All Forum Posts by: Randy Rodenhouse

I would simply ask them for a copy of the policy which will show the term and amount of coverage, etc.

I like it to buy rentals that already have tenants since I step immediately into a situation where I have income.  Now you definitely want to find out about the tenants, the lease, in terms of the lease, etc.  In addition, it is important to make sure that you get something in writing about the security deposits and put that as part of your contract so when the tenants leave you have their deposit to give them (if they have meet all conditions of the lease).  Remember you don't have to keep those tenants in there forever that's why it's important to find out the term of the lease so that at the end of the term you can renew the lease if you like them or remove them if you don't.  Another idea is to get an estoppel letter from the tenants stating their current rent payment and the amount they put as deposit to make sure that what they say and what the seller says is the same.  An estoppel certificate establishes the current status of the lease terms for a third party.

In my opinion, cash flow is the only thing that matters in the world of real estate. The market drops by 50% and I have cash flow I can hold out for years.  However, if I have a bunch of equity and no cash flow then if values drop then what do you have...trouble.  I can't live off equity, I can only live off cash flow. Now if you can pull out money from a refinance and use that money to make more money than your losing in the negative cash flow situation then that might be an option but it needs to be carefully calculated. 

As the term of your HELOC ended and that's why it was closed? I am not clear. Typically HELOC have a period during which you can draw money and then at some point in the future you can no longer draw money but you continue to pay back what you owe.

If you're talking about a true sandwich lease option than you're buying on lease option and then selling with lease option and you make the spread in the middle wrt the rents and the price. Obviously you want to buy it at a lower price and sell it at a higher price.  When I buying on lease option typically I'm looking to buy at 90% or less of the current market value.  Then when I sell the property on lease option I'm typically getting 5 to 10% higher than the current market value since I'm offering future ownership to someone that wants to buy a house but does not have the ability to do so now due to credit challenges and the like.  It's all about finding the right person to buy from and right person to sell to.

Good question Don.  In the past, I was running around 15-18% for passive and 40% for passive.  Now in todays compressed market more in the range of 10-13% for the passive component and the active investments more like 25%+. The active ones used to be much higher and passive ones as well. But today's market is a bit more difficult.  

One option would be to sell the house with owner financing at an interest rate of 8-9% and you make the spread on the difference between your 4% underlying note and the higher rate. So if your loan is $430,000 ( I made some assumptions based on your down etc) and you owner finance and sold it even at the same price you bought it and the same amount down (15%), you then would cash flow roughly $1000+ (quick calculation). Since you're not the owner you are not responsible for taxes, insurance, HOA fees, property management, etc.

Charlie Munger said, “You don’t make money when you buy and you don’t make money when you sell. You make money when you WAIT.”

I think most of us (including myself) hate to wait.  Since it feels like we are not accomplishing anything.  But sometimes it is the best thing to do.  

Now with that being said there are opportunities but those opportunities are only found by doing alot of marketing to find the right situation, motivation, etc.

There are many solutions like Buildium, RentRedi (Biggerpockets product), Landlord Studio are all pretty good.  

Whether a Trustee can sell property in a trust depends on the terms of the trust. It is impossible to know whether a Trustee can sell real estate in a trust without reviewing the trust.  If the trust is a simple revocable living trust used to avoid probate, the grantor and the Trustee many times are one and the same individual. There are no restrictions as to what the Trustee can do – Trustees can buy and sell property in the name of the trust at any time. In such cases, the Trustee has two choices. The Trustee can either sell the real property as the Trustee and deposit the sale proceeds into a trust account or transfer the title to themselves (as beneficiary) and then sell it.

An irrevocable trust, on the other hand, cannot be amended or revoked by the grantor without the consent of the beneficiaries. If an irrevocable trust owns real estate, absent any limitations in the trust instrument itself, a Trustee can sell property within the boundaries of certain rules of the trust.  

There is also the land trust which is a little different - typically there the beneficiary and the grantor are the same and you would get a separate trustee (mostly for anonymity purposes).  Then the trustee would deed the property to you as the buyer.

Yes you can get a loan to purchase the property.