All Forum Posts by: Jon Reed

Suggestion.. walk away... Unless it is such a great deal that it would still be good if you had to rip out all the floors and replace the floor joists. You also need to think about what else is ran in the 18" crawl space... plumbing? electrical?... If you have a busted pipe in the middle of the house and the only way of getting to it is to cut out the floor then that would make for a bad day.

Without knowing the numbers and what your end goal is I am unable to give you specific advice for this situation. 

What I would recommend is networking out more to find more private money investors so you can cover the entire purchase price and renovation cost of a property. That way when you BRRRR you will be ably to repay all of your private money investors and have a cash flowing property. Then, repeat.

If someone does sign a 24 month lease and move out after 6 or 12 months then I would give them two options.

1. In your lease have an option which allows the tenant to pay a lump sum to break their lease... something like remaining rent from the term of the lease divided by two.. or something..

2. If they refuse I would have your lawyer send them a collection letter for the total amount of the remaining lease. If they do not respond file a collection with the court and they will never be able to rent a nice place again since they will have a rent collection against them.

 You will always have bad tenants every so often. Make sure you screen your tenant completely with credit history, past landlord references, etc. If you do this and they move in and decided to break their lease then they will most likely be much more concerned about option number two above than someone who already has bad credit and a history of collections.

I would not worry about a 0.25% difference in rate... if you have someone already set at 3.0% then go for it. 

At 17... the best thing you can do is start saving and keep learning. An opportunity to make your first move in real estate will come but if you don't have the money or the knowledge you will not be able to act on it.

Welcome! Sadly, no one can tell you what the best method is because there isn't one. You need to find out what will work best for you given your own personal risk level tolerance and current resources.

As long as you start doing something then you are going the right direction. 

Why are you so against people who want to sign a 6 or 12 month lease? There is obviously a demand in your area for 6 and 12 month lease so I would change your mindset and start targeting them. Increase your monthly rent amount by 10-20% to cover the additional cost.

For example, if you were getting $2,500 a month for a 24 month lease then charge $3,000 a month for a 12 month lease and $3,500 a month for a 6 month lease. 

You have an opportunity in your market... not a problem. 

Everything is a good deal if you can get it at the right price. It all depends on how much the owner currently owns, what kind of loan he has, and how much the payments are. Sometimes you can't just take over someone's loan without the bank calling the entire thing due. 

So... lets just assume that you did all the math and made sure it cashed flowed with whatever monthly payment you end up with and your total principal is well under the current as-is fair market value of the home. And that you already talked to your lawyer to see what the 'worst case scenario' would cost in money and time to get them evicted.

I would NOT let those tenants stay no matter what. I would write up a contract with them that stated they would move out in XX amount of days in exchange for a single $2,000 payment (or whatever it takes for them to get out... sometimes offer half of what you would and then if they counter you can 'ponder' it for a while then accept it so they think they got more money out of you) to be paid after they leave the property and return the keys. Then I would BRR the property by fixing it up and getting in good tenants.

1st... talk to a local attorney in your area and see if there are any regulations that are unique to your state, county, and/or city (or even subdivision in some places). 

2nd... if the numbers work and you are up for managing six different tenants for a single property then go for it. Renting by the room usually creates more cash flow but requires more of your time to manage.

Whatever property you purchase in the name of the LLC will have the same ownership breakdown as the LLC and will have to follow the same articles of organization. So... if you are wanting to purchase a property on your own (without partners) then you will need to create a new LLC or put it in your own name.