All Forum Posts by: Joe Butcher

Thanks everybody.

Thanks @Colleen F. Where is it you are getting your paper application from? I've come across a couple but would like to hear what others are doing.

Thanks again.

I am posting an ad for my rental via Postlets. I know there are some things you cannot say in a rental ad....things that would indicate discrimination, etc.

But the things I wanted to put in the ad: Must make 3x the rent (gross salary) No prior evictions or felony convictions....these are all ok, correct?

I just don't want prospective tenants paying for a tenant screening if they aren't going to qualify.

I plan on using SmartMove.....do the tenants also need to fill out an application with me as well?

Welcome! My mom lives in Spring Hill.

@Brian L. really nailed it. It's about having a conversation. Sellers have to "know, like and trust" you to sell you their home.

Scripts and lists of questions often sound like scripts and lists. Not like a normal conversation. They can be a good starting point though.

@Account Closed are offering some sage advice here about the various "flavors" of "distress".

I found my own property by marketing for it. It was a great experience and I learned way more than I could have imagined. A realtor would have never found this property. It also taught me how to negotiate, and how to solve someones "distress" problem where we are actually both walking away VERY happy. (Even after the closing she called to say thanks for getting that house out of her life and 17K in her pocket)

Lets look at the scenario you mention. You said you want to buy a distressed property through a realtor, then rehab it yourself and turn it into a rental.

Most distressed properties on the MLS are gone quickly if they are really a deal at all, so unless your realtor has some sweet inside info (pending divorce, bankruptcy, etc) you may not have much luck there. Not only that but there's a hundred other guys trying to do the same thing.

Rehabbing it yourself is expensive in that it eats up your time, you'll still have to hire a helper who may or may not flake out on you or steal all your tools and unless you have a lot of experience it's gonna look amateur.

You may not be able to foresee problems that an experienced GC would spot a mile away.

I'm no stranger to swinging a hammer, trust me, but on this property I just acquired I have a GC handling the whole thing. I'm in a hard money loan and I want out of it ASAP. It would probably take me 6 months to do all the work myself. This guy will finish it in 2 weeks. While his crew is busting their *** I will be in Florida at a music festival watching the Allman Brothers Band and partying with a bunch of hippies!

Ha!!

I don't know if I would say you're dreaming....you have a dream. Now adjust it according to what you are learning. Fine tune it. Make a plan....a real plan.. and take action on it. Run your plan by some experienced investors.

Keep moving forward.

While it would be nice to find a house that just needed some cosmetic updates for wayyy below market value, thats just not happening here in DFW and surrounding areas. The market here is pretty hot and those houses are going for very close to retail.

When I think of distressed, I am thinking "wouldn't qualify for conventional financing" because of foundation issues, roof, etc. The owner can't afford to make the repairs and/or keeps putting it off and of course time has exacerbated the problem. That's why it could be an opportunity to get the property at a discount.

If it was a total rebuild or gut job the rehab costs may be too high to make sense as a rental, but that would depend on purchase price.

I would think more about the numbers....if it's going to be a rental, it would be nice to be ALL IN (purchase price, rehab and other costs) at 75% of ARV.

I'm sure others will chime in and correct me if I'm wrong.

@Bill Gulley Thank you. Sorry for the misunderstanding.

@Bill Gulley

You said "Joe, reread what you posted, as I read it, you painted the picture of raising rents on what pretty much sounded like lower income tenants."

I re-read what I posted. I never alluded to raising rents.

Are you possibly under the impression that I am asking if I can charge 3X the going rent?

Thats not what I'm asking. One of the things I see here on BP a lot in reference to tenant screening is that the potential tenant must make 3X the rent (gross income) in order to qualify. I am asking if that rule still applies in lower income areas and I think @Steve Babiak and others answered that question.

As Steve said, I think giving some leeway on the 3X rule seems fair if they don't have excessive debt and have a history of paying similar rent.

I do know this: If my rent is that far out of line I seriously doubt anyone would rent it.

@Michele Fischer $395-525 is very cheap rent. Your area is probably a lot different than mine, but in Dallas if a 3/2/2 brick ranch rents for $395......RUN!!!!! : ) I am a bit jealous as I imagine the 2% rule works in your area, which it doesn't here.

@Bill Gulley

The 1K is based on comps pulled by a realtor, rentometer, Zillow and Craigslist. Houses of similar size are going for $950-1100. There is a larger 2 story a few blocks away currently rented at $1200 for the last two years. The ones that are going for $950 were dated and gross. I think the level of rehab in mine is nicer than the ones that were $1100.

It's a working class neighborhood. Not a war zone. The people there are not destitute. The houses in this little pocket are all 3-4 bedroom, 2 bath, 2 car garage. Average about 1600 sq/ft.

You said "You might get a grand from someone making 24K".....I didn't suggest that and I'd be very interested as to where you got those numbers from. 3X the rent would be 36K......thats what I'm asking about.

With all due respect: You have a right to your opinion. You don't have the right to invent a narrative about a total stranger.

@Bryce Y. The title of the thread says "lower income" not "low income." Maybe an error on my part (subtle distinction?), but I know the neighborhood quite well. The next subdivision south from mine is a different story. The subdivision just north (closer to I-30) is somewhat up and coming....I'm hoping that eventually spreads my way, as the houses have potential.

Cheers!