All Forum Posts by: Joe Splitrock

If you qualify for conventional, your rate is most likely going to be better than seller financing. Most landlords hate tenant turn over, so I would make it clear you are buying a home regardless of whether it is from them or someone else. That wouldn't work to motivate me, but will work in some situations. For me it would be all about selling price and making sure I could clear a nice profit. We all have different motivations.

One additional tip would be to check on Zillow and see when the purchased the house and what they paid for it. 

I would not refinance until you could get rid of PMI. That means you will need 80% equity in the home, either through increased appraisal or pay down on principal. Often people refinance to lower their payment, without considering the cost to refinance and the fact that those fees are rolled into the loan. Keep in mind once you refinance that your payoff date moves out. In other words if you took a 30 year loan 1.5 years ago, then you are 28.5 years away from paying it off. Refinancing means you push the term to 30 years again. Let's say your payment is $650 per month, that means you are now paying an additional $11,700 for your home. Your refinance is probably just making money for the mortgage company.

Again to summarize. I would only refinance if you can get rid of PMI, otherwise you are better making extra principal payments every month.

I think @Bill S. may be correct because most owners of rental property are buy and hold. Selling to you just means they need to purchase another property. That being said, we are business people and everything is for sale for the right price. 

Determine their motivation to sell. You need to talk directly to the owners and see why they are would want to sell. Are the accidental landlords looking to get out of the business? Have they owned it a long time and are looking to exit the business? Are they just looking to capture some profit in an up market? The answer to these questions determines your approach or if you should bother.

I would present the advantages of selling to the owner:

1. You can do the deal without a realtor and both benefit by sharing those fees.

2. Selling the property to a renter means no loss of rental income. You can pay rent up until the day of closing. If they put it on the MLS, you will move out and they will miss out on rent for 2-4 months while they sell and close.

3. If you move out they will have to deal with some improvements to put it on the market or potentially inspection problems. You know the property, so your offer can take into account the condition. That means non-contingent.

4. Financing is probably the big question. Is seller financing an option? It could be good for them to hold the note and collect some interest if they own the house. Possible other options could be lease to own. The question here is not only if they are open to financing, but if they are not, can you get a loan? 

I find it interesting that any time someone says they chose to pay down debt, other posters immediately come to tell them leverage is smarter. I love your response! The power of not owing money is amazing. There are many people on this forum that are heavily leveraged and some will be financially destroyed in the coming years. Nobody reading this wants to believe it is them. I know it won't happen to you, Kris. Great job! It is great to meet like minded people!

I have considerable experience with snow and cold climates. My tenants are all responsible for snow removal and I do not provide a snowblower or shovel to any of them. I have paid for salt in some cases.

There are two risks as a landlord. If you do not remove snow, you could be subject to fines from the city. The greater risk is probably ice and the potential for someone to slip, fall and sue you (very common). That is where ice melt (salt) is critical. Your tenant should cover the sidewalk in ice melt and it will soak into the cement and even melt snow or ice on future snow falls. Ice melt comes in many varieties and it is not exactly salt. I use the stuff that is good to -30F temperatures. There are other varieties that are pet friendly, so maybe that is a better fit for someone who is environmentally concerned. 

For a snow blower, I would recommend the MTD brand. I have a 15 year old MTD that runs great. I have never had any issues, but I change oil and spark plug every year. My friend just had his 20 year old MTD serviced and the repair guy said used MTD are the best. 

My recommendation is that you get a snow service that is bonded and reimburse your tenant for bags of salt as needed. Have him send a picture of the receipt and you can take it as an expense. Tell him to keep the sidewalk heavily salted if it is at all slippery. Having them do lawn care is fine, but I would still hire a service to spray for weeds. You can get fines from the city for not keeping grass under a certain height or keeping weeds under control.

@Ronda R. I found this post interesting. I was just talking to my wife about out of state investors. I was curious how they deal with snow and other climate issues. In addition to snow and ice, the Midwest can have lots of rain and flash flooding. In my part of the country we have high levels of ground water, so basements have sump pumps. Power goes out and your basement can flood after the sump pump stops. We also get wind, lightening and ice storms that can take down branches or trees. You would not believe what I had to deal with after an ice storm two years ago. Some trees can be three times the height of your home and could cost thousands to remove. Another risk can be above ground power lines, which can be ripped from your house when a tree falls on them. 

@Bryan Hancock I am not sure without reading what a letter says, you can assume someone is a moron. My accountant is from a small town and has been doing business with my wife and her family for over 20 years. I am sure he would provide a letter for us if needed and he is not a moron.

@Logan Allec you never tell us if your accountant is willing to provide to the letter? If not what is the reason he gave you? I am just curious if you posted the question out of curiosity or if you are running into a true problem getting the letter.

I think you are misreading the reason that properties are going contingent and then coming back on the market. You seem to think it is part of a strategy to feel out the market price. I suspect what happened is they had several offers for much more than asking. They accepted one offer and something fell through. It could be many reasons and may or may not be related to something wrong with the property. When the deal fell through, I am sure the buyers asked to relist a price more in line with where the offers were. If it does go contingent and come back on the market one more time, I believe it will be due to something inspection or financing related. 

I agree with your reasons for not making an offer on the property, but others do not  see the same problems as a barrier. My observation is that bad properties can sell quickly at inflated prices in a hot real estate market. 

I am sure you, like me and other investors miss the good old days a couple years ago where properties sat on the market and prices went down. 

@Nate Rohlf I would hardly call W. Norma Trail a ghetto area. The neighborhood is full of townhouses and duplex. All new construction in the last few years. There is a Catholic church a block away and a brand new elementary school two blocks to the south. There is some low income housing going in to the East of the Tea Ellis road. It is surrounded by SFH that are valued over $200K and are all new in the last few years. I live about 8 blocks away to the north and every house in my neighborhood is worth over $500K. Prices are really inflated in Sioux Falls right now, but maybe that is the case everywhere.

As far as your police officer buddy, not sure why he thinks it is so bad. You could run crime log reports to check out the area and I doubt you would find it is that horrible. 

@Jeff Gates can you clarify what your post is trying to say? Are you saying not to rent to roommates or not to accept rent from just one roommate? This may vary by state, but my lease is with multiple individuals, not to each separate roommate. If one roommate doesn't have their money, I would expect the others to be responsible. If I rent to three people, I can go after all three for missing money. 

 I wouldn't state you plan to evict if he doesn't contact you. Tenants can be nervous with new owners. Acting like a hard *** day one is not necessary. If he has been there 3 years give him the benefit of the doubt. I do agree with posting on the door. Just write a nice welcome letter and give him payment address and your contact information. Then tell him to contact you so you can meet and write up a new lease. The new lease can be month-to-month, so make it clear you don't plan to lock him into a long term, but need paperwork updated. No reason to scare him off, yet.

It could be that your tenant needs to load money on their cell phone and that is why they are not contacting you. In addition to posting on the door, try to stop by at different times until you track them down. Don't assume the worst and run out a tenant for no reason.