First Deal Underway!

[James H.]

Okay, so I posted a question on general thoughts for a 12K cash house I was contemplating and got some much appreciated responses. Tonight I am going to hand my deposit to the wholesaler and cross my fingers. This whole process is new, strange, scary and exciting all at the same time. Buying cash from a wholesaler is a whole different animal than working through the MLS with an agent.

When I brought my wife to look at the house last night before committing, there was already some guy there with a for sale sign in Spanish and signing some contracts with a Hispanic family (also there) to sell the house to them! So I called the wholesaler and she said "don't worry about him I just let him look at the house and told him I would sell to him if you decided you didn't want it."

So I already know that this 12K house can be flipped to the neighbors for 18K without doing anything to it. The wholesaler chewed the other investor out for trying to bully me out of the property (apparently not the first time she has dealt with the guy) and we commenced to agree on the deal. With closing costs I will be out 13 to 13.5K. The other guy said we could assign the contract to him and he would pay us 2K. I said I'd think about it (but I have already decided against that).

So here I am soon to be the new owner of a cash home that needs about 3K to get it rent ready. This house was a smoking deal! I know there is no appreciation and tenants could be more challenging, but since I will own it cash I can screen for months and not have nearly the losses as I would with a mortgaged home. My main concern is vacancy vandalism. There are pros and cons to every deal. Even though it is an old 2/1 in a low income neighborhood, I am not worried about exit strategy because I already know the neighbors will pay 50 percent more than I am paying for it right this second without me even touching the property. So there will be others.

There is a 2/1.5 duplex a couple blocks away renting for 600. I think I can get 500 for this one and am going to put it up for 600 to see if it will rent for that!

So, right now, the house needs a little work that I will probably do myself over the weekends and will probably take a couple months to do. I have to do it this way because I will be cash poor after exhausting my funds to acquire the property. Luckily I have the skills to do anything that needs to be done around a house short of HVAC (which this house doesn't have). In the mean time, I want to start generating interest and taking applications and so forth.

Can any of you low income rental landlords out there give me some advice on how to screen tenants, places to get the application and lease forms (the property is in Fort Worth, Texas) where you advertise, how you advertise, what kind of deposit and pet policies? How to reduce the risk of vandalism? Any other strategies that I may not have thought of, are unique, etc? I am in much gratitude for any information or contacts!

Thanks
Brian

[Joshua Dorkin]

Brian - We've written comprehensively about those topics on the BiggerPockets Blog, and it has certainly come up many times here on the forums as well. Use the search here on the forums and on the blog and you'll find a ton of great info to get you going.

Here's a quick start:
- 8 Tips For Screening Out Professional Tenants: Your Worst Nightmare!
- 9 Standards to Help Landlords Approve or Reject Tenants
- 6 Suggestions on How to Avoid Being Dominated by Your Tenants
- The Ultimate Guide to Screening Tenants
- Finding Quality Tenants: Winning Through Intimidation

And don't forget to check out our BiggerPockets/Smartmove Tenant Screening service.