All Forum Posts by: Karl Denton

To be honest, I would need to tour these places and even have a home inspection done. This doesn't give me enough info to say which one I would go with. They could both be terrible or amazing, just don't know until your able to tour it and see what else would need repairing. Average repairs can be 5 to 15% of rental income. Hope this helps! Good Luck, hard choices these days in this market. 

I honestly would try to maybe find a mentor in that case, if its a matter of capital to invest, find private investors. Partners can be great but only if everything is spelled out in the beginning. Problem is always someone is always going to be the harder worker and feel as if they should be compensated more. Try attending local meetups and find someone who can maybe show you the ropes and take you on them to check out some deals that they may have in the works. 

I found my best agents and connects from attending local meetups in my area, see if you can find where the next local REI meetup is near you. Good Luck!

Amazing work! Now on to the next property, I'm also doing this same tactic and now looking for the next one as well. 

Have you ran any numbers in the bigger pocket calculator? At first when i started i wanted someone to help run numbers but I didn't learn anything, my suggestion. Go use one of your free uses for the calculators and run the BRRR, comment here with any questions if your not sure what to input. BP does a great job assisting with the questions next to each line that you can click on and see a breakdown of average percentage/costs for expenses. Feel free to message me and I can walk you through on the phone if needed.

I wont sit here and tell you things I'm sure you figured out already, like collecting full security. However you are now short a couple hundred, that's better then no rent but still not the full amount. In my lease I have drafted if payment isn't made in full you will be charged a late fee. That being said before I draw fast conclusions I always like to give people the benefit of the doubt. Have you made contact and stated you have received her payment but it appears it wasn't in full and when to expect the rest? Maybe she needed another week to get the rest, in my state we have 10 days grace period until its late. Maybe there's a huge issue that occurred in their life. I recently had a tenant that always pays early and this past month they paid almost late, I reached out to her early and turned out she was in the hospital recovering from a heart attack. Things happen and making contact is a great way to access the issue at hand. Now if this is continuing charge the late fee and have a plan how to get paid or you'll have to give her a notice of failure to pay means leading towards eviction. Good Luck

Rehabbing is difficult to figure out, my best recommendation is try to talk to a couple contractors locally or find a flipper and talk to them about how they run their numbers for your area. Sorry I cant be of more help. 

Quote from @Aaron Millis:

@Karl Denton  @Chris Seveney Okay got it. So I'm guessing that when doing "Subject To" you don't transfer ownership/or add the buyer to the deed? My buyer is wanting to be added but I assumed that would trigger the bank finding out. Also it's a VA loan.

Thanks

This means that when you have the closing, the property is titled in the buyers name however the loan is still in the sellers name. Therefore, you are buying the property “subject-to” the sellers existing mortgage payments. Which is how this type of deal goes down, the seller is agreeing to allow you to take possession of their property and pay their existing mortgage payments. Since you are not qualifying for a new loan, and the existing loan is in the sellers name then their credit is at risk, instead of yours. This means that you can buy the property without having to worry about having good credit. 

Why would someone want to do this and risk their credit and tie up there line of credit having an open loan?

Seller motivation is the most common reason why you may score this deal. There is usually some extreme circumstance or a personal life issue that is forcing the seller to do something they might not normally do. But in today’s market there is so much competition on the selling side. Which makes it easier to find sellers who are motivated to do whatever it takes to sell their property. 

Closing the Deal.....

Closing the deal is like closing any other deal. Paperwork will include a document that the seller will sign, which then gets sent to their mortgage company. It will notify the lender that the seller is now assigning "management" of this property to “xxx management company”(aka You). It will also tell the lender to send all correspondence related to this property to your address as the buyer. This will vary on state to state. Discuss the details with a good real estate attorney.

There's always debates on whether “subject-to” deals could trigger the “due on sale” clause commonly found in all mortgages these days. This due on sale clause states, the lender can call the loan due if they find that the title of the property has changed hands without their knowledge. However to be honest, this would be a change of title without the lenders direct knowledge, in my opinion this doesn't give the lender the right to act on this clause. However with that being said there are companies that provide a "subject to" insurance, which i would recommend. They agree to the existing terms and you pay them as a insurance if in fact they do trigger the "due on sale" clause then the insurance company pays off the loan for you and you now pay the remaining loan on the same terms to them. 

Most importantly have an exit strategy, anything from a refinance after repairs or whichever you decide you want to do for your real estate portfolio, you can even sell the place for more to someone else and have the loan paid off and take the difference as profits. 

Hope this helps. Good Luck! Lots of more info in the forums and on bigger pockets podcast. 

Quote from @Warren Woodward:

Quote from @Karl Denton:

Read about financing and refinance the assets you currently own to leverage capital for your next deal. I also would research having systems in place or using software to manage your expenses etc. I use Stessa and Tenant Cloud, but read, learn and execute! 

Any specific books which helped you along the way?

Honestly lookup Brandon turners books, like “How ti invest with little to no money down”

For my investment properties, I use a software that's free called " Stessa" Check it out and you wont be disappointed. My CPA loves that it complies everything they need for tax season and you can categorize everything on there to track everything. Truly an amazing free software that many aren't aware exist.