All Forum Posts by: Jerry Rode

Aaron,

Very good suggestions, some of which I will have to do some research to see if they would be viable in this situation. Some more details per your request.

The seller I have not met yet. This is very new, but will need to be quick moving if it's to work. The seller is being 'forced' to move out of state. If they do not sell, they will not be able to buy on the other end so they would be looking to lease until the local home sells. The house is fairly new (2006-2007) so I'm guessing not much equity is involved, unless they put a decent amount down. I will be talking with the seller later this week, so more info to come from that end.

The 50% rule for rent comes into play right around the $2200 per month at a purchase price of $225k. There are a couple of homes in this area for rent like that, but they are few and far between. This is not normal as a rental, but a small market it still there.

After the 2 year mark, I would likely be looking to sell as this home would not be within my cash flow strategy.

As a side note, the international customer can not gain permenant residence, so they are forced to rent by the terms of their work visa. I 100% agree not to bank solely on the international family, though may present a very attractable option with the pre-paid rent.

Thanks for taking the time to respond. There is some homework to do here, but I don' t want this to fall through because I'm not familiar with all of the available options.

-Jerry

Situation:
A family is looking to rent a larger single family home for up to 2 years (international family on work visa until end of 2013). They currently rent at $2400 per month in my sub-division and want to rent in same subdivision.

A home is for sale by a couple that is moving out of town rather soon. They are under pressure to sell asap, and the international family loves their home and would like to rent. Seller is not looking to rent their $225k home.

I want to buy seller's home at a reasonable investing price and rent to international family for the next two years. Trouble is, I do not have all of the necessary down payment and do not feel that a bank will give me a mortgage on a home if I have to take out lines of credit on other rentals to come up with the down payment & closing. That whole, take a loan to get a loan theory.

Here is where it gets interesting. International family may be willing to pre-pay their rent, providing me with a lump sum as down payment on the home. Does this lump sum need to be 'seasoned' or because it would be written up as prepaid rent a bank would be more willing to write up the mortgage?

I'm open to suggestions!

Dojo,

All of the advice so far has been pretty solid in my experience. After the home is functional (major systems up and running), you'll need to ask yourself do you want to rent it out or rehab and stick with the decision.

The money you put into fixtures, bathrooms, kitchens, flooring, etc will vary quite a bit depending on your end goal. If you are trying to keep it up and in line with the neighborhood, that may be more expensive than getting it suitable to provide cash flow. Get it ready to sell, then decide you want to rent it out and you've likely over improved the property to where your break even point is much further down the road.

-Jerry

P.s. I always try to get the plumbing up and running before much of anything else if I can help it...for obvious reasons!

Mitch,

Thanks for the document. I've searched around for the laws in Indiana. It looks like as long as she keeps it under 6 kids, not including her own, she is OK in not being a licensed provider. Over 6 and she needs a license.

Now onto the liability, that is still up in the air as I haven't found much in the way on how to protect myself. Possibly an umbrella policy for me, and ensure that they carry sufficient renters insurance. More to come on Monday with this.

If anyone has any experience, would love to hear it.

Thanks for the replies.

Duece - My lease does state that running a business from the property is not allowed. She hasn't signed anything and I don't intend on changing the lease.

I've got a call into my insurance agent to see what their advice might be.

Jeffrey K - she would be doing the babysitting to make money, without question.

I need to check into the laws to see where I stand on things.

Thanks all,

Jerry

Max,

100% agree, the numbers need to make sense. I will want to use this property as a future rental, so the 50% guidance does apply.

Where I need help is understanding the various options available that can turn this into a 'win-win' between both the future sellers (or future foreclosurees) and I; without bringing much cash to the table.

I'm new at this game and I'm sure this is a pretty elementary question, but it is stepping outside my comfort zone so I thought I'd ask for some help.

Here's the situation - A co-workers neighbor, I have learned, is in a situation where income doesn't match expenses and it's just a matter of time before they are forced to loose their home. They have expressed interest in just walking away to my co-worker.

I would like to breach the subject of how I can help out as an investor. Here is where I need some opinions.

Assumptions:
-I have very little of my own money to provide
-I'm new to the world of land contracts, lease options, etc (still searching and reading through the forums)
-I don't know (yet) the equity built into or what is still owed on the home.
-Is the perfect world scenario given the amount owed makes a decent business case is that they deed the title over to me, I start making payments on the home and they walk away w/o damaging their credit.

SFRs are my focus for buying.

Ok.....go! :D

Update! I was able to snag a HUD home on Christmas Eve. It had just come off of the 10 day owner occupant waiting period and I submitted a bid that was accepted.

Home will be bought for $69,500. It needs new carpeting on the first floor and new paint in the bedrooms. The worst part of it is the back yard is a mess (decorative pond, flower boxes that aren't kept up, etc). Overall, in pretty decent shape.

Comps support a $110k-$115k selling price, as well as $1000-$1050 in rent.

First REI, here I come.

Thanks for the feedback.

NC Mark, I wasn't touting or bragging, but as I entered into this business I was sure that saving enough to get started would have been then difficult part, but you guys are right, finding the right property at the right price is the job.

I know 3 mo isn't that long, but here's to wishful thinking that something comes along at the right time sooner than later.

Good luck to everyone.

It's been fun to be on the boards and read about everyone's trials / tribulations and success stories.

I have been successful rounding up a decent chunk of money that would support a 80% LTV loan to buy a property to rent out. I figured that would be the hard part.

I have stayed faithful to the 50% rule for renting properties and have submitted many bids, mostly to REO and HUD homes. It's been the better part of 3 months now and I've gotten close on a REO home, but no luck.

I hear that the first property is the toughest one to successfully close. I'll keep at it, but patience is wearing thin somedays. :D