All Forum Posts by: Jim K.

@Account Closed

I hired a Belarusian-immigrant father and son team once to do tile work on my home for me. They showed up on the job site wearing matching ankle monitors, the father for beating his daughter for prostituting herself, the son for multiple DUIs. They royally botched the job and didn't finish in the time they promised, we threw them out, and that's how I learned how to do tile.

@Caleb Heimsoth

I wouldn't call that stupid at all, Caleb. The only way I figured out an LLC wasn't worth it for us was following the exploits of another guy I met with 25 long-term rentals. Never got an LLC, owned them all in his name, was a totally standup self-managing fixer landlord, sold them all in 2015 and retired. Apparently, he was a set carpenter for Mister Rogers' Neighborhood back in the day.

@Nik Moushon

You forgot the ever-dreaded box gutters. :)

I am most definitely one of the people who believes that many of the 100-year-old properties in my target area are better-built than the more modern ones. Especially for self-managing fixer landlords, these places represent a unique opportunity. To be clear, not all that's old is good. But you can often snag prestige housing of the past for pennies on the dollar in terms of square footage simply because it's old and hands-off landlords don't want to pay what they perceive are going to be extremely expensive maintenance costs, when in reality once you really dial a place in you can get decades more of easy management out of it.

Quick update, people of the thread, BP is trying to shut down the McRib gag...it was good while it lasted, but it looks like the limited availability is up. I'd like to thank all of you for making the party as memorable as it was. Special thanks to Omar Khan for coordinating our SW branch and helping us expand into Canada.

@Dave G.

@Omar Khan

@John Woodrich

@Anthony Wick

@Account Closed

@Matthew M.

You certainly HAVE pointed out an important thing here -- for good landlords working in low-income/high-cashflow properties, people that have been trapped in the system through previous criminal activities that they have been punished severely for and have reformed, well, very often and sadly make the very best low-income tenants. All they have to do is become convinced that you're a better landlord than they could get otherwise, with their criminal record, that you are providing full, responsive landlord service in a C/D class property that they could not get elsewhere.

But this guy with this story...I don't but it at al. Not because I don't understand the issue of young men making bad decisions about women. I'm in my 40s now. When I was 23, I made the worst decision of my life, and it was over a 21-year-old woman. But it was not a dishonorable decision, nor a criminal one, and I don't try to avoid admitting that I was certainly at least 50% of the problem in that failed relationship.

This guy, on the other hand, sat in front of Aaron and explained how, at 22, he had sex with a malevolent lying teenage seductress with a vengeful cop mom, and THAT'S why he went to jail. It's a classic "nuts and sluts" defense. Lolita done did dirty a fine upstanding young Texas boy and ruined his life.

The only way he could have made this implausible pass-the-buck story MORE of a cliche was explaining that he was cunningly plied with alcohol and she was well-known for having unstable relationships with lots and lots of guys and/or that he found out later that she had had several various mental health problems and/or that he knows she's separated now from her fifth husband who left her in a doublewide with eight kids by six different men, two of them mixed-race...hey Aaron, did Lester the Molester feed you anything like that about the person a court of law decided was HIS VICTIM?

@Aaron Silk

The story does tell you something about him that you need to be fully aware of.

If his story is true, he's an innocent victim of a lying, manipulative teenage Lolita with a mean cop dad. Personally, I wouldn't believe it for a second. But let's say that it's sort of true. That makes him pretty stupid at 22, doesn't it?

If he's lying, he heartlessly manipulated a young girl into having sex with him without troubling to learn that her father was law enforcement. That also marks him as pretty stupid.

17 years later, married with four kids, still renting, still trying to sell his potential landlords on his innocence...

I think you can safely assume that this man is a fool and continues to have the capacity to make very foolish life decisions.

@Cody Jensen

I've told this story multiple times on Bigger Pockets but it always bears repeating because it illustrates a few important things about getting into this business.

I didn't find my first rental property deal. It was handed to me by my wife. A friend of hers was preparing for a nasty divorce and needed to unload a rental property that was in his name quickly. We had 100% equity in our own house and could easily afford a home equity loan to buy this place, and the price that was being offered for a quick sale was very low for the area.

The home equity loan was approved at 3.25% interest and our loan payment was $562/month for 15 years. The property brought in $1075/month at the time. We did the deal. I have never run numbers on a property -- didn't have a clue about how to do it. All I had was a passable basic handyman background I had gained in Europe, working in apartment buildings. After we did the deal, I hired a home inspector to look at the place and he pronounced it sound. All in all, we didn't step on our cranks too badly.

OK, so:

1. Is it wise to mortgage your own home to buy a rental property? Not always, but it's also not always a bad decision.

2. Do you HAVE to be fully aware of all the metrics and calculations that go into buying properties for profit before you buy? Again, not always.

3. The best deals are always off-market deals. However you decide to structure yourself as an investor, your deal pipeline/lead pipeline should always include as many avenues to get off-market deals, in whatever economy, as you can possibly develop. The MLS of your area is not your friend, and will not unlock a royal road to riches for you.

4. Can you lose your shirt in real estate making uninformed decisions? Yes. But you can also do pretty well not knowing everything as long as you stay conservative, as long as you know you can afford to lose the money you're investing. This business does not reward geniuses or get-rich-quick systems. It rewards reasonably bright, emotionally mature, resourceful people who can make steady, sustained progress toward a goal while dealing successfully with repeated setbacks.

5. If you even for a moment think that you're going to get into self-managed landlording successfully with very little investment capital to spare and also with your spouse's not being 100% on board, you're deluded. You're just totally deluded.

Good luck to you, Cody!

@Ashley Davis

Dealing with REOs and foreclosures isn't always a nice business. Yes, you do snoop around vacant places. Yes, you do knock on the doors of preforeclosure properties. It gets weird. I almost got shot once doing it. @Jay Hinrichs has been in the real estate business for forty years, and has probably forgotten more about this than I've ever learned...for instance, I've never bought any OREOs from auction.com or any auction site.

I have never done a closing sight-unseen. The closest I've gotten is a really ugly auction buy, which I just sold recently. I did not enter the house before I bid, but I did case the exterior thoroughly and I also had additional intelligence on the place.

It doesn't matter if the tenant forges the lease or actually has one. The onus is always going to be on you to prove that the tenant does NOT have a valid lease. That's will take time, effort, and money on your part.

Please don't take offense, but yes, while great deals like the one you're sure you've fallen into exist, everyone who's been knocking around real estate for a while has heard of sure things going wrong for all kinds of reasons. "There's no way I can lose" are perhaps the most common last words in real estate. You don't know for sure until you do know for sure.

Not all tenants are equal. Inherited tenants are very often tenants you don't want. You have no control over how they were screened, they already feel shafted because the building changed owners and they weren't part of the decision, and change is very difficult for them. Keep this in mind in your dealings with this one. Getting rent out of them isn't always a simple, pain-free economic exercise.

@Christen G. has a good idea about trying to warn them with a mailing. But you should be aware that people in this tenant's situation aren't always perfectly rational, no matter how hard you try with them. There's a lot of emotional baggage attached around the idea of hearth and home that gets in the way of quiet, logical, sane conversations.

@Ashley Davis

Hi, Ashley. I do have a few investments of my own. Mr. Morrison is a something-something, as I've pointed out elsewhere.

When you buy a property from a bank, it isn't a foreclosure. The bank, in buying the foreclosure, has to clear the title in order to sell it, or will use the money from the sale to clear the title. This is called a REO.

Can I ask why you bought this place without looking at it? Perhaps you've taken a look at the exterior? Even if you didn't physically go there, there's still plenty to see in Google Maps and many local computerized deed registries.

I suggest you take company with you for the door knock, preferably large, male company. The tenant may have no clue what's happening. This is almost always a very traumatic experience for the tenant. It's more trying if there are shotguns and/or pitbulls involved, but fountains of tears are not the easiest thing to deal with, either. You need to figure out what sort of lease, if any, the tenant has. Most likely the easiest and least problematic legal way to get rid of the tenant will be cash for keys, but find out first what the tenant's lease says.

If it turns out that the tenant has no lease AND has no interest in leaving, you'd best start boning up about eviction law in your area. I always recommend that investors hire an experienced lawyer to do the first one for them. It's an expense, but it's also an important learning experience. Some of us go years without an eviction, some of us go days. Good luck to you, no matter what happens.