+rehab) of $48, 45, and 42, which works out to 1.35, 1.44, and 1.55, respectively. But those are full rehab numbers (new roof, new HVAC, kitchens, etc) so my % will improve with inflation in the near term as I've already absorbed the bulk of capex on those properties. 

Every market is different. Some markets make little sense to buy for rental purposes but make big sense for appreciation. Some markets have little appreciation but will make a killing on rent. And some markets have neither, which is a death spiral!

Whose bankruptcy? Yours? I am confused by your post. Did you declare bankruptcy in 2014 or did the owners of the building you are attempting to purchase? 

Did you sell the original home? If not, unless you are way over 4% you are probably not going to refinance into better terms. My local banks are all doing investment (2nd+) mortgages at ~4.75% 80/20 right now with top-notch credit. Having 2 mortgages is considered greater risk of default, especially when one is an investment property. 

Unless I'm reading this wrong and you only have 1 house at this point? 

 To get a loan from a bank or other institution you have to think like the bank. What is the bank's biggest concern? That you will be unable to make your payments and they will have the cost of repossessing the unit, having a non-performing asset become a liability, and have all the costs associated with retrieving and divesting of the unit. Banks don't want to own real estate, they want to own interest paid on principal. Using savings is no good unless you lock that money in escrow, because you can always spend it. 

I put no confidence in the article whatsoever. "Real Estate" is absolutely a local market. I can show you around half a dozen localities in a 100 mile radius of where I live where real estate prices rose during the "crash" of 2007-2009. One of the reasons I like real estate is the local influence on prices that at least buffers some of the outside effects of recession & monetary policy. Further, to suggest that a small-time flipper or landlord should divest themselves of their properties because conglomerates holding 6 figures worth of units are selling off some/all assets is crazy talk. I paid so little for my properties that the world economy would have to crash, with Mad Max gangs roaming the streets, before I couldn't continue renting and making a profit. A conglomerate that buys 10,000 units at a time can afford to make $50/month/door because of the multiplier effect, but becomes that much more exposed if there is any kind of generalized downturn. 

Always make arrangements to meet at a coffee shop or similar the first time around. If it cannot absolutely be avoided, bring a male counterpart as your "assistant". 

I would say pretty difficult based on what you are looking to purchase. Since you have a substantial amount of savings, I would probably aim for one single-family house, where you will live, FHA first-time homebuyer if you can make that work, save the rest of your cash, find employment, then start looking at the next place. If you have to pay all cash for the first place, once you have employment for a year or so you might be able to cash 80% or so back out and begin your journey.

PS: Never promise something you can't deliver. Provide as little information as possible about the running of your business. By telling the tenant someone was coming to insulate and then it not happening forever, you set a bad tone in their head. By giving them the place "as is", and then having someone show up (with notice, of course) to insulate so that "their energy bills will be lower", you become a hero, someone who is looking out for the tenant. Same exact outcome, different set of expectations. Promise nothing & deliver everything, not the other way around.