What to Do with a 'Tired Landlord' Who Isn't Motivated or Desperate?

Question

Hi everyone! I'm still a newbie that's learning to crawl in this REI world. In looking to find my 'first deal', I had a conversation with a friend about his condo property.

He purchased this condo in 2007 as a 2nd investment property. 6 years, a marriage, and a move of primary residence to the other side of town later: he's a landlord that likes being a landlord when the condo is rented and finds the 'tenant turnover' phase rather annoying.

He owes 'about' $120K, while the property is worth 'about' $105K (according to him). It's a fairly turnkey property. My friend is neither motivated nor desperate, but I can't shake the feeling that this is a deal worth pursuing.

What would you folks do in my situation?

Joel Owens · Answer

WAIT THEM OUT until they are motivated.

Elizabeth Colegrove · Answer

It doesn't look like its a deal. He has no equity,no interest, and honestly I am not a condo fan.

Ryan Dossey · Answer

I don't like condos in particular due to the HOA fees. If he owed 65-70k you may have a deal if he just "wanted out". A tired landlord is someone who is simply just fed up and wants out. A good time to get properties like that is right after a tenant trashed the place.

Jeremy Shinall · Answer

@Elizabeth Colegrove I'm beginning to be 'not a fan' of condos, as well. Thanks for the feedback!@Brian P. You're right. My buddy is not desperate or troubled enough. He may never 'come around' - equity or not - just like in your story. Thanks for sharing that!@Joel Owens With no equity, I it seems waiting him out would be the only wise choice. Alas, the added complexity of being in an HOA makes me lean towards just leaving this alone. Thanks for reminding me that one doesn't have to be in a rush!Account Closed Doing some 'comp research' is a great idea. Who knows how long ago the owner bothered to check?! I like your suggestion about gleaning landlord experience from him. What a great idea. Thanks!

Account Closed · Answer

As an exercise, do some research into similar properties in the area and confirm whether you think his estimation of value is accurate or not. You can never have enough practice running comps.That being said, it never hurts to put the word out there to your friend that you are looking into real estate investing. You could ask questions and learn from him about landlording (he has some experience). And maybe 2 or 10 years down the line, it could be deal.Consider him someone in your network but no, this isn't a deal right now.

Jeremy Shinall · Answer

@Patrick L. - I was thinking 'subject to' or 'lease option', but I wasn't sure if it was worth taking on the other negatives, like the equity. Thanks for confirming that it's not a good idea.Ryan Dossey - Great point about the HOA fees! I'm willing to bet those would make selling this property harder for anyone. Thanks for the feedback.

Brian Gibbons · Answer

Dont be a Dope in Real Estate Investing1. There is no more appreciation(have this attitude), maybe some depreciation, at least in the next 5-7 years.2. Buy on cash at 80% or lessWhy? It costs 10% to sell fast with an agent, closing costs, and sellers concessions. Then factor in 10% profit, if you are lucky.3. Buy on terms only if the exit strategy makes sense. Buy sub2 or wrap, offer lease option then assign for 3%master lease for cash flow monthlysandwich lease option (only if you have cash reserves)4. Stay away from HOAs, not a Creative Real Estate Investor's Friend

Brian P. · Answer

I wouldn't even ask, he would really need to be in trouble of some kind not visible at the moment. He might just get his satisfaction from being able to tell people he owns a rental condo. even if it isn't the best investment at the moment.I ran into one of these guys once and he had already been under the water once and was gasping for air and was going down for the second time but he refused the life preservers being thrown to him. Finally he was going down for the third time and a family friend offered to take everything over and give him a total out and a few thousand just to make him feel it wasn't a total loss. Her turned her down in front of me, ( I had sold her primary residence a few weeks earlier and she was in escrow) he said we were trying to take advantage of him somehow, after all he said he owned many properties and was very knowledgeable, got into his car and drove off for who knows where. I just said to myself thank god he didn't accept her offer and maybe he really did have enough class not to mess her life up by accepting her offer.

Ryan Dossey · Answer

Some HOA's don't like rentals as well which if you ever are seriously considering a condo you would need to look into. A friend of mine owns a nice condo in STL. His HOA fees are $500.00 a month. OUCH.

Patrick L. · Answer

Not a deal. No equity and he doesn't sound motivated enough to bring a bunch of cash to closing to get rid of it or wreck his credit on a short sale. Unless he's way off on the value then where do you see a deal with those numbers? Even if you took it sub2 with nothing down why would you want to have negative equity in the place?