All Forum Posts by: Rich S.

It is good to see other perspectives on things, but I think so valuable to fine tune thoughts of others like you.  Glad your day was made @Jay Hinrichs .... I'm just hoping someday I will be able to provide as much good advice as you and many others do on BP.

As an avid reader and absorber of this site I've found myself drawn to certain folks who seem to have ideals/thoughts that very much align with mine. I am interested in many aspects of REI, but I've been drawn to the thoughts of a few more than anyone else. @Jay Hinrichs and @SteveVaughn are two of the folks who seem to have a mindset that very much aligns with mine.  They both speak in reality... not just in the awesomeness of REI(it is awesome, by the way).  They bring folks back to earth in regard to there is risk, not leveraging to the nth degree and have really honed in on their niche.  This very much aligns with my thinking. They bring a wealth of experience to the table and they speak to situations where things didn't work out... to the reality.  Steve speaks to the mission/goal of what he is providing folks in his community AND about how he is trying to create a legacy for his children by immersing them in the business, having them put in sweat equity, etc.-- which is EXACTLY my why....    They are always informative and sincere in their advice.

Those are my BP idols, for lack of a better term, who are yours and why?

I guess I see it differently than many.  First off, he has been a paying tenant for a number of years.... in the many stories I have read on BP, it seems there is plenty of cost every time you turn over a property, so if this tenant has been in place for so many years, you will have turnover costs anyway, but you have saved a ton not having them for all these years, so for the folks tearing your business practice apart, I'd say it has worked out thus far.

In regard to what to do... I'm with @Jay Hinrichs on this one.  Just tell him what you are thinking... if he/she is interested, maybe you can sell with much less hassle and at a savings.  If he/she is not, you are doing anything and everything to be open to help them find a new place after being in yours so long.  A third thought would be, pitch the property to another investor... you might be able to walk away with plenty of cash, the long term tenant may be appealing to another investor and it could be a win-win for everyone.

There is no doubt that this class of property is not for everyone, but I find it funny that so many folks just want to RUN and then they will say "it's all about the numbers" in another thread.  If it is purely about the numbers you use for every other property... allocations or %'s are the same, I don't see how you can't use that logic here.  There is no doubt if you can't refinance your money out the only play is being willing to be in it for the long haul.  I would explore the section 8 route as I think that improves the scenario.  I think the biggest question is can you use your $80K to generate more cash flow or a better cash on cash return?

If you are good with the long game, I don't know why not. If most of the CapEx is done and done right with the cashflow you could be free and clear, all your purchase money back in your pocket within 5-6-7 years... I also think where you are at in your investing career/portfolio plays a part too... if it completely blows up in your face, will the 80K kill your business? The things I like most:

*Low entry cost

*Management wants to stay in place and by your words is solid... these types of properties definitely take a special touch

*I think there will always be demand for this type of housing... because it is dirt cheap

*Most CapEx done... major updates/renovations on the horizon would kill this deal, IMO

Good luck!

Sure looks to me like you made some big sacrifices for long term success... doubled your portfolio... in a year you'll have all your money back out... over $200/door cash flow... once you get your rents up where they should be it will increase as well.... for most on BP, the long game is the driving force.  You paid a price, but in the long run, looks to me like it will be worth it.  Two of the guys I admire on BP @Jay Hinrichs and @Steve Vaughan  could probably tell you multiple stories like this and last I checked, they are always the ones giving advice instead of seeking it... to me that means you are on the right track.  Kudos to you... out there grinding and taking the risks while many sit back and hope it happens to them.

Any update on what actually happened with the property that caused the start of this thread in the first place?

I think the part that is overlooked in this discussion is ability to view properties.  I'm not sure if it is regional or not, but having your license allows you to go look at properties on your time... not waiting for agent to set it up, etc... I also think it helps you network with others which may mean more leads.

Realtors and Brokers will always say it is better to have a realtor for this or that reason. There is no doubt they provide value, it just depends how much and that is based off each individual situation. The bottom line is there is a TON of data available to the general public in a few clicks online that can help you with any and all of the metrics used to create a list price. And being you've had it listed, you already have a fair idea. Back in the day, you used to HAVE to have a realtor for this data. If you fear that not being on the MLS will cost you, pay for a flat fee listing, then it will get listed on the MLS. Keep in mind, many realtors/agents will NOT show their clients listings that aren't listed by another realtor. You can market a buyer's agent commission if you want, to try and prevent that. I think there are a lot of markets in the US with more buyers than listings, so FSBO should be very doable.

A rather distant relative is looking to unload a property.  The owner of the property is in a care facility and will not be coming out.  The home used to be my Great Grandfathers, so it has some sentimental value to me, but I also believe would make a worthy investment.  Lots of deferred maintenance, but I'm confident could cash flow for many years.  Anywho, I have no experience dealing with this process.  Can the family even sell?  If so and I purchase, do I have to worry about the property being taken back?  I want to help, if the numbers work, but don't want to be surprised later and get burned because they owe the care facility or whatever.  Can anyone offer experience or advice in this situation?  Thanks for any and all thoughts.