All Forum Posts by: Marcus Auerbach

My lease option tenant decided that the home was not for her and moved out. She left the home in decent shape, normal wear and tear of a family with dog and kids and after a day of cleaning it was ready to go on the market again. The one thing that I cannot fix is the damage of the counter tops which appear to be from a hot pot. It is not easily possible to remove the piece and even if it would come out I doubt I would be able to get the exact same color. I paid about $8000 for the tops - its a large kitchen. Now the questions is how much should I deduct from her security deposit?

Hi Donovan, 

welcome to BP! I can pretty much just sign under @Dawn Anastasi 's post - I contact every wholesaler I come across: I end up either never hearing from them again or I see some junk deals and then never hear from them again. Don't waste your time building a buyers list - I know it's hard to resist, because it made so much sense when "the guy" explained it *ggg* but trust me, if you get a decent deal under contract: it will sell just like Mark said. Being a wholesaler is not easy and many give up before they succeed - you have to understand comps, be able to ballpark repair cost correctly and ultimately get the sellers signature. It takes a lot of effort to learn all that. However, it can be done and there are some who became very successful and have built a great business. I'll keep my fingers crossed for you and if you come across a SF 130-160 ARV on the far North side of Milwaukee be sure to let me know.

@Bruny Joseph

65% of ARV minus repairs is very low - as long as both numbers are realistic. If you buy for cash flow and are able to make your numbers any deal where you have no or little down payment is worth doing. In other words if you are looking to grow your portfolio there is nothing wrong with 75% or even 80%. But make sure your numbers are not inflated on ARV or too low on repair cost.

@Tyson Luthy @Jeff Semrow, @Mark Elliott and everyone else -  thanks for your comments, you make a strong case here! I change filters in my duplex, but for some reason I thought it would be different in my SFs. I guess I will be buying some filters..

Jeff, would you PM me the contact of the business in Butler?

@Marcia Maynardnow that you say it... but it's positively a pile of dirty filter pieces and not a bat!

Glenn, your comment about self perception made me laugh! You are absolutely right and I can't tell you how many I went from feeling brilliant for closing an unbelievable deal to feeling stupid in a matter of minutes. I think this is what makes REI so interesting. And this is also why I love the BP community: because you guys understand this.

Yesterday I got a call from a tenant telling me that his furnace would make an unusual noise when he turned on the AC the first time (yes, end of June - that's one of the perks of living in Wisconsin). I asked him to turn off the system and I would check it out after work. When he called me he was surprised that I could not hear the noise over the cell phone, which really got me to worry a little. So I got there turned on the unit and indeed it sounded like when you throw tennis shoes in a dryer and the whole system was shaking. Clearly the fan was completley out of balance, so I checked the filter and to my surprise -  there was no filter! What I found in the fan was this:

It looks like the remains of an old dirty filter! Somehow it must have collapsed and got sucked into the fan. Not quite sure how a filter goes from dirty to shredded?? Makes me wonder if anyone has seen this before or if there was something else going on? I suspect the the heat exchanger is full of dirt and will have the unit cleaned  serviced. My tenant was surprised about what I found - and the fact that filters need to be changed. I learned another lesson here - from now on I will replace filters no matter what my tenants tell me. Looks like this is what most of you guys do as well?

@Kristin Whitfield you don't need an LLC to buy a rental property, especially when you get started. Managing your rentals properly is the most important thing, followed by an additional umbrella policy. The only thing an LLC can do is contain the potential damage from a lawsuit to what the LLC owns and thus keeping assets you own outside of the LLC shielded. This comes into play with increasing net worth - if your net worth starts to exceed your umbrella policies limit you make a much more attractive target, than someone who has $17.000 equity in a condo. In any case if you decide to get started with an LLC right away (nothing wrong with that either) then I suggest you spend a little bit of money and have it set up correctley by a real estate attorney. He will also be able to tell you on how to operate the LLC propperly (transfer title of the property, sign contracts, operate independednt bank accounts etc) - if you don't do these things correctley you can potentially make the LLC comletley useless and offering no asset protection at all.

I am not a lawyer and this is not legal advise, just my opinion.

OK Alex I think that came out the wrong way. Did you really mean to say you are only friends with someone as long as they are usefull to you and then ... what? Some of my freinds are in RE, but most are not. Actually I dont have that many really good friends, but I know they are there for me even when I have nothing to offer and that goes both ways. And some of them sometimes tell me to shut up when I won't stop talking about REI and actually remind me that there are a few other things too worth talking about.

@Quan Booker be careful:

my hair stands up when I think about partnering up with a tenant, that has bad idea written all over it. Most likely your neighbor does not have an investor mindset - he wouldn't be renting for 5 years.

The ratio of $850 rent to $160k does not seem right. For  2x850  rent the price seems very high. You can PM me the address, I can tell you what I would pay. If he puts it on the market he will pay 6% in realtor commission, that's 11k. Plus he's not going to get asking price based on 850 rent.

Your student loan should not keep you from qualifying for a personal residence. I assume there are other reasons that ad to the total picture. Your bank owes you an explanation if they turn you down. Don't forget to count both security deposits to your down your down payment.

If you want to buy it and you can confirm its a solid deal make an agreement with him and ask for some time. You could sign an option to purchase. In the meantime get your credit cleaned up and think about how you can earn some extra bucks to get the down payment saved up.

By the way, as an investor your goal is to buy below fair market value and not full retail.

Good luck.

@Account Closed congratulations, that's a tough one and requires a lot of discipline and patience. I see you are from SFO so I understand why you have to, but it would not be my first choice. If I would see any chance to invest within driving distance I would stick to that.

How much would I pay myself for travel for a showing or to meet a contractor? How much would I spend for gas and milage or airfare? How much more do I have to pay for contractors and materials (on a rehab) because I can't easily shop around.

Ok, there are many different ways to deal with this, I assume you invest in newer buildings? I am dealing with homes built in the 50s and 60s, I could never do it from afar.