All Forum Posts by: Scott Steffek

Joe,

What city is the property located in?

I find properties for investors that are out of the country. They're having a very difficult time finding funding that doesn't cost them an arm and a leg. It seems like the reputable lenders want 2 or more deals under their belt, before they'll even look at a foreign national.  Most of my investors have llc's set up in the US. If anyone can help steer me to a reputable lender that has fair rates, I'm all ears. 

Jay is right about Northwest Indiana. It's a great area for rentals. You have Illinois people who are moving across the border to Indiana, because the cost of living is far less than Illinois. Rents are lower in Indiana, but so are home prices. The taxes in Indiana are far lower than Illinois. I've sold SFR's in the $80-$100k range, where the taxes are only $600-$1400 a year. The competition out here is getting worse by the day. But there are still deals to be had. Hammond and East Chicago are areas to consider. But these 2 cities also have certain areas that you need to stay away from. Small multi units can be very profitable. Just stay away from Gary! Someone mentioned property management. If you don't have quality property management, you have nothing. Especially in the lower to middle income areas. It's of the utmost importance that you place quality tenants in your properties. The property manager needs to check out each and every tenant extensively. You can have the best deal in the world. But if you have lousy management, you have nothing.

David,

I'm not dismissing anyone. All I'm trying to do is let investors know that there are things they can do to reduce fraud. I would bet that you're the exception to the rule, when it comes to third party dealings. I'd lay money on it! Many others have just trusted them and hoped what they were being told, was true. I'm very sorry that you're going through all of this.  It sounds like you did all you could to check on your properties. I'm talking about the "newbie" person who is anxious to buy an investment property and doesn't do what he should, to check things out. They jump into something and have no idea what they're getting themselves into. Those are the people I'm talking about.  I've had people call me from BP that want to invest and they don't have a clue what they want. Oh sure, they tell me how much they want to spend. When I ask them their specific criteria, they don't have an answer. What percent of cash on cash are you looking for? What ROI are you looking for? What are your investment goals? When I ask these questions, the phone goes silent. That's scary. It sounds like Morris took advantage of those people. There are plenty of them out there. I hope this helps you understand what I meant. I wish you the very best of luck and hope things turn out well for you. 

It amazes me how many people feel like they were scammed by Morris. Having their license revoked is definitely a sign that something's very wrong. Why do people continue to take risks with them? 

People are a dime a dozen if you need pics of a house. We shoot video and pics weekly, of the properties we rehab for our investors. But for a small fee, you can call a local realtor and they'll run over to the property and check it out for you. I've had new investors ask me if I could let a realtor in, to see how the rehab job was going and so they could take pictures or whatever. So I know there's people out there that can assist you. You're not alone!  I know that many of you want turnkey because you're too far away to handle things yourself. But their's companies on BP that can help you from start to finish. Turnkey is typically expensive, but not always. It just depends. But have a realtor go checkout a turnkey property as well. Don't let people take advantage of you! Best of luck to you all.

Megan,

We sell investors properties without basements all the time. They can be a blessing, because you don't have to worry about foundation problems. However, in the south Chicago suburbs, where these homes are located, the rent is less than a house with a basement. No basement leaves little room for storage unless you have a shed or a big garage. It also limits space in the home.  A typical 3 bed and 1-1/2 or 1 bath home without a basement, will bring in anywhere from $900- $1000 a month. That same home with a basement will bring in a minimum of $1000 and go up to $1250. The rent rate depends on if the basement is finished, partially finished or not finished at all. An investor is closing on a house this coming week and we're adding an additional room in the basement for him.  The cost is reasonable and it will bring in a higher rent. We estimate that it will rent for a minimum of $100 more per month, than without the room. Plus, it will increase his rental pool because of the additional space. So at that rate, the investor will have his money back in 25 months. I'd say he spent his money wisely. So I think each type of property has its pluses and minuses. Buy personally, I wouldn't turn down a house without a basement. I hope this helps you. Best of luck to you.

Jody,

You are spot on. Trust is a major factor in investing. I would rather buy a $150k house and work with people that can be trusted, than only spend $50k and work with people I don't know or don't have references for. We hear from investors that don't have a "team" in place and that's dangerous, when investing out of state. That's why we put our own team together. That's why other wholesalers also have teams. It's make it much easier for people to invest. If you have someone who can offer you quality property management, a great realtor for flipping and a quality contractor, you're way ahead of everyone else. These teams allow out of state investors to buy anywhere and it's a much easier process than trying to find a team yourself. Also Jay mentioned war zones etc. Trulia is a decent site to find out what area a home is in. It tells you if it's a low medium or high crime area. So if someone sends you what you think is a low cost home, check Trulia. Also, ask other investors that have properties in the area you're looking at. They can help you too. We have investors that do very well in "lower" income areas. NOT the hood, just lower income. But that's when quality property management comes into play, more than ever. You can buy the best deal out there, but if you have a lousy property manager, you're in for some major headaches! Quality property management is one of the main ingredients to being successful with buy and holds. Best of luck to all.

Eric,

You can put in whatever tenants you want. Keep in mind the key to success in rental properties is having a high quality, experienced property manager. If they put in lousy tenants, you'll have very high expenses and very low profits. 

To Jay and especially turn key buyers,

I never knocked Morris, because I'm not in the business to do so. However, when someone asked me my opinion, I would tell them privately. We work in Northwest Indiana, which is near Chicago. Rarely do we offer investors turn key properties. They're typically over priced and hard to find. But there are some "decent" deals out there.  Just because it's "turn key, " doesn't mean it's a rip off. But you'd better be careful. It's the company that you deal with, that matters. That's the key. Many of you don't have a contractor or a property manager, to complete an out of state deal. That makes it difficult to buy. I get that. But you MUST complete your due diligence! I can't tell you what my company does, or BP will flag me for advertising. But find a company that works with a quality property manager, a quality contractor and go from there. Look for a company that has the tools you'll need as an investor, to be successful. One last thing. A "cool" website and a professionally made website can be made by anyone. Don't let that take you in. Any schmuck can put together a nice looking website. It means NOTHING! The proof is in the investors that have been happy with their purchase and are happy with the company they went through. Ask others before you buy from anyone. Believe it or not, there are quality wholesalers out there. Not many.....but there are some. You just have to find them! Best of luck to all.

Welcome Jan,

You might want to listen to the podcasts and dig deep into the forums, for some great advice. Experienced people are always willing to help the newbies.  BP is by far and away, the best real estate site on the net. If you have any questions about the Indiana market, feel to ask. Best of luck to you.