All Forum Posts by: Nathan Gesner
Nathan Gesner has started 316 posts and replied 27552 times.
Post: we got a house at the sheriffs auction (not)

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
I'm not an expert but this sounds like an attorney that screwed up and is now trying to bully their way back into the game to save face and a client. Here's my thought: you did not break any laws or violate any rules. You bid on the home and won it. If you turn in the paperwork and payment, you will legally own the home. The law firm may be able to take you to court to win it back, but it will cost them a lot of money. So maybe you could purchase the property and then offer to sell it back to the law firm for a fee that is equal to the court costs? In other words, if you bought it for $34,000 and it will cost the attorney $3,000 to win it back, I would sell it to him for $37,000.
Definitely talk to a GOOD attorney. If they are certain you could win, they should be willing to represent your case for free and get paid from the losing party.
Post: funding rental properties

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
Do a search for "private money lenders" or "hard money lenders" as a start. There's a book by Brandon Turner on the site that you can purchase that details all the ways one can fund a purchase. I recommend those as a starting point.
Post: raising rents equitably

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
My concern is that it leaves money on the table and, more importantly, opens you up to a discrimination complaint.
Here's an example of why rent disparity should occur. One tenant moves induring the peak summer months when rentals are in high demand. You advertise the unit for $1000 a month and find someone quickly. The next vacancy occurs in December and you have to drop the rent to $900 just to get someone to even look at it. You now have two tenants with identical units and a 10% difference in rent.
In the examples above, your pricing is based on the market. This is normal and you can develop a plan to balance it out within a year. For example, you could rent it in December for $900 but on June 1st it goes up to $1000 or the tenant terminate and you find a new tenant at that price.
If a tenant has been there for eight years with no increase while others are being increased, then you risk a complaint. My recommendation is to increase the rents and balance them out. If they are way behind, give a little extra time so you don't chase them away. If they are bad tenants, hit them with the full increase and they can stay or go.
I always give 90 days notice for large increases so they have time to prepare, but that's up to you.
Post: How to make contingent offers?

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
I'm sure you can find plenty of people to answer your question so let me be the bad guy. You don't provide a lot of detail so maybe I'm reading this wrong but it doesn't sound like you have much experience in real estate. Have you ever purchased a home before? Are you using a contract you found online or from a late-night infomercial?
I'm not trying to insult you. I just hope your investment strategy isn't to roll the dice and hope nothing bad happens because that will bite you eventually and can derail your entire investment strategy and/or life. If you don't know what you are doing, hire an attorney or a real estate agent until you know enough to break out on your own.
Post: How to Start Real Estate Investing in 2017

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
This is a good article, @Benjamin Riehle. I particularly agree with #7 because I personally know how hard it is to be patient. We see others scooping property quickly and assume we must be doing something wrong if we are only buying one property every 1-2 years. We have to set our own goals that are within our capabilities and stick to them to avoid over-extending.
Post: Owner finance - As lender, what benefits & issues to consider?

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
Every time I hear someone is owner-financing, I get nervous for them. Why? Because they fail more often than not and they are typically not structured in a manner that protects the seller. The fact that you are not sure about tracking payments tells me you may not have had appropriate council.
Ask yourself: why do buyers want owner financing? Because they can't qualify through a lender. That should be your first warning! It doesn't mean you should slam the door on the deal but it does mean you should approach it cautiously and ensure you are protected every step of the way.
- Get an attorney before signing any agreement. Make sure they are a real estate attorney that knows what they are doing because there are plenty of attorneys that have no experience in this field. They don't know the pitfalls and they don't know how to protect your interests.
- You should not sell below top dollar. Why? Because there's no point! If you want to sell it at market value - or even below market value - then you should just find a qualified buyer and be done with it. There are far more cons than pros in this deal.
- Require a large down-payment. If they default in the loan - as the majority do - then you have to take back the property and try again. The property may be neglected or damaged. The buyer may be many months behind on their mortgage payment. They may decide to steal the appliances, cabinets, and front door on the way out. The bottom line is, you need a deposit large enough to cover missing payments, damages, and repair. The recommendation is 10% as a minimum but I personally wouldn't do it for less than 20%.
- Require a higher interest rate. When rates were at 4%, private sellers were cutting deals at 5% or higher. Again, you are taking on a tremendous risk and should be paid for it.
- Do not carry it for 20 - 30 years. I would recommend you require a balloon payment at no later than five years which is plenty of time for them to repair their credit. They can apply for a standard loan so you are free-and-clear at this point.
There's little benefit to owner financing. It could help you sell faster, it could have tax benefits (paying taxes on annual income rather than the entire lump sum from a sale), and you are earning interest.
On the down side, you are earning interest, but about 1/3 of what you could earn by selling outright and investing in rental property. Heck, it's even less than what you would typically earn in the stock market! Then there's the risk of everything falling apart and you lose the sale, you lose money, and you are right back at square one.
I honestly hope it works out for you but I wouldn't want to be in your shoes.
Post: Property under contract

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
A couple thoughts. First,the seller or agent may still have it advertised as available for sale. These people may have showed up not realizing it was already under contract. Second, even when a property is under contract the seller is allowed to take backup offers in case the first offer falls through. Third, there may be something in your contract that allows them to back out or accept a "better and higher" offer.
Personally, I would have approached the party and ask if they knew it was already under contract. The seller or agent may be knowingly advertising it as available to hedge their bets, but I find that behavior dishonest. You are also welcome to call the seller or his agent and asking what is going on, just for peace of mind.
Post: How do you know if you have a good property manager?

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
I do not recommend contacting the tenant. Once you open that door it can create all kinds of confusion and conflicts. Your tenant may very well start playing you against the property manager just like a child does with their mother and father. I'm a property manager and I have a specific clause in my management agreement that forbids owners from communicating with the tenant about anything. If they want to view the property (inside) they can schedule it through my office and I escort them through. Even then, I warn them to avoid communicating with the tenant because they will try to manipulate the situation the majority of the time.
I recently tried to help a friend locate a tenant. My job was to market, handle showings, get the person under contract, collect first/last/deposit, and then pass everything to our friends for management. I was very clear: do not let the tenants negotiate anything with you! I found someone and they were scheduled to sign the lease and pay the deposit on a Monday. They came in to sign and I told them how much they owed. They said, "We talked to the owner and she said we didn't have to pay a deposit until next Wednesday." I called the owner and she confirmed. There goes our leverage! Sure enough, the applicants signed the lease with no money down and four days later sent a text message that they had changed their mind. We could go after them through the court system, but it's not worth our time. Had the owner listened to me, we would have had $1800 in hand to cover vacancy until a different tenant was found.
If you want to know how things are going, send an email to your PM and express your concerns. They should be able to provide you with a copy of the tenant ledger showing if the tenant is caught up on payments, paying on time, etc. You can also request an inspection that is recorded on video or photographs to show the condition of the home.
Just remember to be realistic about your requests. Inspecting 1-2 times a year is sufficient. You should respect the tenants' right to quiet enjoyment and your property manager's time. If you feel the property manager is not doing a good job, start researching for a replacement now instead of at the last minute. There are some great guides on how to find a good manager but it takes some effort on your part. You can't just hire the one with the lowest fees, either!
Post: Flip to rent (buy and hold) project in Philadelphia

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
@Mike B. It appears you found a lot of problems after purchase. Missing copper pipe, non-functioning drains, gas furnace shot, roof needed replacement. You took a quick look but did you take a second look during the due diligence period? I ask because the items you missed could have sunk a less-experienced investor, particularly if they are using contractors for the work.
Yes, it's important to evaluate a property quickly because the best deals get snatched up quickly. However, it's easy to miss something (or many things) when you're in a rush. Any offer to purchase should include the opportunity for inspections followed by an additional negotiation period if something unusual is discovered.
There are tools available to help evaluate renovation projects. Click here for an example.
Thanks for sharing!
Post: Fed Funds Rate bumped to 0.75% How do you read that?

- Real Estate Broker
- Cody, WY
- Posts 28,238
- Votes 41,447
The Fed kept rates low in an effort to boost the economy. If an economic recovery actually occurred during the past eight years, the Fed didn't notice! The business industry is very optimistic with Trump taking over and we're already seeing the results. The Fed is forecasting growth and raising rates accordingly.
How will this affect my strategy? In my market we are going to see the energy industry rebound plus we have several large businesses coming to town. That will drive the demand for homes, decreasing inventory and bumping up prices. I predict a lot of competition between home buyers and investors, meaning deals will be even harder to find than they already are.
This might be a year to focus on making money and saving up for a larger purchase down the road.