All Forum Posts by: Nuhan Demirkan

I'm not sure I understand! The property has been on the market for over a year but you have to submit the offer tomorrow? What happens after tomorrow? This is an REO and has liens against it? What kind of liens? Most liens go away once the bank forecloses. Will the bank provide you with a clean, insurable title at the settlement or a warranty deed? Of course your agent feels comfortable he/she doesn't get paid until the deal closes. Remember, you're the one with the money and you control the deal. Until you are relatively certain that this is a good deal I would not recommend you write the offer on the property.

It has been said that "if you have to have an answer right now - the answer is no. But if you give me a little time to look into it I might say yes."

Don't get bullied. You're in it to make money.

Good luck.

Lisa, when you say your investor, I assume you mean your banker, right? In the scenario you explained you are the investor, he is the source for money - the banker. For the purchase, the banker wires the money to the title company so there are no issues/questions there. You can also set up certain thresholds for draws to pay your subs if the banker is not comfortable advancing the entire rehab money. The banker's position should be secured by the property and any other collateral you two have worked out. I would not want to call him every time you need to make a payment.

You should also add a title company, an insurance broker and an attorney to your team.

Sarah, there are multiple ways to finance your real estate purchase. My first strategy is the seller. Is the seller willing to hold the note for the purchase? Since this was a rental property, the owner is used to receiving monthly income from it so why not ask if he/she wants to be the bank? Offer reasonable terms and he/she might accept. 

Second, offer to buy subject to existing mortgage - if there is one. You might be able to offer a small down payment to cash him/her out and keep the mortgage in place until you refi him/her out within a specific time period.

Third is private money. Do you know anyone who has money in the market (Self directed IRA, stocks or bonds) but would like to get a little more yield. They can lend the money and use the house as collateral.

Look into these strategies. They seem improbable but not in reality. I have purchased rental property using all of these strategies.

Good luck.

I guess I don't understand Austin market but I would not pay $140,000 for $16,800 in annual rent. When you subtract taxes and insurance your return is probably less than 10% annual. And this does not include any rehab cost. I would want $22,000 to $24,000 in annual rent.

I am not following your math. Mortgage + Taxes + Insurance = $900

Left over $400. if you put $400-$600/mo you won't have any cash or will be in negative cash flow.

I suggest PITI - $900 plus $65 for deferred maintenance/vacancy - $965 monthly cost.

$335 cash flow.

I don't know the tenant/landlord laws of Ontario Canada but in my state a tenant cannot withhold the rent due to issues with the property. He has to deposit the money into an escrow account at the courthouse. Once the dispute is settled the judge appropriates the funds. Plus I hope your lease has something along the lines of lawful use of the property. Smoking weed definitely breaks this clause so you do have a reason to evict him, especially if he is living in your personal residence. Everything comes back to how you train your tenants. I usually have a come to Jesus meeting in the beginning so there are no misunderstanding and this is strictly business nothing personal. Sounds like he is taking advantage of you. Tell him if he does not pay the rent he will be evicted... period... Next time he smokes you will call the cops. If he parks his bike other than the designated parking area you will park it where the sun don't shine.

Think back to your screening process of this tenant. Did you skip a few steps?

Carl, I know some folks at Bigger Pockets are proponents of the 50% rule. I've been a landlord for over ten years with 20 SFH's in my portfolio and I have never experienced it. Especially if you are spending $25,000 on rehab. Your maintenance cost is reduced because most of the things that could go wrong are brand new and shouldn't. After the rental has some age on it you may experience higher maintenance cost. Plus if you are a good property manager, I strongly suggest you learn how to manage it yourself before giving it off to a property manager, your vacancy rate is minimal. I suggest you write your lease so the tenant pays the rent as a direct debit from their bi-weekly paycheck so you don't have collection issues either. As the number of rentals increase your cost to operate decreases per unit owned. Allow 5% of the rent as deferred maintenance and move on. Don't offer less than 12 months lease and raise the rent gradually at every renewal. And keep buying and holding...

Hello Michael, I know Richmond a little bit but not enough to recommend areas. However my suggestion would work in any part of the US. Go on Virginia Tax Assessor's web site and do a search on the type of property you are interested in the zip codes you like. You can then download the list and do a mailer out to the owners asking if they would like to sell.

Good luck.

I'm in Maryland and I put laminate in common areas and carpet in bedroom. The cost is comparable but laminate seems to wear a little better and looks good for marketing purposes.

Sounds like the sellers aren't motivated enough to take your offer. You can increase your offer and take a chance on not making money or find a motivated seller. You're not in it to buy real estate, you're in it to make money and you make your money when you buy. They will call you when/if they are ready. In the mean time you can use this experience to hone your offer skills for the next one.