All Forum Posts by: Joe Splitrock

Quote from @Ahmed Al-Absi:

Currently I'm position the call to only build a rapport with the seller: 

Sample script: Hi John, my name is Ahmed Al-Absi, I'm a real estate investor with "Name of Company". We currently own a multifamily property in "The Same Market". I see that you are listed as the owner of "Greenview MF" and I wanted to connect with you as a professional courtesy. I'd love it if we can speak on the phone for few minutes to have the pleasure of getting to you know and your business. When is a good day and time? I look forward to speaking to you. 

Thanks, 

Name+name of co

contact info(mobile+linkedIn)

Horrible. You are are not connecting out of professional courtesy, you are connecting out of personal interests. What is their benefit in having you "get to know their business". Your pitch needs to offer a benefit to them, otherwise you are just wasting their time. When I hear people tap dance like this, it just annoys me. Successful people don't have time for BS. Cut to the point of what you want and be honest. Establish credibility by talking about a recent acquisition. Maybe talk about a property located close by that shows the seller you are a closer and not just a talker. One benefit could be, "we buy off market, pay top dollar and you don't pay realtor fees". 

@Donya Mattis this is why mortgage companies have reserve requirements for investment properties. You can't collect rent for an inhabitable property, but your mortgage payment is still due. You can call the mortgage company to see if they have some option to suspend payments. I have not heard of this, but it is worth checking just in case.

I have had tenants move out, not clearing snow or cleaning up leaves. If it is minor clean up, I let it go. If it is substantial, I hire it done and deduct from deposit, sharing the invoice with them as proof of expense.

I let tenants know they are responsible for lawn and snow up until the last day of their lease. Even if they move out before the end of the lease, they need to freshly mow or clear snow right before move out. We put that on our move-out checklist and I text a reminder if I see something isn't getting done. There are no surprised if they get charged, because they were well warned.

Quote from @Julio Gonzalez:

@Bruce Woodruff While it may seem like a simple concept, it's actually a very complex process that requires significant documentation as well as specific methodologies. If the proper reports and documentation are not completed, you run the risk of failing an IRS audit and the cost segregation not being honored. Here's a link to the IRS website noting specific items that are included in the cost segregation study report.

 I have seen people in the BP forums claim to do their own studies. One said they hold Professional Engineer status, so felt confident they could defend their work. I think their study consisted of a spreadsheet with breakdown of items. I have also seen cost segregation firms on BP talk about doing cost segregation on $200K houses. I always thought that wouldn't be worth the effort, but they claim a simplified process that only costs $500. These are referred to as computer based studies. I think they just enter a few data points and the software estimates based on an algorithm. This is a far cry from $10,000 to $15,000. It begs the question, what is the right answer? Should people be doing cost segregation studies on $200K or even $500K houses? It seems common on vacation rentals, but if you have a place in the mountains or on the ocean, land value is probably as much as the structure. It seems people may be accelerating too much. Maybe there is no enforcement, so it doesn't matter. I am not arguing any side, just curious your thoughts.

@Benjamin Bruce I would recommend a starter house using FHA low down payment for your primary residence. That may mean living in the city in a smaller house. Live there 2-3 years, then move to your house in the country. Rent out the small house in the city.

I applaud your motivation, but I see a couple potential flaws in your plan. First of all, why are you having your wife get a hard money loan and selling the property to you? Is this an attempt to get around refinancing terms on conventional loans? I fear this could raise red flags. The second concern I have is buying a mobile home. If the mobile home is not on a foundation and meeting certain requirements, it could be hard to get a loan on it. Generally speaking, mobile homes are not great investments. I am a little skeptical that $25K will increase the value by $75K. My friend purchased a brand new mobile home for his lake home. It was 4 bedroom, 2 bath and delivered cost was $116K.

You may need to reset your families expectations. After years of renting and not properly managing your money, you will need to sacrifice to get on a better path. You may even want to consider Dave Ramsey Financial Peace University. This is taught at churches around the country, so I am assuming you are familiar. Although I am not in sync with everything Dave teaches, but he has three core principals you should follow:

1. Use the debt snowball to rid yourself of consumer debt.

2. Use his budgeting and expense tracking system to get spending under control.

3. Establish an emergency fund.

You may already be implementing some or all of this. 

Congratulations and taking action to change your future!

Any mortgage calculator is accurate, provided you input correct information. Most of the mortgage calculators out there are built around owner occupied, so they may not accurately estimate interest rate, down payment, insurance or taxes for an investment property. 

Your best bet is meeting with a mortgage broker for prequalification. Send your mortgage broker details on the deal and they can estimate down payment. 

Also be aware some of the people responding didn't read your question very carefully. They thought you meant Zestimate feature for valuing properties.

@Bill B. I think there is some regional difference on where Zillow pulls data. In my market the tax information is pulled directly from county records, the tax portion is accurate. You just have to be careful, because we have homestead rate for owner occupied taxes that is lower than investor.

When using payment calculators, I generally remove taxes and insurance and estimate those separately. The principal and interest portion will be accurate, provided you loaded the correct down payment and interest rate.

Wholesaling and flipping are both jobs. RDPD was written around the concept of investing, not just trading one job for another. 

As @Bill F. pointed out, we are in the hottest job market in a generation. As companies are desperate for qualified people, so now is great time to change employers and get a higher wage. 

I would also argue that now is the worst time to wholesale or flip in a generation. These businesses are saturated with experienced people, who are seeing margins deteriorate due to competition. I am not saying someone can't be successful, but if you are picking up a new job, why not focus on your area of expertise?

If you want to leave your job, focus on acquiring cash flowing real estate. There are many ways to do this. Nothing wrong with wholesaling or flipping, but most anyone who gets into that eventually transitions to buy and hold (or they are only doing it to fund buy and hold investing). 

The ACH transaction itself takes 24 hours or less, as far as money leaving the tenants account. The tenant sees the money out right away. Part of the reason that some rent payment services "float" the payment is to make sure it clears. If they put it in your account right away and it bounced a day later, they would have to pull the money back from you. This could be risky for them if you already transferred money out of your account or closed it. The float ensures the transaction clears and they make a little on interest to help fund free payments. Most of the fast ACH services will charge a transaction fee.

Zelle uses ACH but operates faster because member banks pre-authorize that funds are there. There is no reason to wait for funds to clear, because the sending bank only sends if money is there. 

@Jared Smith you should have an expiration date on every offer, so it expires prior to making a new offer. There is no rule against having multiple offers accepted at the same time, provided you have ability to perform on all contracts. Last year I had one property under contract on a conventional loan and two conventional refinances going at the same time. I closed on the refinances a week before the purchase and used cash from the refinance for down payment on the new property. It is totally fine as long as your financial situation supports it. Just talk with your lender and make sure they can write the second loan. If not, you either need to delay closing or cancel the contract.

I am fine with a tenants rights group, provided they are just a lobbying group advocating for fair treatment. I take issue when they withhold rent, which is fraud or theft, depending on how you look at it. Fraud because you broke a contract and theft because you consume goods without paying for them. This would be no different than a landlord turning off utilities or locking a tenant out, without legal eviction. We all have to play fair and follow the law. If you don't like the law, get it changed. People have a right to disagree, but they do not have a right to steal or destroy other peoples property.