All Forum Posts by: Robert Leonard

@Ryan Pomerening you still need to contact that lawyer about the answer to this question as this is no legal advice, just an opinion of what I would do.

I would get a copy of the existing lease and bring that with me to an attorney and ask the attorney for an agreement to voluntarily end a lease early.  It shouldn't cost you an arm and a leg for that and you will be paying for more than just the answer to a simple question.  The agreement would be something for one of the two tenants to sign in exchange for an early termination incentive that you would pay the tenant to move out early.

If the deal is a very good one, it will be worth it to offer the tenant an incentive of say $1,000 to move out?  Maybe not cash but offer to pay for a moving service to move them to their next place, if the cost is reasonable?  Just come up with something that makes it easy for them to be understanding of your compelling reason to ask for it.  I would approach them asking for their help and if they don't accept it, go up by $500-1000 if it's worth it to you?  The likelihood of them accepting your incentive will probably depend on how long they've lived there and the availability of similar places to rent?  Hope this helps!

Well @Carl Randal for me, it comes down to the fact that I'm in the real estate business.  It appears that you are in the utilities business.  While it might seem like a good idea to get landlords involved in what seems to be related, it's a different business.  I wouldn't be interested in adding it to my real estate business either.

@Tyler Dunlap now you just revealed one of the perils of asking questions about what to expect to pay for properties to a national audience.  Look at the locations of where the responses you received came from.  None of them are anywhere near Utah.  Have you ever heard the expression, "real estate is local?"  I'm here to tell you, it is extremely local.  To a lower level than zip codes in cities that have more than one zip code.  It usually is local down to the subdivision and sometimes street to street within subdivisions.

I think you also need to revisit the 50% rule.  It pertains to estimating operating costs and has no relation to value as your use of it implies.

There is no way to analyze your monthly payment vs rent equation to know if you have a good deal. You have to analyze the overall numbers of the deal to know whether or not its a good deal. If you are paying 800/month for five years or for 20 years makes a big difference. What is the FMV and condition of the property? What would another informed buyer be willing to pay for the property? Does it need any repairs and if so, how much? There's so much more to the equation, that you need to give consideration to that is beyond monthly payment vs rent to analyze a property's potential as an investment.

You might want to try something like this:

http://beta.biggerpockets.com/files/user/brandonatbp/file/brandon-turners-spreadsheet---rental-flip-hybrid-calculator

@Donna Salmiery you shouldn't let this upset you.  There are unethical people all around us, just be thankful that they shared their little secret with you.  Now, you know that they are not trustworthy.  A snake in the grass is not a problem as long as you know that it's there.

I don't think they'll come out smelling like roses either.  They've already been exposed for one fraudulent enterprise.  It's just a matter of time before this scheme catches up to them.  People who try to beat the system always end up fooling themselves more than anyone else.  They are stepping over dollars to pick up dimes.  Be thankful that you found out what they are made of this way and not after you partnered with them on a business deal.

@Donovan H. I think I have the same issue here in my market.  We have a very active new construction market and it is a challenge to get remodel/renovation type jobs done.  Getting quotes, dealing with no shows, unreturned calls and the like are all the same things I'm dealing with.  Some quotes I do get are like "if you're crazy enough to pay me this much, I'll take the job."  I'm doing way more of the work myself than I want to. 

I'm still hunting for a couple good contractors to allow me to turn a corner and accelerate my deal flow.  No need to push for more deals right now until I have the contractors with the capacity to get the work done.  It's what makes me serious about looking to other markets for opportunities where there is less new construction and more competition (better pricing) for remodel/renovation contractors.

@Stanley Hataria There are lots of factors to the equation that make the answer different for different situations.  One question is, how does the cost of rent compare to the cost of owning in your market?  The answer can be very different in different markets. 

What is your long term employment like?  Is there any chance that you might be moving in the near future?  If you might be moving soon, you may not have time to recover any savings (if any exists) in home ownership compared to renting because of the cost of acquisition (closing costs) and sale (commissions) of the property you would buy.

What is your family situation?  Could you live in a low cost apartment and save to be able to invest or have a good down payment to buy a home faster if you sacrificed a year or two before making your big purchase?  Is your family likely to grow anytime soon and need more space than an apartment offers?

Those are the first three areas that come to mind for me and hopefully that gives you some food for thought.  Only you know the right answer for your situation and I hope these questions help you find it!

@Larry Russell I would look for smaller regional banks or credit unions for better seasoning expectations.  Their seasoning requirements (the amount of time they expect you to own a property before you can cash out refinance) will be anywhere from zero to 1 year.  The only way you know is if you ask.  Condos usually only get 75% financing as opposed to the 80% other types of properties usually get, from what I've read (not personal experience).

Something I recommend before you go and visit these banks/credit unions is that you go to www.memphisinvest.com and for the price of your name and email address, you'll get access to Chris Clothier's video tutorial on how to create a "bank book."  If you do that, you will put yourself head and shoulders above others when you offer them your business while others walk into banks asking to borrow money.  Be prepared to take notes while watching the video, the information is gold!

DISCLOSURE:  I have no affiliation to memphisinvest or Chris Clothier.  I simply find this free information very valuable.

Well @Riky Hidajat,  I can only tell you that when I had "very little money and no regular income" I knew I wanted to be a real estate investor.  And it wasn't until I obtained enough money and a regular income, that I became a real estate investor.

Is risk necessary?  Absolutely, it's in every decision we make, but you have to understand the difference between a calculated risk and a careless risk.  The more you deal with predictable outcomes based on historical measures, the more calculated you can be in your risk taking.  The more you accept unpredictable variables into your risk equations, the more careless your risks become.

I'm not dissuading any of the creative methods of financing.  I am saying, you better know what you are getting yourself into and have a plan for the unexpected, you should expect it!

Hi @Robin B. and welcome to BP!

Hope to see you around the site or maybe at a NOREIA (N.O. Real Estate Investors' Association) event.  I've been to a couple of their training events and I've met some interesting people (like you always find in New Orleans ;-).

Send a shout out if there's ever anything I can do to help you from down the road here in Lafayette!

@Rae Remer

@Rae Remer

@Rae Remer