All Forum Posts by: Steve Hall

Welcome to BP@Joanne Hanson

Laws are different by state, but being a landlord is the same.

You're going to need to start reading forum posts, listening to podcasts, reading books, watching videos, going to REIAs, networking, and educating yourself. You can't just come on BP, and expect experienced landlords to dump everything you need to know in one post.

Learn to use the search feature on BP. There are over 4,000,000 forum posts that have already answered questions like you've just asked here.

If you want to be compliant with taxes, hire an accountant.

If you want to be compliant with laws, hire an attorney.

@Mark Blaz 

Welcome to BP. How does one own 3 properties for 15 years and end up needing to short sale them? Kudos to you for getting the lender(s) to go for that. Sounds like the properties are probably good deals if they're being shorted. Why don't you put them up on BP?

If the buyer does not show up / perform at closing that's a breach of contract... you keep their deposit and re-list the properties. Simple.

A portfolio deal should have had 10%-20% down. That is yours to keep when the buyer fails to perform. If the buyer only put $500 down, then that it is on you. (That is the amount you agreed to keep in the event of default when you entered into the contract.) In most states, buyer's cannot change from a cash offer to a financing offer it the they signed a contract to purchase stating that they were not getting financing. You would have to agree to a change (by adding an addendum), in writing. You also should have had verified proof-of-funds early on in the first week or two of the deal.

Never extend closing. I have had that pulled on me many times. I always deny, and somehow, the buyer always seems to pull it together in time.

Welcome to BP @Dorothy Degrange. Congrats on the divorce!

Wow! Your trial was 9 months ago, and you are still not divorced? What state is this in? Are kids involved? (Are you sure this wasn't just a hearing 9 months ago?)

Since you have not given enough information to answer this question, I am going to assume the following:

• You are still living in the marital home
• Your STBX is living somewhere else
• You  have not yet agreed to let him buy you out
• You have an attorney (although I think assumption might be a stretch)
• You have no children together
• You are unemployed by choice

Since you are not employed and have no income, you have no chance of getting a loan to "buy out" your STBX. DO NOT let him buy you out. This will backfire and you will end up with less than the home is worth. The home must be sold.

Have your attorney file a motion with the court to list the house for sale and let you remain in the house until it is sold, since you have no place to go and he already does. In the motion, ask for the list price to be market value (your agent will get comps). Then suggest a specific listing agent (one that you choose) and stipulate that the price of the home will be reduced by $5,000 every 90 days if not sold.

Lastly, go get a job. You knew the divorce was coming for 9 months, you should have a job by now. The court will see your lack of employment as deliberate in order to get alimony. You will obviously need to find a place to live after the home is sold (or he buys you out). Planning to live on alimony is a bad choice.

@Jason L.

Don't change the locks. Don't threaten to keep the security deposit. Instead:

• Send written notice via certified USPS of breach of lease. You should also send one not certified if you do not receive USPS confirmation.
• Tape a notice to the tenants door using 2" blue painters tape. The notice should be on bright yellow or pink paper. Take a photo of it.
• Call the number you have on file for the tenant and leave a voicemail if they do not answer. (Read the notice word for word.)
• If you don't hear from her at all, schedule a lock smith to change the locks at 8 am on June 1st, and be prepared to have some work to do.
• If rent is not paid on time for May, begin the eviction process the next day!
• You may also repeat these steps 2 or 3 times - but no more than 3!
• Be sure you follow Florida Law with regard to keeping her security deposit. You have several steps that you need to take.

Consider requiring First, Last & Security for new tenants. 

@Jon Gorman An office building is only worth something if it's occupied. If you could get "her" to sign a lease on 3 units BEFORE you buy it, that is the way to go. Then I would do some quick cosmetic improvements, rent the other office, and turn around and SELL the whole building, advertising it as 100% occupied with a nice big cap rate and 5+ years to go on the leases. Very desirable!

Take the profit and go buy a bigger office building (that could handle 15-20) units, or an apartment building if you don't mind residential tenants.

BTW, she does not want 10% equity, otherwise she would put 20% down and buy the building herself. Also, equity or no equity, if she goes out of business, she moves out early. A 10% stake does not stop her business from going under.

Last but not least, it seems like you have a lot riding on this one tenant. DO NOT buy this building hoping that you can get her to sign a 5 year lease with you at 25% above market rate.

@Shawn Hershberger

There could be LOTS of things you are missing! Based on how little you've told us, my guess is that you've probably missed a lot.

You didn't tell us anything about expenses. Is that an 8.8% cap for self managed? Did you run the numbers? Do you have a BP report for us? How much is the water/sewer? Do you have a T-12 P&L and rent roll? Why are 2 units vacant? How long have they been vacant? And why do you think those 2 could get $55 more per month? Did you read the 4 leases? Are you paying cash? Is the property in a flood zone? If not what are you figuring for debt service? What's the ARV? What's the cash flow?

@Julia Rockwell

Just look at ALL of the negative factors that led you to this place:

• "felt some pressure since my apartment lease was expiring"
• Want to be near downtown and nothing on MLS near downtown
• Competition with all-cash buyers
• Competition with someone looking at it at the same time
• Not given "much time to think about" it
• "I definitely felt a lot of pressure"
• "swayed by the location"
• "fear of losing"

All of these things are common stressors which trigger a fight or flight response in your amygdala. You clearly chose to FIGHT! Your thalamus also sends a signal to your cortex which was supposed to override the fight response. Now, thinking back on it, your cortex is going "hold on, maybe this isn't such a good deal".

This is all good. It shows your brain is functioning properly now, and with repeated offers and purchases, your cortex will remember past experiences and now it will be able to compare your 2nd, 3rd and 4th purchases against previous ones. Next time, your cortex will take over sooner and tell you "flight" is the better option. You never want to fight for real estate.

Hope that helps!

@Julia Rockwell

You are a brave woman asking me to criticize your purchase. It's great that are willing to take the criticize and learn from it. I appreciate you respecting my time as well.

When you are doing your due diligence on an investment property, you should ALWAYS limit your own exposure to unnecessary costs and liability. 

Here are just a few of the ways you've opened yourself up to unnecessary costs and liability:

1) You made an offer on an investment property in your name. If you back out, you will likely get sued personally, and you could very well lose, since you signed a contract. You will have to spend money to defend yourself either way.

2) You paid people BEFORE closing. The only person who should be paid before closing are inspectors/structural engineers and professional services: attorneys, CPAs, Insurance, etc.

3) You paid a Realtor! Never do that again! And fire that person. He/she did NOTHING for you except give you bad advice and steal your money.

4) You signed a "termination contract". Do you even know what you signed? Have you read the entire contract? Have you even read the entire purchase agreement?

5) This is pre-foreclosure. Why didn't you let it go to auction? Every other investor knows about the foundation issue, and would have discounted it 20-30% at auction. You could have picked this $185k property up for $130k-$148k.

6) There is a reason that YOU got this property, and it isn't because you know where to shop.

7) Being new, you should have presented all of this information above to the BP community and let them pick it apart BEFORE you were in it for $11,000+

8) Lastly, have you talked to an attorney yet?

Hopefully your next deal will be better knowing all of this...

@Julia Rockwell

If your numbers are well researched and accurate, why are you hesitating? The crack in the foundation has probably been there since 1955! Don't let your fear stop you from pulling the trigger.

Have you made mistakes on this deal already. You bet. Will you make more? No doubt.

It seems like a good learning property... Go for it Julia! You can do this...

@Sarah M. The banks will not approve you for more than $275,000 because you only have $40,000 in savings and your DTI is too high. (You admitted to paying $5,000 per month in rent!)

You have a few options:

• Rent a $1,000 per month place to lower you DTI while increasing savings up to $75k-$100k. Buy a home next year... (Also do not fund a Roth this year, and ask a friend or relative for "gift money" now.)
• Buy a house for less than $275,000!
• Find a partner, buy a commercial building, and you can both run your business from there. (Both leasing from your own business.)