All Forum Posts by: Shera Gregory

As I understand it, most banks would not accept an offer with "and/or assigns" for a foreclosure property. So you would have to offer to purchase yourself and provide proof of funds. But maybe that's not 100% accurate in all markets.

I have several rentals in the Richmond area. We used craigslist for years with good success. Then on one we did in the spring of last year we just weren't getting the same response rates or good leads. We switched to postlets/zillow and things took off really well. For the past couple of rentals we have used both. And both sites are a good source for finding out what rents are in the area. We had planned to ask $1000 for a 3/1 in the city of Richmond but based on the "comps" we saw in the other advertising we decided to move up to $1200. We had tons of interest and ultimately got a two year lease at $1200 per month.

Also, our ad includes the requirement that the household income be at least three times the monthly rent. So that helps to screen out some people from the start. We do have the prospective tenant pay the credit/background check and we credit that toward the first months rent if they wind up being the renter. What we do (and we tell them we do this) is to work through our applicants in our order of preference so we are not asking someone to pony up the application fee if they are not a serious candidate for the house.

Hope that helps!

Hi. Just because this isn't as good as your first deal would not in itself be a reason to not move forward. However, all of the other points you make seem to be very reasonable concerns. Here are the additional aspects to consider that I would suggest to help clarify whether your concerns are sufficient to look for a way to pull out of the deal.

House too old & will need expensive repairs -- ALL houses have the potential to require expensive repairs. Do you have information on the normal big ticket items such as roof, HVAC, electric and plumbing? I live in a house that is 100 years old but it has a slate roof that will last another 100 years and new furnace and AC unit. Is the electric knob and tube? That can certainly be more expensive to work on and can be more difficult/expensive to insure.

2 basement bedrooms - you are correct that this will limit your future buyers. How much of a limit probably depends on how much of a "basement" vibe you get. How much light is coming in? Is there anything you can do to increase that (without compromising safety)? Even though it limits future buyers you only need one! So this doesn't have to be a deal-breaker. But you need to make sure your idea of what you would sell it for in the future does discount vs other comps due to this. Also, how common is that style in your area? Perhaps buyers will see this in other houses too. For example, I personally can't stand tri-levels but there are a ton of those in my area and people seem to keep buying them.

Risk of flooding, sewage - that makes me think there is a drain in the middle of the floor like you do have in a lot of non-living space basements. How is existing drainage handled for the house? Where is the hot water heater and where does that drain go? You can measure for radon if you want. But before you add that expense I would do a quick google check to see if that is frequently a problem in your area.

Where are you in the purchase process? Do you have an inspection clause? That would be your best opportunity to get more info on the items that might need to be repaired or replaced in the near future and to potentially opt out. I plan on spending at least $5,000 on average every five years for each property. This is generally enough to cover one big item. If you can't manage at least that in the next couple of years then this deal is probably too tight for you.

Good luck with this!

We have a renter who has been paying rent via electronic payment every two weeks on the same day as his paycheck. This was working very well until a few weeks ago when the payments started bouncing. Because of our good history with him we sat down together to go through his bank statements, etc to see what was going on. It quickly became clear that he got himself into a jam by getting a loan against the title of his vehicle. 

Based on the documents we could see (which did NOT include anything from the start of the loan) it appears that over the past three months he has paid about $1000 on a $1600 loan and has paid down about $40 in principal. They say he still owes $1700 and all his recent payments are for "fees" and interest. I have heard bad things about "payday" lenders but this is my first encounter with the reality of what is being done. It's a terrible practice that preys on people who don't understand what they are getting into. We are trying to figure out what, if anything, we can do to help this person dig himself out. Any suggestions?

I do have all the calls coming to my cell phone and I try to answer if I can. I make sure they know about the requirement for household income to be three times the rent. I ask what they are looking for to be sure it really fits. Then, if we already have a day & time planned for an open house I let them know about it.

One thing that I have found helpful is that I immediately create a contact in my phone right off of their calling number. I give it a name starting with the property (ie Main Street contacts = Main Bill, Main Susan, etc). If I have made arrangements to meet them on a specific day & time I put that into the contact info in an easy to see field like the e-mail address. Then later on I can follow up with individual text messages or even a group text message to everyone. That has been very useful when I wind up having an open house that I didn't have planned at the time I spoke with the person. And if someone later tells me they aren't interested I just delete the contact.

It sounds like it has the possibility to be a good buy and hold. For the value it's best to use comps, not tax assessments (although that's not a bad data point to have). 

To analyze cash flow, ROI, etc I started with the spreadsheet that J. Scott put together to evaluate buy & hold over time and tweaked it to allow for a 15 year loan. It's in the File Place section of BP at:

Buy & Hold Evaluation

One caution on this spreadsheet .. you can develop a deal "on paper" that may not exist in reality. I would so love to find my $25k purchase + $10k rehab that rents for $900 per month with 2% vacancy. 

There is no separate capital expenditure row so my suggestion is to include enough money in the Maintenance section on an annual basis to equal at least about $1000 per year for long-term fixes and another $300 to $500 for "normal" maintenance.  It seems like every five years or so you will run into something that's going to cost about $5k to fix. That will eat up $125 of your planned cash flow right there.

And have a conversation with the owner to try to get the price down from where he is right now.  I have certainly over-paid for a property because it seemed like a good deal .. but maybe I could have turned it into a great deal.

Don't forget about the option of driving the areas you want to "farm" and seeing for yourself what is out there. Even if you don't use this as your primary source of properties you will develop a good feel for your area. I think it's very valuable to know your own area well enough that when you hear about a deal you can just about envision that block without googlemaps. In addition, it's a great way to see which houses have grass not mowed, etc. Signs not only of an absentee owner but one who may be motivated to sell.

Best of luck!

Thanks @Phillip Syrios @Cal C. and @Marcia Maynard for your comments. These were all helpful in my follow-up discussions with the potential roommate/tenant. I will make sure that he is on the lease. They have all agreed to a deposit equal to two months rent. I found out that the roommate has been clean for about 2 1/2 years (the one year period was how long has has been on the current job). He has a good support system in place including monthly counseling sessions with drug testing. His current employer (who is aware of the full situation) is also a landlord so he understands the concerns I might have and spoke very highly of this individual. Nothing is ever 100% but I feel that we have a good shot at helping a deserving person. That is one thing that I enjoy about our role as a landlord -- we are not just a big corporation with strict criteria that can never bend.

We are considering renting to a couple who also have a friend they want to have live with them to help cover the rent. The couple together make exactly the 3x rent that we require. The third person makes enough to bring this up to over 5x rent. This third person had some drug problems and an eviction but seems to have been doing well for the past year. He spoke very highly of his friends, says he understands if I don't want to rent to him but asked that I not hold it against the couple. I was considering just putting the couple on the lease and letting them have the guy live with them but I think things could get sticky if for some reason they were to leave or have problems and then I have a third person living in the house with no lease. Ideas? This is in Virginia.

Not sure why my @s didn't work. I did the @? thing. Trying again .. 

Thanks @Dmitriy Fomichenko . Good to have that clarified.

@Loren Whitney  - I'm not sure I would go that far, but also good to know that there are options that could work. 

So as I understand it now, I could work with another investor with their IRA or non-IRA funds but they would have to be outside the disqualified parties group.