All Forum Posts by: JD Martin

She should have made remedies before she left. I would make repairs and take them out of the deposit. You are probably on firm ground for the extra day on the pro-rate, but I wouldn't bother. Just make the repairs and be on your way. 

 Yes, I have. If you can buy cheap houses - less than $40k - it can be done without a whole lot of time, but there is no question leverage will get your portfolio going far faster than you could ever hope to by sitting around saving up money. One can be disciplined and still use debt - I don't know why anyone would think those concepts are mutually exclusive. 

IMO Dave Ramsey is written for lowest common denominator. If you have a good feel for real estate investing, and have funds to do so, you have probably already evolved past Dave Ramsey. Now if you say you're following DR because you have a bunch of credit card debt, car loans, etc, then you are probably not ready for REI anyway.

Also: if you're going to go into business with your girlfriend be sure you have a good contract to govern the split of assets if/when you break up. *DO NOT* put an asset into her name as well as yours unless she has paid/is paying equally for it. 

 I emboldened that statement for emphasis. I cannot count how many times I have found myself in the same predicament in the past wanting to "make something nice". From what I can see, the vanity that is already there is already nice, just looks dated. Get someone to spray it - it will look new. Put updated pulls on the cabinet and a high-end vanity top with undermount sink, granite or quartz, and you've got a hell of a vanity that's already installed for $500-600. 

I wouldn't do it. Winterizing primarily covers the plumbing fixtures to keep toilets from freezing, water lines from bursting, etc. when the heat is turned off. Without turning on utilities, you don't have any way of checking the integrity of the water system. If you do go ahead, factor in replacement plumbing & electrical systems in case of total failure. 

Not really sure what else to say, but my last purchase (the one I referenced above) went something like this:

House was listed for $70k, dropped to $60 and then to $50k. Bank-owned, decent neighborhood, 2br 1ba 1100sf, solid house in need of cosmetics and floor refinishing (bad urine smell/damage). I offered $30, bank came back at $42, I came up to $32.5, bank came down to $40, I came up to $35, bank came down to $37 and we had a deal. My top number was $40, so when they were down to $40 I knew we would have a deal.

Before I made the first offer I went through my numbers at home and determined that it could work at $40k or less. Had my realtor take me through the house and it was a solid house worth moving forward at the right price. After a minor rehab the house currently rents for $650/month, which gives me an annual COC return of 19.5% after rehab but before taxes, insurance, maintenance, possible vacancies and any necessary capital expenditures (major one done with purchase, heating/cooling system). My net annual return after income taxes is about 14%, which is a pretty good return IMO.

First, I only bother looking at houses that fit my criteria, which are neighborhood, viability as a rental, square footage, and price being "in the ballpark", meaning if I see a house on the MLS or elsewhere and believe I could make it work at, say $50k, and the seller has it priced at $120k, I don't even bother looking, but I will check it out if the seller is at $70k or so.

No formula regarding list price. The last place I bought originally listed at $70k and after a couple of price drops and our negotiations I closed at $37k. It wasn't worth more than $40k to me, so if I had to pay more than that I would have walked even if the list was $41k. 

You have to know A)What it will cost to rehab, B)What you can rent/flip it for, C)The depth of the project  BEFORE you make an offer. You don't have to have exact numbers but your room for error decreases the cheaper the house, i.e. you might be able to afford to be $20k off on a $200k house, most likely, but will get killed being $20k off on a $40k house. 

I self finance my rehabs (well, actually, I more or less self-finance everything, but nevertheless); it is a lot less tempting to go overboard when you are borrowing money from yourself than it is when you are given a big pot of borrowed money from someone else, in my experience. I think this is extra important when you don't have much rehab experience, as you will find that the big stuff is easy to account for, but the small stuff is where your budget gets blown. Example: I was just looking through the numbers on a recent rehab and noticed that about 30% of the funds were spent on "Where did it go?" items - replacement soft water lines, a pressure reducing valve, a dozen cabinet knobs, etc. This is the area that breaks a lot of people, as you can go to Lowes and figure out how much 10 cabinets cost, and 10 feet of countertop, but you forget to add in construction adhesive, shims, caulk, cabinet knobs, drill bits, ETC ETC ETC. 

Anyway, once you refinance, *hopefully* you have increased the value of the home (if not, why did you rehab?), and you "cash out" your rehab dollars so you can do it again. 

1. Not sure what you consider significant. My insurer offers it, as did my last insurer (Allstate and USAA), but it was higher. USAA will only let you go somewhat below what they calculate the rebuilding cost to be, which could end up having you grossly overinsured on property if their numbers are off (as they were with mine, so back to Allstate I went).

2. Yes, it was offered for my rental property.

3. I prefer cash value unless I know the cash value on the house is grossly below replacement, in which case I'd rather have replacement. In either case, I want the one that protects me best and costs me least. 

 Tell your friend I apologize :D