All Forum Posts by: Vincent Plant

I currently have a deal locked up under contract using a 20% down conventional loan. 

Single fam 3 bed 1 bath. I got it at full price ($75K) without seeing it first. The property is tenant occupied by a tenant who was not being cooperative with showings so based on the numbers and comps decided to move forward with the offer without seeing it to beat out all the competition, which I did. 

Comps on the street are going for about $120-$130K if they are in good shape. I also have considered renting it which would generate an excellent cash flow around $6-$800/month.

I elected a home inspection in my offer to ensure I could pull the plug if need be if it wasn't up to par when I went through. I went through and conducted a home inspection and it was in really bad shape. Pretty much every aspect of the property is in need of repair/replacement to the point where I am amazed that the tenant and her family are even living there (its section 8). 

So, I took that report and ran with it and I basically got the sellers to drop the price down to $55k. Even with the $20k reduction I am hesitant to move forward. I have never taken on a project like this and I am not so knowledgeable with estimating rehab costs. I have the cash to make repairs but I don't know how much it will cost me to either get it in rental condition, or better yet rehabbed to flip. 

The house needs:

• Complete roof, soffit, gutter, downspout replacement.
• Basically all plumbing is shot. 
• Outdated HVAC.
• Sub flooring under toilet and kitchen sink is rotted from leaking.
• All windows (6) are original and need to be replaced.
• Driveway is crumbled.
• Kitchen cabinets and counter tops are in really bad shape. 
• Shower and bathroom sink defective and in bad shape.
• All carpeting replacement (or refinish hardwood underneath. 
• Drop ceiling in basement needs redone.
• Whole interior needs painting/patching. 
• All doors need replacing. 
• All vent covers and light fixtures.

I have a ton of pictures but would love to hear any insight. 

Thank you everyone for all the responses. Sure helpful!

I have a young family in my property renting it out currently. It’s a low income home so I don’t expect them to be perfect however I see now that collecting the rent is slowly becoming an issue each month. In the past she was paying it half on the 15th, the rest on the last day. Then I noticed she would send it all on the last day. Then she would send it in the 5 day grace period, and now she sent $900 out of $1,150 and said the rest will be late because things are tight. In our lease we have a $125 late fee if it’s late but I’m worried that imposing that fee will cause them to fall even further behind. How would you handle this? Do you come off as understanding and say this is your one free pass to be late, or put your foot down and slam them with the fee? This is the first time they are officially late on he rent, but we are only about 5 months into the lease.

@Patti Robertson Thank you so much for the detailed response it helps a lot. When the listing agent was telling me about the property initially over the phone she said she “believes” it rents for around $1,250. Then after I submitted the offer and pressed a bit about them sending a lease she sent over the one page section 8 agreement that showed a rent of $1,019. So clearly she lied or your right, she doesn’t have a clue. My biggest concern is taking the deal and then being stuck with the rent at $1,019. It just doesn’t cut it. You mentioned if I can show comps, AND if she can afford it, they will raise the rent up to market value. Well what if she can’t afford it?? On the agreement they sent, it lists that it’s effective until 7/1/19. So do I have to wait until that agreement expires before making any changes? And, if I’m not able to raise the rent and she is compliant am I able to remove her just on the fact that I want to get more for the property?

I'm contemplating buying a property as a rental income property. The property is listed for a great price and was interested right away. I went to schedule a showing (I'm a Realtor) however the listing agent informed me that the property is occupied by a section 8 tenant who is being combative and not allowing anyone in the house because she's worried she will be kicked out if it sells. 

In this market, with a price like that I didn't want to risk losing it. The listing agent told me it rents for $1,250/m and I did a drive by and decided to go ahead and put in an offer for full price with a 15 day inspection contingency, as well as a requirement to provide a lease to give me an opportunity to pull the plug if I saw it was banged up too bad. 

The listing agent verbally accepted my offer but didn't feel right having the seller sign it without giving other agents an opportunity to schedule a showing. She also sent me a one page agreement with section 8 and the seller stating the property rents for $1,019 and claimed there is no traditional lease between the seller and tenant. 

Here we are about 5 days later and this tenant has still not allowed anyone in the house (owner claims to not have a key). I have no lease from the seller, no idea what condition the interior of the property is in, and no idea really about what type of control I will have over this tenant once I take possession (Can I raise her rent, can I have her removed, etc.). 

I know that this place can rent for probably $1,300-$1,400 and will be a cash cow if I am able to get the right tenant, but is it worth it?   

Ok, when acquiring a property using a hard money lender how is it actually structured? I understand its typically a short term high interest loan but how it is actually arranged? 

I assume it works like a personal loan? For example the loan is written between lender and borrower, I acquire the funds before making the purchase and then purchase the home as I would in a cash deal? 

Or is the loan actually used to directly acquire the home? In this case the lender would be listed on the offer and is directly involved in the transaction up until closing? 

What’s best way to find/approach/acquire funding from a hard money lender when you have never flipped a home?

I currently own a rental income property. It’s worth about $75k and I owe $50k on it. It is currently cash flowing $650/month. Currently, my goal is to add as much passive income as possible so naturally I am saving for another rental property. I’m just thinking, what if instead of buying another property, I just splurge and payoff the $50k mortgage and instantly raise my cash flow to $1,150 (owning the property outright). Then, I would plan to use a cash out refinance to pull the money out of the house and dump it on another. Is this a good idea? Or should I just save and buy a new property the traditional way?

Hello all, What are your thoughts on this: Our primary residence is currently worth approx $250k. We currently owe $170k. We are looking to explore the option of using a home equity line of credit to fund our next real estate flip purchase. Only problem, I’m not really sure how the HELOC works. Can someone do us a favor and summarize how this procedure would look from start to finish, and using the #s provided if this statetgy is even worth it?

@Steve DellaPelle Gotcha, So just so I’m understanding this. How does it all look when everything is said and done? I’ve refinanced my $50k mortgage and I have about $10k remaining after closing costs. So I continue to pay tHE MoRTGAGE AS usUAL? How is this $10k distributed? What would be the typical terms that I have to pay it back?