All Forum Posts by: Rumen Mladenov

I do the same thing as @Account Closed. And I do not think the tax deductions matter at all - if I pay $2000 less interest and I am in the 25% margin, I lose the $400 tax deduction, however if I instead earned $2000 interest in a money market account, I would owe $400 tax on it so it is a wash.

The only downside is the remote risk of having your HELOCs frozen when you need them the most. Hasn't happened to me, and even if it does I have big enough limit on my credit cards to carry me through any short term emergency.

I have never charged per person, and as @Marcia Maynard pointed out, it would most likely be illegal. You are not running a hotel...

I would also not hold a property that is ready to rent in April (the time rental demand is highest) vacant for over two months. It just doesn't make sense, unless you are in a terrible market and even in April you can't find other qualified applicants. Other than lost rent, you have to consider the expenses (water, sewer, insurance etc) for those two months, as well as the higher risk of break-ins, vandalism, getting your HVAS unit stolen for the copper in it - however small that risk may be in that neighborhood, it is still there. And your insurance may not even cover a loss for a property that has been vacant over 2 months.

In a bathroom, mold commonly develops if they do not turn the fan on while taking showers. I did that for a few months in my own house (bathroom right next to baby's room, sound woke her up) and had it develop on the walls and ceiling. Wiped it off with bleach, put a coat of Kilz and then painted over; also installed a new ultra quiet fan. No problem ever since - and the baby will turn 5 this month.

I use the MLS. Yes, there are many other investors looking at them. But not everyone is looking for the same type of deals you are. For example, I look for properties I can rent out with some rehab; a flipper who plans to do a total rehab would not care much that the current kitchen/bath can be acceptable for a rental, they would gut to studs anyway and replace. Thus a property with average kitchen/bath would not be worth more to them than a property with a terrible kitchen/bath, while to me it would. Also, I like to stay local - the benefit of being able to walk to a rental makes it more valuable to me. A flipper or a landlord who uses property management company for everything or a landlord who simply lives farther than I do would not see such value.

If you are looking for deals to wholesale, do not waste your time looking on the MLS at all.

@Scott C.At least you get a temporary tax cut. In Delaware, we got an increase in both personal income tax AND property tax recently... The income tax increase was supposed to be temporary during the recession, but it was made permanent afterwards. 

Now that you mention it, I do not recall ever being contacted by a new landlord for a reference either - ever.

I usually do some basic checks before I call. Is the paycheck showing the address claimed as a current residence? If so, is the person claimed to be landlord actually the owner of said residence (or a property manager)? If so, does the court database show a pending eviction from said residence? Doing this usually eliminates more than 50% of the applications without the need to make a call. I guess the percentage would be lower if I collected an application fee, but I do not mind it - I want to make it easy for good applicants to choose my rentals, and if that means for every good one I will get 10 bad ones, I can live with that.

@Marci Stein 

you need to turn your irony detector on. @Jennifer Lee 

put that expression in " " for a reason :)

I have successfully purchased a couple of properties from Hubzu. It can be quite frustrating, and closing date is a moving target, but all in all I cannot complain - the deals were good enough to justify the hassle. 

@Joe Kim 

how much did that commercial policy cost you? I have not checked a blanket liability policy, but anytime I inquired about a single property commercial insurance, the rate was 3-4x the regular one.

I had that problem when I started out. I was able to borrow unsecured funds (credit card balance transfer offers, friends, relatives etc), buy the property cash, and then get a HELOC on it to pay off the unsecured loans. For some reason HELOCs are much easier to get than mortgages... It only works if you can get short-term funds to purchase it first though.

The other benefit of the HELOCs is that when you pay them down, the unused portion becomes available for future purchases. The downside is the variable rate - not an issue during the past 5 years or so, but sooner or later they are bound to go up.

@James De Silva:

1) There are discounted properties on the MLS too - fixer uppers, pre-foreclosures etc. I bought several properties off HUD (www.hudhomestore.com), and to make a bid on the web site you need a realtor. Same for Hubzu (www.hubzu.com). 

2) @Jennifer Talcott is right on about buy and hold investors. I am one, and I purchased a couple of properties over the past two years from a wholesaler that probably would not make sense as flips but make great sense as rentals.

3) REIA meetings are a great start. I also respond to yellow letters, saying that I am not interested in selling at this time, but I would be interested in buying for the right price. Word of mouth is a great way to find out who is good - ask fellow investors about their experiences with wholesalers.