All Forum Posts by: Wade G.

Thanks Kyle, I am going to look into it.

Does anyone know if you can rent to a family member that is enrolled in the program?  I know it may sound kinda like a scam but I have a disabled sister that will someday soon need assistance.  I know it's not a good idea to mix business with family but I will need to contribute to supporting her someday anyway.  Problem is she cannot afford the rent.  So just wondering if I could receive rent through the program if she was enrolled in it and if my house was qualified to be in the program.  Sounds fishy I know but I'm trying to figure out a way to help that is a win win.

Well I forgot to add the mortgage payment above.  I have not run the numbers but think it would be around $475 month.

A turn key deal fell into my lap a couple of days ago.  I seem to make poor decisions in life and no longer trust my decision making abilities so I would appreciate any feedback.  Ten years ago I would have jumped on it in a heartbeat but just don't have the same confidence I once did.  House is worth 135k and the lady wants 110k for it.  Other than a few hundred dollars worth of sheet rock work to be done in the garage it is turn key and ready to rent.  Its a standard 3/2/2, 1600 square feet, brick home.  Roof replaced couple of years ago, no foundation issues, no plumbing issues, HVAC 10 years old, solid neighborhood.  It's not a home run but I really have no interest in doing complete gut jobs on houses anymore.  Solid numbers as follows:

Rent - $1,300 maybe $1,400

Down payment - $22,000 plus appraisal and a few hundred more for sheetrock, hoping seller will pay most or all of closing costs, if not this could be a little more

taxes - $3,500 a year

insurance  - $700 year

HOA - $120 year

Flood insurance - $483 year

The rub for me is the 20% down payment. I have it liquid in the bank but it would deplete my reserve funds (which is all my liquid money) to basically zero. In order to qualify for the loan I would have to have around 23k in reserves...plus use my current funds for the down payment. So I really need close to 50K to buy the property. According to the loan officer I can get a line of credit or even a personal loan for about 20k, plus qualify some small funds in an IRA and that would suffice for the reserves. So that is the hang up. I don't like not having reserves and doing this deal would make life very risky for a few months. I can replenish my reserves at a rate of about 2k a month so I would not have the line of credit open very long. I guess I just envision the worst and don't trust life not to knock the holly heck out of me financially while I am at my weakest. Any feedback of any kind is appreciated.

Well don't feel too bad about it.  Seems like anyone who is actively involved in investing will eventually lose a little sum of money due to a bad decision.  Sometimes it's just has to be chalked up to a learning experience.  Last year I made a bad decision and it ended up costing me over 7k after attorney's fees were thrown in.  I trusted but didn't verify.

I don't agree with this practice from wholesalers either.  It is 95% of the reason why I quit dealing with wholesalers.  That and because after doing my own due diligence on some properties I quickly figured out the comps given in the wholesalers package were often cherry picked.  Lower comps purposely left out, or comps from the neighborhood across the street that was newer build.  I found it to be disingenuous.

I don't mean to bash wholesalers.  Guess it's like any business, there are good and bad.  Unfortunately the bad tend to stick out in our minds a little more.

I am bored with SFH. I could sell my houses and have a good chunk of seed money to buy a very small MF or partner up and buy into a larger complex. I'm just wondering if MF investing is a network that you can just enter into once you have enough money or is it like SF investing where you have to work and pound the pavement trying to find a good deal that will work for a rental.

Let me explain why it seems to me that MF is a network.  From what I understand an investor or group of investors finds a complex and due to bad management or various other reasons buys the complex as a value play.  Then management is replaced, deferred maintenance is repaired, rents are raised and the investors later sell to another investor as a yield play or hold and refi out their cash.

Other option is just to buy a complex that is operating well as a yield play.  Either way at some point the complex is sold and the investors move up to a bigger property.  So it seems like a cycle depending on if you want yield plays or value plays you just have to have the money to enter the game...and some knowledge of course.  I'm sort of confused as to why an investor would buy a yield play though when a value play can be so much more lucrative.  I guess over time with inflation and rent increases the value is increased from the yield play purchase too.

I'm not sure if I am conveying my actual question very well.  I can't seem to concentrate tonight.

I would very much like to give his name but there are possible criminal charges coming and I am not sure if I should say a whole lot just yet.  I need to consult with the attorney I am using about that.

I will begin by saying this is embarrassing for me but hopefully my naivety will protect some others.  I have been a member of the Reality Investment Club of Houston (RICH) for many years.  Over the years I have met and been approached by many con artists, swindlers, and other various pieces of human trash.  I was always able to filter those guys out.  While there have been bad members I also met some good ones.  One of the good ones (or so I thought) is an attorney that specialized in real estate.  The past couple of years I hired this attorney to help me or consult me in the area of real estate. 

Well to make a long story short this attorney approached me one day to give me a piece of a real estate deal he was working on.  At the end of it all there was no real estate deal.  It was a scam.  I lost several thousand dollars to this guy.  I went to court, he of course did not show up.  I won my case easily by default.

Recently I have learned that this attorney is still speaking at the RICH club here in Houston.  I have also learned that many other people were swindled by this same guy last year.  What even shocked me more is that apparently board members of the RICH Club know about his actions but they have chosen to turn a blind eye to it.  Since I am a member I attempted to speak with some on the board by email and by phone but no one will return my calls or emails.

For me this has been a huge eye opener.  You cannot trust anyone when it comes to money.  I trusted an established attorney with over 30 years of experience.  I lost several thousand dollars that I will probably never be able to recoup even with a judgment against the guy.  I have never been a smart person but I always thought that common sense picked up the slack for me.  Unfortunately I was blinded by trust.  For all the greatness that this country offers it is also a playground for criminals and victims get screwed all the way around.

Looking back I can see many red flags with this whole scenario and how it went down.  Like I mentioned it is embarrassing now but it has also been a huge learning experience, although a costly one.  Protect your money, protect your assets, don't trust anyone, but in the end its just stupid money anyway.

After reading some recent blog posts on BP this topic has me at a crossroad. On one hand I can see where continually trading up may indeed build ones empire faster...I think. In regards to trading up SFH rentals there are significant costs associated with the trade up...realtor fees, make ready to sell rather than rent again, holding costs during the transaction, depreciation recapture and capital gains if not doing 1031. Of course on the other hand holding the property forever is a case of diminishing returns...eventually a new roof, HVAC, deteriorating galvanized pipes, cracked slabs, make ready between tenants, etc. Another consideration now is these low interest rates. One of my SFH has a 4% fixed 30 year loan. I almost hate to sell that property just because of the loan rate.

To me it does seem that keeping your money moving by purchasing, renting for a year or two and then selling and trading up is the more aggressive and more prosperous route. Now this is what I have done...buy, hold, wait, save and repeat. This is incredibly slow. The saving part is incredibly boring. Working a full time job also only allows for a certain amount of time to do all this. A lot of work and time can go into purchasing just one SFH. All this depends on market cycles of course.

I would like to hear from some of the successful investors and get their opinions.  Since we are in a sellers market (at least in Houston) I am trying to decide if it is time to start trading up.

I am a past member of LU and a current member of RICH club in Houston. I think both BP and LU are great to be involved in. You don't know what you don't know so you just have to keep all avenues of education open. Regarding LU, as a beginner SFH investor I would recommend joining at the $500 level. There is a lot of good information to learn. I cannot speak about their MF levels of membership since I have no MF properties. Now having said that, I think LU is a little disingenuous regarding cash flow. They fail to ever mention anything about vacancies and repairs and the costs involved. Their cash flow is anything after paying PITI. I know they have strategies for not ever having any vacancies or repairs but I have yet to see it work out that way in real life.