All Forum Posts by: John Clark

Quote from @Cody Marck:

Hello all, My parents own a home in New Richmond Ohio (in town) and owe almost 90,000 dollars on the mortgage after multiple cash out refinancing. What advice can I give them?

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Your post doesn't make any sense. Your heading is that the home's value is way under the value of the mortgage, and the balance of the mortgage is circa $90,000.

So your folks are under water by some unknown amount. That means they have to bring money to the table to close. No one, flipper or otherwise, would buy under such circumstances otherwise. It would be a rare situation where cosmetic repairs would take a house from under water to substantial equity. In that case your folks could fix and sell.

What are the terms of their mortgage? Low fixed interest rate? High variable rate? What did they do with the money?

Quote from @Bruce Woodruff:

The issue I see (beyond the plumbing issue) is that they took a shower when they clearly knew that there was a clogged drain.

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The fact that there is a clogged drain in one part of the system doesn't mean the entire system is affected, especially if the shower's connection to the stack is below the toilet's connection to the stack, so no, it is not "just stupid."

Second, the shower was used Friday night and no apparent immediate back-up into the shower was noted, so the tenant might have had no reason to believe that the shower was affected by the toilet clog. Again, not "just stupid."

"I know I can use private money but don't have those contacts yet."
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You just named your solution: Get those contacts. How do you get those contacts? Track record. One profitable deal at a time, until you reach a critical mass, where someone is willing to back you BECAUSE "you are you." So develop and demonstrate your judgment.

It is not important to get big. It is important to start.

Musicians identified the problem and the solution centuries ago: "Pay your dues."

The rest is detail.

Look for your cancelled checks and loan statements from the lender towards the end of the payments on the second loan. You may need to sue for quiet title if you cannot get evidence of a release, and those documents will come in handy.

Call your attorney, and your title company.

Quote from @Paige Hogan:

My fiancé and I bought a house outside of Boston, MA in Weymouth in July, 2020 for $430,000. We've done some improvements including laminate flooring and added a patio, and currently the Zestimate is at $515,000. 

For reference we live in a 1 family cape in a neighborhood about 1 mile from the train into Boston, 3 miles to the nearest hospital, and a downtown that is only expanding. I am currently a travel nurse and we are looking to start investing/ buying multifamily properties in the next 6 months based on locations we travel/ our home state of CT. 

Our question is, based on the information provided would you keep and rent the property knowing Boston is only expanding , our downtown is expanding, the location etc. and buy a more affordable multifamily or sell to reinvest in a larger multifamily or a couple multifamilies and start fresh. We are not planning on living or working within 2 hours of the Boston area anymore. We would love to hear some thoughts! Thank you in advance. 

 First, just remember that a Zestimate isn't worth the paper it's printed on.

Have the property professionally appraised two ways, first as a sale, second as a rental. Check the comps the appraiser gives you as to what their value is now, and what their value was when last sold. That -- with due windage for improvements that buyers made after last sale -- should give you an (very rough) idea about appreciation. Run the numbers, act accordingly.

Give notices, but don't tell them anything beyond what is required in the notices. See a lawyer immediately if not sooner. Do not pass go, do not collect $200, and certainly don't take partial rent payment if you plan on evicting.

Quote from @Vianey Monica galdamez:

NEED advise,

I want to buy a house in the same area but everything in that area is 1m plus and the chances of getting cashflow are almost 0.

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If the place is not cash flowing then it is a net drain on you right here right now. The only stop to that loss is appreciation that you can get when you sell. That is the framework for your numbers.

Select your exit timetable and ask the following questions: How badly will you be drained each month? For how long (I assume rents will rise along with taxes, etc., so monthly cash  drain will change)? What is the likelihood of appreciation and by how much over that period of time? Can you afford to carry the loss until exit? What alternative investments (either housing or otherwise) are there?

First, as others have said, make sure the existing system is working properly.

Second, does your town have a heat ordinance (landlord must make sure sufficient heat in each unit)? Chicago does, with the exception of when there is a heating system controlled by the tenant -- so long as the system has sufficient capacity to heat the unit to 68F when it is -25F outside. So Chicago landlords can use separate electric baseboard heating for each unit and forget about being in compliance with Chicago's heat ordinance -- each unit controls its own heat (and pays for its own heat).

So just add baseboard electric to the second apartment and ell tenant he can turn it on when it gets cold. Yes, you can work on training the first floor tenant, but if you aren't making him swelter in order to heat the second apartment, you might be good.

Quote from @Leila Moussavi:

@John Clark

From your perspective, what makes OOS investing nearly impossible for rookies? . . . Out of state obviously has the downside of distance - not being able to conveniently meet your team face-to-face or see properties/neighborhoods in person. However, it seems like there are tons of resources vetting neighborhoods/zip codes online. . .

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The factors you mention make it impossible. Online resources usually aren't worth the paper they're written on (who's writing them if not a real estate shill trying to unload property at full retail?). Other resources cost money (property managers, etc.) if they're good, and even more money if they're bad. Plus, you have to get a "feel" for a neighborhood and a building. You can't do that from afar. Compound that with being a rookie and it's essentially impossible to get a fell for what you are buying.

First of all, forget out-of-state investing. It's hard enough for people with experience, and neigh on impossible for rookies. Yes, I know, California is impossibly priced, but that doesn't make out-of-state investing any easier.

Try a small three-flat or four-flat in reasonable condition, find a partner similarly situated (just starting out) and each of you put up down payment and reserve money, and house hack: you live in one unit, partner another, and rent out to two tenants. You'll need a lawyer to draw up the partnership agreement or whatever other relationship you settle on.

Also, forget lot size unless you plan on adding an auxiliary dwelling unit (ADU). You want to be a landlord, not a farmer, and that means density. Sounds like you'll have your hands full learning the ropes. Navigating the shoals of ADU additions (with no money, I might add) will be too much.

Finally, stay in college. Unless you are majoring in some useless subject like art history, psychology, or (my favorite) "western civilization", you will want and need that degree. In fact, make sure that you can't put your savings to better use by using it to pay down/off student loans. You ill need to qualify for financing as you invest in real estate, and student loans can be a real burden.