All Forum Posts by: Matt Shields

I recently had a similar situation with three adult roommates sharing a home. I required all of them to be on the lease and sign all documents. The more people on the lease, the more to collect from if things go bad. It turned out that my tenants abandoned the property and left a lot of debris and damage. Two of the roommates were deadbeats but one was very concerned about her credit and paid for everything. Good thing I had everyone on the lease.

When it comes to qualifying roommates I average their credit scores and apply my minimum FICO. I also use cozy.co for screening (Criminal/Credit), and rent collection (Cozy also does roommate multiple payments), renter insurance, maintenance, ect. I like the service. Then I want to see employment income and rent payments, or If they were homeowners I want to see mortgage payments. Then I check work and landlord history/references. I also look at social media. I have a no pet policy, and recently I was looking at a woman's Facebook profile where she had been posting pictures of a dog, even though she claimed she had no pets. I called the tenant's prior landlord who told me about her "problem" pitbull.

When screening people just make sure that you have set standards that you stick to otherwise you can get into Fair Housing law violations, and there have been recent changes to how landlords can screen criminal history

Yes, you can sign a lease to start on any date, but that's almost three months! Why would you do this and lose months of income, or am I reading this wrong? For deposits, some states limit what you can charge, for example, here in AZ we can only charge 1.5 times the monthly rent for a security deposit. 

If this is your first rental, I would highly recommend that you pay for an hour with a real estate attorney to review everything. It will save you a lot of time and money in the future. Good luck.

Do you mean contract or property exit strategies?

I generally require at least 1% of the purchase price, any less and I feel it shows they lack confidence in being able to close. In a seller's market, I also remove the financing contingency and make the money go hard after the inspection period.

As always, seek professional advice. 

I think to be a good wholesaler you need to understand investing, rehab costs, and how to value property. The problem is that it is hard enough for investors to find deals with enough meat on the bone let alone paying a wholesaler. Every day I get offers from wholesalers where the ARV estimate is much too optimistic and/or the repairs estimate too low. Most of the deals I receive would be money loosers.

I have been using Cozy.co for several years and like them. They do charge tenants for card transactions, but they can do a one-time setup for checking that is free. They also provide split roommate payments, screening, maintenance requests, applications, renters insurance, late payments, and expense tracking. Most things are free or charged to the tenants.

When you say "prices are dropping" is that listing or selling prices? Other than being competition for an existing listing, listing prices are not that sanificant. Selling prices are the important number, but the Phoenix market also has seasonal cycles, so you need to compare yearly numbers. Example August 2018 to August 2017. 

A few things to know about mobiles. If you are going to rent the lot and buy the home you may find your expenses increase. Mobile home park pad rentals can be expensive, and moving them also cost a lot. If it is affixed to the land it is real estate, if not it is a vehicle  (check local laws) and depreciates like a vehicle. Even affixed, generally only the land has the potential to appreciate. Also, older mobile homes are very challenging to finance which makes them more difficult to sell. Sometimes you can find used older mobiles on the cheap because of this. I'm not opposed to them as an investment property, but you must know their limitations. You mentioned house hacking, are you planning to rent out a room in the mobile?

I have friends who are airline pilots and flight school is probably a good choice. There is a pilot shortage, and after school and a couple of years in commuter Hell he should be able to get a well-paying job, then you could qualify and invest in good quality properties. That's my two cents.

As always, seek professional advice.

Did you have a scope of work contract including schedules, milestones, and payments?  Is the contractor licensed? If items were not completed why were they paid for? There should be a verified milestone in the SOW well before the half-way point of a $100,000 budget. 

You can sue, but if the contractor is unlicensed he may disappear or go BK. Some states have a recovery fund for licensed contractors but may not cover non-owner occupied or commercial entities. Even if you are successful, lawsuits take time and if you are waiting for the money to finish the project the carry cost will eat you up. A refi might be the answer, but remember, time is not on your side during a flip. 

Personally, I would be honest and upfront with my hard money lender about the situation. They might want to work with you on extending terms. If they first find out there are problems through a missed payment the lender will be most unhappy. 

I'm sorry this happened, contractors are the hardest part of flipping. I have had my share of nightmare experiences with contractors who lie, cheat, and/or are incompetent. I would STRONGLY suggest you talk with your real estate attorney before doing anything. Good luck.

If you need help in Phoenix Metro and ARMLS access, just PM me your email and your criteria. 

 That's not good. What if you dump a lot of money into the rehab and the sale is rescinded? I guess you would just have to wait and eat a month of carry cost before beginning rehab.