All Forum Posts by: Walt Payne

@Judd Campbell Lowball the offer. Big time. I would offer no more than $18K. Then walk away if it is countered. If it is still available in 60 days, offer $2K less.

Most will feel it is too much work, so you will probably not have competition. Since you know how to deal with it, that is the kind of job where you can make great profits. If you don't get it, consider the retch factor and what you avoided. If you do get it for that price, use the profit as a balancing factor for the disgusting conditions.

And also, use oil based Kilz throughout as your primer. It works miracles.

@Frank Coppola I would be more concerned with the construction techniques than materials, those you can find information about online. Knowing the what, how, and if of the work is harder to learn. Your local big box store has Saturday classes that would provide a start if you don't have that experience. That and maybe offer to work part time as a laborer for a contractor in exchange for training.

@Jon Holdman I agree that a personal residence in general tends to be a bad investment because of the decisions we make about our homes. But if you buy with the idea that that residence will be an investment, and that you will compromise your long term goals for short term gain it need not be that way. You could live in a "good rental property" that you own while building equity and saving more money. Especially if it is a property, as they say, that needs TLC. Which again, has to be done with a business perspective and not going too far on renovation costs.

And yes, that is dependent on the market and whether that works for you. Especially if you have kids, or plan to have them before moving out. But I think that buying a property to live in as an investment can work if it is purchased with that idea in mind, and knowing and accepting the compromises involved.

It seems to me there are two scenarios that one could plan for, each requiring dissimilar tactics. High inflation, which means having a high leverage ratio makes sense since you would then pay the mortgages off with cheap dollars. But ... if the economy tanks bad enough, you might have a hard time finding renters/buyers who can pay the bills, therefore so do you. In that case having minimal leverage means more security. How do you protect yourself from both possibilities?

I'm not sure what the answer is, and obviously the supposed economic gurus don't either or we wouldn't be in this mess. I do know that if I spent as much money over my income as the government has done that I would be in jail for fraud.

@Josh L. HDR is usually done using software. You take 3-7 pictures at varying exposures. Some capture the light areas, some the dark. The software then merges them together. Some Smartphone software does this for you. Newer (hence more expensive) cameras can do this for you with higher quality. Smartphones can do a quite adequate job for what you want. Not professional photographer quality, but most people would not see the differences online.

I mentioned HDR because you wanted to show interior features while showing the view. This usually involves a big difference in the amount of light between the interior and exterior parts of the picture.

Also, the lens used will effect what you can fit in the picture. And to get this kind of shot right really requires a tripod. In other words, if you don't have or want to get a smartphone, put a listing on Craigslist for an amateur photographer for $50 (to be paid after you accept the pics) and save yourself a lot of hassles. There is more to what you want to do than just buying a camera.

@Chris Frydenlund They are not really rules, they are guidelines.

You are also using them wrong. The 50% rule says that over time you will pay approximately 50% of rent toward upkeep. But the mortgage principle and interest comes out of the other 50% ( but taxes and insurance are part of the upkeep).

The 2% rule says you want to try to get close to a rent that is 2% of the total money invested (not just the purchase price itself). Again, more a guideline and not a rule. But it is not used to set the rent, rather the other way around. It is a very rough, first test for screening properties to see if it might be a good deal. If it passes that test, then you figure out the real numbers so you can decide.

But you have to consider other factors, also. How old is the roof, HVAC, plumbing, what kind of neighborhood is it, what kind of tenants will that property attract? Those are all things that can effect how safe it is to stretch these guidelines. And even if it passes that test, will it involve a lot of time and work to maintain and/or manage.

If none of the properties match, it may be a market where they don' t work. Or it may be that you are not looking in the right places, Or in the right way.

@Josh L. I happen to be an amateur photographer. What you want to do involves what is called HDR (high dynamic range) photography. The easiest way to do that is with a smartphone and an inexpensive app. I could do it better with my equipment, but most people don't have the money or time to go that way.

@Bill Gulley I don't think it takes a really hot market for that to be the case. In reality a newbie doesn't belong in a rehab situation alone at any time. But the TV shows have glorified "flips" and now everybody thinks they can do them and make lots of easy money. If you don't have experience it is a risky area to play in without lots of padding to the numbers, and hopefully a good mentor. For that matter it is a risky area to play in if you DO have experience, just less so. That is why we make sure we have several exit strategies per purchase.

Even in a normal market, it is a definite advantage to have the experience to be able to make the offer without contingencies. Especially for REOs, because banks see contingencies for what they are ... an easy way to back out of the deal.

@Jordan Thibodeau No, when you use them, they also provide tenant insurance. No problems. Clean evictions with no bodies found. ;)

@Ryan Hobbs I agree with the no votes. But ... Try to set up your work schedule so you can do a few random visits. Especially early in the project. Let them know you are watching, at least until you know they can be trusted