All Forum Posts by: Richard Betz

Compass was doing this for a bit, but have downscaled their investment budget.  

So you're ready to start, but have no money to invest?  Maybe you're aren't that ready.  You will have to find a property, then find a lender.   Do you have good credit?   Perhaps a visit to your local bank or credit union to see what you can qualify for is a good start.   You'll likely need some sort of collateral.  Do you have equity in other property?  Hard money loans are out there, but they expect you to have skin in the game too, and some experience.  

I would recommend you go and look at the contractor's previous ADU builds. Talk to the owners of those ADUs.

This type of purchase used to be a lot more common.  When interest rates were higher many people could not qualify it was a way to get into a property.  There was a lack of buyers, and for a serious seller, letting someone take over your loan might have been the only way to get out of it.  

The new owner just kept making the payments on the existing loan, but the loan stayed in the seller's name.  The bank would not be notified. If the new owner stopped making payments the seller would be in a bit of a pickle.   The sales contract would spell out the way issues would be handled.

The last time we did a subject to purchase, we used our property management company to make the payments.  We told the bank that the management company would be making payments since the occupant wasn't able to handle their finances.  The family got together and hired us to do it.  We brought the loan current, as it was $21,000 in arears.  When the bank got the checks from us they didn't seem to mind.  It just meant one less bad loan they had to deal with. 

You definitely want escrow to NOT contact the lender on the first.  I had a subject to property loan get called because escrow goofed up and alerted the lender.   I had to refinance and pay them off.

If they sue it will almost certainly be in small claims court.  If the do sue you, then go, and present all this information to the judge.  The Judge will decide.

Even if you knew the correct color for the touch up paint, the color might not have matched.  Even if you have the original can of the actual paint it may not match after a few months of being on the wall.

What's that saying?  Fast, Cheap or Good.  You can only pick two.

My company used to do prep for sale on Fannie Mae and Freddy Mac foreclosures.  We used to do them fast, cheap and decent.  LOL  But they just had us doing paint carpet and appliances.  There wasn't quartz countertops and luxury flooring.  People expect a lot more from a good flip than that stuff.    

And please no more gray and white!  

Contractor here.  I'm in San Diego so I know your pricing.  Last month I did a one bedroom condo with a 3/4 bath, and nice kitchen with quartz tops, all appliances, scraped ceilings, all new texture, a new windows, tiled shower.  My COST was $30,000.  So adding a second bath, triple the flooring and more of everything I can see $70,000 being at the low end of what you will be charged.

Flippers ask for wholesale pricing, but contractors are booked up weeks ahead with people paying retail + pricing.  Why would they want to work for less?   It is a tough time to find bargain contractors.  Maybe you can get a quality unlicensed guy but you need to be careful.  It isn't exactly legal. 

Don't give big deposits up front.  Get invoices for all the work.  If he uses subs, get lien releases.  

And eventually word will get out and friends and neighbors of the tenants will be over doing their laundry for free.  Using your water and power to do it.  

If you keep the current house and rent it out, what can you get for rent?  How much cash could you take out of the home and still have decent positive cashflow?

I would probably stay in the home, do a cash out refi and use those proceeds to find another property to buy and rent out.  Preferably a multi unit building, or a couple houses on one lot.  

I chuckle at the numbers.  They seem so affordable, here in San Diego, one bedroom condos cost $500,000.  It makes investing very hard.  You should snap up every place you can.  Do it now while you are young and strong and being a bit poor is palatable.  30 years from now you will be on easy street collecting thousands of dollars in rents every month for zero effort.