All Forum Posts by: Jeshua Patrick

@Allan Smith I have photographic evidence the payment was sent as the USPS now allows you to sign up for email notifications that have pictures of most, if not all your mail on a daily basis, for free. Unfortunately, after the picture was taken, I never received that piece of mail but everything else was accounted for. Her bank does her no favors by printing "payment enclosed" in bold on the outside of the envelope. I'm not quite sure why she seems dead set on taking her frustration out on me when ultimately it will hurt her more if I have to evict her.

@Bill Brandt unfortunately capital gains will probably come into play as we were only in the property 21 months. Long story, not what we intended.

welcome. make sure to look up @DarrinCarey and @ChristinaCarey who host a great monthly meetup in Dayton. They can also be found on FB at the Dayton Real Estate Investing Network. I visited in January and there was 115 people in attendance so you will surely find a couple people that can help you get started.

My wife and I have a Town Home that was a primary residence that we decided to rent out last year. We purchased the property in September 2017 for $123k with 20% down and Realtor estimates its current value at $146.5k. Quick analysis indicates this is probably close and may even be low. It is currently rented at $1200/mo plus $60/mo towards water/sewer/trash and pool access. Mortgage is $620/mo plus $250/mo for HOA fees. Hold backs for vacancy (10%), maintenance (5%), cap ex (5%), and property management (12%) make this no better than a break-even deal and likely a slight loser; however, market (Charlotte, NC) is projected to be a top 5 market for price growth for the next 3-5 years. Expected appreciation over the next 5 years is $20-30k.

Tenant is currently late on rent due to a lost check in the mail and a failure to timely replace the check by tenant or the bank. Tenant was on an automatic bill pay plan with their bank. I have been accused of receiving the check and losing it by the tenant and tenant has not responded to my offer to set up a different payment option (such as Cozy). A 10-day notice has been served and expires on 2/20/2020. 

My personal back story: My wife has about 30k in loans ($8k/5yrs and $22k/25 yrs) against her 401k that are sucking up about $400/mo and has decided that its now time to change jobs/careers. Additionally we have $26k in credit card debt that is sucking up another $450/mo. I have a 401k that I have re-positioned into a SD 401k with the intent to purchase RE inside and outside my 401k and have been actively building a team and searching for property out of state in a market that makes a lot more sense for us than Charlotte currently. In addition to 401k's we have about $10k in liquid cash and $400/mo in excess cash after all expenses. If my wife changes jobs we have to repay the $30k immediately or eat the taxes and penalty ($12k loss, OUCH). I could take a loan against my 401k, pay off her loan, and wait for her to rollover her 401k to her new employer so she can take a new loan out. This is not ideal as it increases the monthly repayment costs by at least $200/mo and severely limits my ability to move on an investment deal during that period. The other option is to sell the property, repay her 401k loans, and pay off some credit card debt which would free up an additional $600/mo in cash. What would you do?   

@Marco Morkous I would add that there are scenarios where a rehab loan is available to an owner occupant but those can be difficult to close because contractors don't want to bid a job unless you already own the property, even for a fee many times. If the property won't meet the bank's lending criteria as-is the only other option is cash (cash, PML, HML).

@John Thedford I think you should rethink your approach. Would you try to have a civil conversation with or even listen to someone who you asked for advice if they immediately started calling names and treating you like a worthless human being?

You are correct in many of your points; however, especially when someone references a deal being their first, understand that they likely don’t know what you know and are probably working with bad information regarding what is legally acceptable and the proper way to do things.

While the OP is going about things the wrong way, I’m sure he would love to have a legitimate conversation about how to do things correctly had you not vehemently attacked him as you did. If not, then at least you can extract yourself from the conversation,while having added value to it for the other readers, without looking like a complete jerk.

@Victor Pedro I think this could be a good learning experience for you. I’m not an attorney nor am I offering legal advice. I think the person who suggested you consult an attorney is right although there is nothing they can do for you now other than advise you what you can and can’t do for the duration of the agreement’s effective period. In the future you would be wise to read through any such documents prior to signing them. If you are unsure of the implications, ask for time to have an attorney review and explain them to you. If you feel the implications may cause you undue hardship during or after your employment ask them to revise the contract to a more amenable wording. If they won’t you have to decide if the job is worth it or move on.

@Ahmed Youssef if Turnkey is only offering you properties at retail and then making you sign a contract that obligates you to overpay if they missed their numbers I don’t see why you would buy Turnkey to begin with. I could possibly see using Turnkey AND paying retail if I got to choose the property pre-rehab and control what is done during the rehab provided the property cash flows.

In this situation I might even consider overpaying up to 10% IF, and this is a big IF, they could provide me reference backed evidence that they could rent and manage the property at a high enough efficiency rate to increase my cash flow to a point where I would recoup the difference in out of pocket expenses within 24 months AND they guaranteed me a refund of the difference if they failed.

I think you would be much better served by networking and finding reputable contractors and PM's to help you through any rehabs and then target light rehab properties off the MLS that can be had all-in for 90-100% of retail. When dealing with traditional sellers on these types of properties you typically have an option to cancel if the property fails to appraise, especially when financing, that forces the seller to return any EMD monies if they are unwilling to accept the lower price and you cancel the contract. If a Turnkey is unwilling to operate under the same standards I would run the other way.

I just had a call with one of New Western's agents in the Charlotte, NC area. After discussing the types of deals I was looking for I asked her directly about the way they do business, namely that it was high pressure, that they make it difficult to do due diligence once under contract, etc. She admitted that all the things I had read were true but didn't see a problem with that. She stated point blank that their contract states that all due diligence must be done prior to going under contract, that once under contract all EMD money is non-refundable, and access will only be granted while under contract if the property is vacant. She also stated that most of their deals are going under contract in under an hour. Based on our conversation I took a hard pass and would not recommend them for newer investors like myself but I can't say that an experienced investor couldn't have a good experience with them if they are accustomed to buying sight unseen.

@Jacob Kline I think the biggest takeaway you should have from this is that you need to step back and rethink your approach. I know that FL has passed laws making it much more difficult to operate as a wholesaler because of unethical practices by unscrupulous wholesalers who have no intent to close their own deals. As far as the state is concerned, and many would probably agree, wholesaling is nothing more than an attempt to skirt licensing laws. You would probably benefit from at least taking a licensing class even if you ultimately decide not to get licensed.

My personal opinion is that wholesalers should not sign contracts on deals they wouldn't close themselves. Many of the wholesalers I receive deals from overestimate ARV, underestimate repairs, and barely leave any meat on the bone for the end buyer so they are screwing two people. The seller when they can't find a buyer and the buyers who are inexperienced investors desperate for a deal and insufficiently educated on how to identify a good deal.

While I believe @John Thedford is being a little too aggressive trying to turn in every wholesaler he runs into he is not wrong that you are indeed acting as an unlicensed agent, regardless of how upfront and honest you have been with your seller, and could face serious legal repercussions for doing so if you don’t stop and find a better way of doing things that doesn’t break the law.