All Forum Posts by: Jeff Roth

Hi Shaun-

This is a great question.

What was one of the biggest challenges I've faced in my investment career?

I would say that markets do not go up indefinitely.

The Great Financial Crisis and mortgage crisis was one that comes to mind quickly.

Not many people saw that coming including myself.

I learned how to do short sales during that period as well as foreclosure prevention.

It forced me to learn new skills for a down market and like all crisis experiences you learn a lot about yourself and how to problem solve creatively.

To Your Success! 

Hi Shay in Atlanta, Georgia-

You are planning to renovate an unfinished basement, close up a carport/renovate into a living space, and convert a closed garage into a living space and wonder if you need to obtain permits.

It looks like you are planning to live in the property and rent out rooms to others or house hack.

I would always get permits for the following reasons.

1. If you rent spaces to others, local regulations may require work to be permitted sometimes even retroactively permit un-permitted work.

2. Future buyers will be able to see all work was done with permits which gives them confidence in what they are buying.

3. For liability reasons, if something should happen while renting to others, lawyers and insurance companies are very good at 1. trying to assign liability to make a claim or 2. avoid paying on one.

To Your Success!

Hi Kristin in Chicago, Illinois-

I am sorry one of your rentals has been vacant for a couple of months going on three months and you are concerned your property manager is not representing the property well and their criteria for screening tenants may be too stringent for the area.

This can be an expensive learning curve as you have holding costs and may even have to pay one month's rent to the property manager to get it leased.

I had nearly the same thing happen to me. I would look for a new property manager in the area immediately and see if they will wave the one month fee for placing the new tenant if you work with them. When I switched property mangers, they had it rented in a week and did not charge to rent the unit.

Again, I am sorry this is happening. One additional note, in my case the property was a duplex so I had some rent coming in while one unit was vacant. Consider building your portfolio with duplexes for this reason.

To Your Success!

Hi Ayyoub in Kansas City, Missouri-

Congratulations on being in a position to rent your home in a month or two.

You wonder whether to use a property manager or not.

Frankly, the property manager is one of the most important people on your real estate team. They should be your partner and working to add value, increase rents, and reduce costly tenant turnover. They also will keep you compliant with Fair Housing laws and local regulations.

The biggest reason I see people not continue to scale or benefit from investing in real estate is trying to self manage and getting burned out.

Make your investment as passive as possible with a property manager.

To Your Success!

Hi Mario in Tempa, FL.

Congratulations on having enough capital to begin your real estate investing career and you are considering one of two options-building your portfolio with single-family homes or starting with multifamily.

Personally, I would consider buying duplexes as you hopefully will always have paying tenants inbetween vacancies. Single-family houses are binary. They are rented or not rented and can be a financial alligator with an extended vacancy. Try to get 2 bed, 1 bath each unit duplexes minimum as tenants tend to stay longer than in smaller units. Garages are also nice for storage and for tenant longevity.

If you buy the duplexes well, in no time at all, you could refinance them and scale into a larger multifamily after you have some experience. There are several good markets in Michigan for this.

Also recommend using a property manager to keep your investment as passive as possible and for compliance purposes with Fair Housing Law and local regulations.

To Your Success!

Hi Simon in Jacksonville, Florida-

Congratulations that you and your wife are in a position to begin your real estate investing career.

You would like to discuss your investment strategy and build your team and are sharing investment information with your wife and trying to get on the same page together.

I work with many husband and wife teams. What I notice is each partner brings their own strengths to the decision making process. I would, as a couple, consider each of your unique learning styles, leadership styles, and investment risk tolerance.

Perhaps, consider finding an investor friendly Realtor you both like and trust to help you come to consensus.

It's a process.

To Your Success!

Hi Troy in Cedar Rapids, Iowa-

You are days away from closing on an investment property and the seller and their agent are saying they are not going to return the security deposits and tell you it should have been written in the purchase agreement. I am sorry this is happening.

There are many things that happen that are not in the purchase agreement like the seller turning over the keys to the property at closing. While I agree having it in the contract would keep this from happening, you are correct in saying the security deposits do not belong to the seller. In fact, in many states, the seller cannot commingle the tenant's security deposits with other funds and the tenants must be told which financial institution their security deposits are held.

Finally, because the tenants are section 8, the local housing authority may also be helpful in resolving this with the seller.

To Your Success!

Hi Evan from Sayville, NY-

You asked about whether a lender would pay real estate commissions and closing costs with a short sale.

I negotiated a lot of short sales after the Great Financial Crisis.

Short sales are similar to dealing with a bank owned property accept the bank is trying to avoid taking it back so the terms, specifically an acceptable purchase price, have to be negotiated.

The thing I found that was important to negotiate was the lender agreeing to settle without further recourse for the seller. That was not always possible, especially with HELOC seconds, but it also was not uncommon.

To Your Success!

Hi Zoe in Milwaukee, Wisconsin-

You have $25,000 to invest and you would like to scale your portfolio efficiently and wonder what the best approach would be to do that.

First off, congratulations on starting your investing journey and having $25,000 to invest.

If you could find something near you with equity when you buy it, then house hacking will get you into a property with the lowest amount down--make sure to leave room for reserves and repairs in your budgeting and then refinance as soon as you can to pull money out to buy the next house the same way and keep the first and so on.

If that is not possible near you because of prices or other factors, then I would look at buying a BRRRR in a market like Lansing, MI. You can buy a single-family investment home in need of work with what you have available. Then you can rent it after repairs are made, refinance, pull money out and do it again in the same market or similar.

To Your Success!

Hi Dave in Northern, NJ-

I am sorry to hear you have a single family rental facing foreclosure.

You have it in an LLC and wonder what your options may be to delay foreclosure.

Lenders do not want to take properties back and have a nonperforming loan.

The best time to work with your lender is as soon as possible but certainly before the sheriff's sale.

After the sheriff's sale, there is a redemption period where you can still sell it and the length of time varies from state to state and may depend on if it is vacant (avoid that for a variety of reasons), if tenants have a lease and have rights, or if someone is occupying the property.

Working with the lender may not be easy but do not give up.

Also, reach out to investors, who buy properties in foreclosure or pre-foreclosure, and see if they would be interested in curing the default and buying the property.

To Your Success!