All Forum Posts by: Colin Reid

40 year term?! I need to meet that banker! Do I have to be delinquent on my bills to qualify, because I can do that!

I'll answer the last one first. I'd rather have clear title and a simple deal for 30% COC, which isn't that hard to do, even in SFR.

Second, "cash negative" doesn't really mean anything, because you've exchanged that cash for something of value. If I put down $50k on a $250k property, I haven't lost $50k. I've bought 20% of that property (or more) with that money. I still have $50k, just in a different form. Then I start renting it. If I get $5k in profit, I'm not at -$45k, I'm at +$55k.

I'm not an accountant (though I am taking a class in Fundamentals of Accounting right now), but you're doing some financial gymnastics to make this sound like a good deal. 

If I had this fall in my lap, I'd forget the sub-to. They owe $180k and need $15k to live for the next year? Cool, offer $195k as a straight up sale, and tell them to vacate.

 That's what I'm saying, dude. Tell him to keep the deposit and stop contact. Don't give him ANOTHER $600. It's not defeat, you're cutting your losses. Before you know it, you'll have spent enough to recarpet the whole house, PLUS he'll keep your deposit, PLUS you'll split the replacement with him. All in the name of being the bigger man and having the cleanest carpet to ever go into the landfill. Think about what the lease actually says. Either you return the property in satisfactory condition, or the LL keeps some or all of the deposit to remedy the issues. This guy is never going to accept your cleaning, so STOP CLEANING.

I ended up with cats outside my house. One acts like he used to live in my unit, always trying to get in. He's been outside, and the property vacant, since the first time I looked at it, so I don't know if he was born feral, or if he used to be a pet. I'm allergic, so he's never coming in, but I was fine with a "barn cat" model, keeping pests away. The advice I got was to keep him fed, because cats don't hunt for food, they hunt for fun, and if they're hungry, they're not going to hunt. So I found the cheapest cat food Walmart had, and a $3 pet food bowl, and now Mooch is my loyal outside guard cat. He also brings all his friends (at least half a dozen strays and/or outside cats on my block) for chow in the morning, and the rain in FL usually keeps the water full. If not, I fill it up when I see it empty.

I was an accidental landlord. I bought my first home in 2009 in a popular neighborhood (0% down VA loan), got orders a few years later, and a friend in my squadron offered to manage it for me as a rental. He and his wife were investors, managers, and realtors, outside of his military career.

I bought another home at my new base. In 2013-14, the DOD was making huge cuts and I was certain I would get kicked out of the Air Force, so I started learning about personal finance and real estate more intently. I ended up not getting cut, but I was on the path and the fire was lit. Now I am out of the Air Force, have 5 doors, I'm trying to learn about apartments, and I'm networking hard, finding a surprising number of people who say they want to invest with me.

As for books, I would say broaden your horizons. There's nothing wrong with BP books, and I've read several of them myself. But they're not the only real estate books out there. I always recommend "Millionaire Real Estate Investor," by Gary Keller, as a good starting point for new investors. It gives pretty good overviews of the main types of investing, so you can understand each one and decide which one you want to persue.

 I disagree that they have a right to keep the whole deposit, but I do agree that this is no longer worth additional time or additional money. How much have you spent just on carpet cleaning? Is it more than the deposit yet, for carpet he's just going to rip out anyway? Tell the guy where he can stick your security deposit and move on.

I'm a veteran myself, and one of the things I love about being a civilian now is how many problems just disappear with the proper application of money. 

 Nailed it. I supposed I fall into the "young professional" category, and I bought a house hack in an older neighborhood in St Pete (33712), blocks away from the hipster part of Central Ave. There's a fair amount of new construction in my neighborhood, big luxury homes with inlaw suites in back, asking $650+ That's not what I bought, but it's an indicator for the neighborhood. 

They gotta keep clean until it closes. If you go buy a new car the day before settlement, the lender is going to be upset. So if they play nice until they close on their new home, they might just stop paying the rent, but why would they stay in the house?

For those saying it's not worth it for a small portfolio, I've got some questions, because I'm in a similar position as the OP.

If I plan to grow bigger, does it not make sense to start running the business like a bigger business? It seems to me like it would be more trouble to convert my records from a less formal format, like a simple excel sheet, to a more formal system like QBO later.

 They could definitely do that, but they won't. The OP said the tenants are trying to buy a house. They're not going to do anything to risk their credit if they're applying for a mortgage.