All Forum Posts by: John Nachtigall

There are minimum (unwritten) standards that buildings are expected to maintain relative to their class.   And the more of these you defer the lower on the class scale (A-F) your properties slide.   If a few things are deferred it probably wont affect rents in a significant way, but the more you have the more "damage" to the ability to rent at all.   

For example, if the outside paint is rough but otherwise everything else is good then no impact.   Now add a worn roof...outdated windows....dated cabinets....overgrown landscaping....  At what point does your class B property fall to class C?   When will tenets pay someone else $900 a month for a nicer place?  There is no set place that happens...but it does happen

I would consider maintenance/updates to be the ticket for admission.   They don't drive new value, they retain the minimum value.  

Charges Filed

https://www.scribd.com/document/398845594/Manuel-V...

He is exactly the kind of scumbag you would expect

https://www.ksl.com/article/46478484/slain-real-es...

As difficult as this discussion has become I think it is important to have.   Obviously the police did not think the shooting was justified, they arrested him and the women.  I don't think anyone in this forum thinks the shooting was justified.   I can say I certainly don't buy the defendants story.   There is no reason to turn on each other, this is a tragedy we all agree.  We all want the perpetrators to receive justice.  

The point is that there are legitimate safety concerns with regard to being a landlord/property manager.   Desperate/Evil people will do desperate/evil things.  Be careful, and realize that not everyone follows the accepted norms of civility.  

There are others more knowledgeable, but I will outline some basic points.

It is a new loan, it has a 2nd position compared to your primary loan.  so in the event of a default it gets paid 2nd, so more risky.

Banks will generally loan 70-80% of available equity. So if the bank thinks your house is worth 200k and you owe 100k that leaves you with 100k of equity and a bank will give you about 70-80k HELOC based on your credit score and their policies.

The LOC = line of credit. So it is available money you can pull at any time. Mine is just another line of my bank account I can transfer money to my checking instantly and then do what I want with it. They generally run 10 years or so. Usually floating rate interest rate of prime + something

Each one is a little different but generally you are only required to pay interest every month.   It is not like a mortgage with a set payment, you can pay back the whole principle or nothing at any time.   Just like you transfer it out you can transfer it in.  

One way it can be used is to buy a property in cash using the HELOC then fix it and get a fixed mortgage and pay back the HELOC. The BRRRR method.

It is like an on demand hard money loan with a much lower rate. They are very useful but there are drawbacks. They can generally be called by the bank or modified at will. Also it is a lien on you home, so if it goes bad, you can be foreclosed and lose your home. Also it is linked with your home value, if you home value drops the bank can cut off the HELOC

Hope that helps, it can be a valuable tool but continue to educate yourself  

There is nothing magical about adjusting your strategy.   You know why the current owner is willing to let an all brick quad go for 15k?  Because no one is willing to pay more.    That says everything you need to know about the location.   It is a war zone and he is willing to give it away to be rid of it.  

That said, he may not be as smart as you.   If you are thinking of a strategy like section 8, to lock in ACTUAL payment of rents maybe.   How would you manage it?   Outsource or self manage?    Perhaps it is an opportunity to get an assistant some experience with little investment.   Tell them it is theirs to manage and offer them 25% of profit.   

Some peoples trash is another treasure, but only if you have an actual plan, not just a dream that 15k is really cheap.

Good Luck.

I should have included the GoFundMe page.   See link below

https://www.gofundme.com/in-memory-of-dave-stokoe

Also the killers story is already falling apart.  There was no evidence of a chokehold or that the door was kicked in.

 I think he absolutely intends to deliver and will do his absolute best.   Cardone is a slick salesman, but I don't think anyone is saying he is a con.   The properties are real and he is doing this the right way with SEC registered investments and such.   And the PPM, like all PPM, explains the risks.   He has and will continue to succeed in the future.  

That said, sponsors absolutely lose money in deals like these.   I am in a multifamily deal right now that will probably lose money because the property flooded and the sponsor did not have insurance.   There is a whole host of reasons it can lose money.   Additionally, Cardone has never been through a downturn.  Ask about the success rate of deals bought in 2007 vs 2010 to understand how factors outside sponsor control can effect the outcome.   This is why traditionally they only let the rich participate, no one cares when millionaires lose the 2nd home because of bad investments.

For non-accredited we are in uncharted territory.  Frankly they have not been allowed to participate until now.  More and more sponsors are offering unaccredited investors a chance.   CrowdStreet has had a few deals that allow it, but just a few.  If you like this better than a public REIT then Cardone may be your guy.   Just understand the risks are proportional to the rewards.   

That is why I said "Alleged" in the title.   I posted it because it was a tragedy and there is something to learn here about land lording and safety.    I don't believe them for a minute.  Given they hid the body nothing they say should be trusted.   Their "defense" will not get far in court.   3 drug users/dealers who kill a family man and hide the body, lie about it, ditch the car, and get caught.   Oh yeah, I totally believe now it was self defense...not.   Makes you glad their is a felony murder statue so the girls get the same change.  

My guess is that it was a final "pay up or get out" conversation, not an eviction, that got very heated.   That said, they are innocent until proven guilty so the paper was just reporting the facts of what they "allege".  I believe in the Constitution, even when i don't like the result, like giving rights to scumbag murderers.   

Such a tragedy

https://meaww.com/three-people-arrested-utah-real-...

The tenets claim he was doing an illegal eviction, given their general character it is hard to believe them.  Entirely possible he was just trying to talk to them.  I am sure the lack of rent payments was a real hardship on the landlord.   Who knows what really happened, just a terrible thing all around.  

Obviously huge wrestling APA fans