All Forum Posts by: Johnny Hastings

I used to make a decent amount delivering pizzas!

If you have construction experience you could post on Craigslist, see if you could find someone wanting your skill set. Alternatively, scan the Craigslist Gigs section, see if someone is in need of help that you could provide. Sometimes those Gig ads will lead to part time employment, if you're reasonably skilled. 

If you have a RE license, why not go work for a local broker? It would kind of suck to give up nights and weekends and be doing showings, but it seems like an otherwise easy job. Just be able to sell yourself!

Those can be foreclosures, preforeclosures, or 'make me move'. 

The latter of the 3 is someone posting a high price on their own home; they'd move if they get that price. There's no value there, since no one is going to low ball their own home price.

The foreclosures them selves will likely be for sale on the courthouse steps if the process gets that far. In my area, there's no deals there. The banks price them too high to make it worth while. 

The preforeclosures are where the deals can be had. You should do some digging on preforeclosure strategies. I'd wager the Zillow ones are not up to date. Once they're on Zillow, thousands of people can see them; any actual deals to be had would be scooped up fast in most areas. 

If you're interested in that route, I'd recommend doing some digging on your county's web site, see if there's a way you can search legal notices, lis pendens to be specific. They may not be called lis pendens in your area, but there will be something equivalent. In my county you can search them online via a 3rd party web site. It costs $6.95 per search. You'll get them way before they end up on Zillow. From there you can look up the property (either the address will be on the notice, or the parcel number will be). You may have to take the parcel number to the county's GIS site, to look up the property in order to find the address. The owner's name will also be on the notice. From there you can send them letters in the mail, or postcards; or even look up their phone number for a call, or send a Facebook message (if you think that will work for you).  If they're receptive, you may be able to work something out to buy their home, take over their mortgage, or something else. 

That's a typical preforeclosure strategy, and you'll be ahead of the ball for anyone trying to do it through Zillow. Anyone seriously pursuing this strategy would definitely not be using Zillow. 

In Wisconsin the answer is no. It doesn't cancel the eviction. Because it's already Dec 3rd, and they haven't paid for December rent, they're still behind on their rent. I've been to eviction court a handful of times here, and it's always the exact same thing. The judge starts by asking the tenant if they're behind on rent. If they say anything other than 'yes' or 'no', she tells them to answer 'yes' or 'no'. If they say 'yes', which they always do, unless they've been evicted a few times and know how to play the game, then the eviction is granted immediately, and you're asked if you want a damages hearing, then things go from there. 

Hopefully someone from VA can get on here and let us know if it works the same there!

If it works anything like it does here, it's a waste of time. I've followed the sheriff's sales in my county for years looking for a deal, and it just isn't there. The banks price them high enough to recover costs involved in the foreclosure every time. 

You'd be far better off to see if your county has public access to mortgages in arrears notices notices online somewhere, and pursue the preforclosure route, as best as I can tell. For instance, in my county you can do a search through the courthouse website's link to some 3rd party site for lis pendens notices that have gone out in a given time frame. The search costs $6.95 to do, but that's pretty cheap. What you get there is a list of people in the county that are behind on their mortgage, and the bank is beginning the foreclosure process. From there you get the person's name, the address (sometimes), the parcel #, and a few more bits of info. You can find the property from the address or the parcel number on the county GIS map webpage. Once you have the address (which is on the GIS if it wasn't in the lis pendens itself), and you've looked at the property to see if it is something you're interested in, then you can send them a letter an ask to buy them out of the mortgage, or work something out with them to get the place on the cheap. You could also call them if you can find their phone #, or even facebook them; if you feel like that strategy is effective. That's pretty much the whole preforclosure purchase game in a nutshell. 

I've literally watched it for years, and while the foreclosures seem overpriced at the sheriff's sales, all those people buying preforclosures swear that there's deals to be found by going through all that. 

Also, perhaps Indiana is different than Wisconsin, and the sheriff's sales are worthwhile, lol. Just make sure you go down and do a title search to make sure you're not saddled with a tax lien, a second mortgage, or some other type of lien on the property you buy. 

There's not much you can do to get around that if you're financing through a bank. I was able to pay the 20% down, then leverage additional funds through a 401K loan to pay for capital improvements, but it wasn't ideal. You could attempt to find a private lender; perhaps reach out to family and friends to see if you can borrow the amount you need, just come up with a sensible and fair payback plan. If you have to take a hit up front on cash flow to reap a reward once improvements are done, it's not the end of the world.

In all honestly, cap rate isn't that important to me. My strategy is to buy, improve, and hold; typically. 

I do calculate the cap rate when considering a purchase, because it's part of going through the motions, but I don't pay much attention to it when deciding whether to do a deal or not. 

For me, it's cash on cash return that's important, how fast will I get my down payment back? If a cash on cash return doesn't look good, it's always a good idea to consider the internal rate of return as well; sometimes cash on cash return calculations don't look good, despite the investment being solid. 

That said, if your strategy is reliant upon cap rates, and to answer your question; I took a look at the buildings I bought, and what the cap rates were for me when I purchased. The duplex I got was at: 7.3% (2016), the three plex was at: 11.2% (2016), and the 12 unit was at: 14.9% (2013).

I had bad luck with US Bank. They nickle and dime you to death with fees, and they have (what I thought of at the time as significant) account minimums for business accounts. I got fed up, and went and talked to a few local banks. 

One of the local banks had good terms. It's a flat $5 a month for way more transactions than I'm doing currently, and their fees are lower for things like when I deposit a check from a tenant that gets returned. If I should exceed the number of transactions allowed on the account (I think it's 50), then they charge a flat 25 cents per additional transaction. 

I'd say go to a few local banks, and ask. They will be able to provide an info sheet on exactly what it'll cost you. You can probably find that info for some banks online, I'd guess the big guys for sure, so you can compare what it'll cost you to bank. Just ask / look for their business checking account options. 

@Peter B.

Taxes are about $8500 / yr. The building has individual electric meters, but I cover heat and water. 

I'm currently looking into options for billing back the water to the tenants. There's no way to do that through the local water system, but it can be metered and billed back by me. The water bill runs about $450 / month. I think the main benefit here would be that people would be motivated to conserve if they were paying for it!

The current list of concrete expenses are: Insurance, Trash, Water/Sewer, Electric/Gas, Tax, and Mortgage. Those total about $3680 right now. Rents are at about $7300, and the coin op laundry pulls between $225 and $350 per month. I have a $25K cushion sitting in an account for emergencies, and save a few hundred a month from the rent for improvements. 

About a year ago I had the water heater in the building go out in a big way. It burst and flooded one of the downstairs apartments. At the time it was a huge hassle and mess. Ended up costing about $7K to get it all handled. It was a single huge 65 gallon water heater. I have a decent relationship with the repair guy. He had an engineer come out and that fella noted that the boiler that heated the building could handle providing hot water as well as heat. He replaced the old water heater with a big insulated tank fed from the main boiler. In the end the bill went down a few hundred dollars a month, which was pretty awesome!

I'd take that situation to a few local banks, and shop the loan around. I know beyond any doubt that at least one local bank that I've worked with here would make the loan if I had the 20% down payment, and the property was in reasonable condition. 

Definitely create an LLC to hold this in. You're risking too much by not, and (at least here in WI) it's cheap and easy to start an LLC.

When the bank looks at whether to make the loan, they're going to consider income vs expenses, your experience managing property, the condition of the property itself, and your down payment. At least those are the items that came up in discussion when I got my first investment property loan (which was also on a 12 unit as it happens). 

Your profile says you have property management experience, so that shouldn't be an issue. 

So, I think the answer to your question is 'sort of'. The property income/expense plus your experience and down payment should qualify for the loan. 

Hey Joey. That's rough, but don't panic! Your places look beautiful; the ads are definitely doing them justice!

I'd do your second option of offering an up front rent break for the first month's rent. If you lower rent, you end up with reduced rents on the books/financials, and that's not such a good thing long term from what I've seen. 

Do you have signs in front of the properties? If there's folks in the neighborhood considering a move, that'll get their attention.