All Forum Posts by: Aaron Hollingshead

I was all ready to close on a quad last week when I discovered that the sewer line from the property runs through a neighbor's yard.  City/surveyor indicate no easement on file.  

Any ideas for what to do in this situation?  Do I proceed anyways?  Cancel deal?  Try to get neighbor to sign something and file it with the city?  

Thanks! 

I invest out of state and, like a lot of other people, I've discovered that deals are harder to come by then they were 3-4 years ago.  I want to do a mail campaign but am debating the most effective way to go about it.  

Option 1: Do the campaign, take the calls (I live 14 hours ahead of my market so it might be at all hours of the night), set up walk-throughs for my realtor to take a look and potentially make offers.  Then it's a bit of a strange situation negotiating how to pay him as I wouldn't want to pay a realtor commission, and how much of his time I can use/how quickly he will respond to my requests to see a property, etc.  

Option 2: Partner with said realtor.  I pay for the mail campaign, he takes all calls does all walk-throughs and makes offers, handles everything locally.  I do trust the guy as a stand-up person, but then again I'd be investing my own money with literally no control of what happened after mailing the letters.  

Any thoughts or suggestions for how to move forward? 

@Phillip Shafer sorry about your luck! I am wrapping up a project that had too many unexpected variables to count too and it’s been frustrating watching the money drain from my bank account. On the other hand, sounds like you made major upgrades at a really reasonable price. New roof and interior means probably deferred capex...for my project, I’ve joked with friends that I hate it now but I’m going to love it in 5 years. Hopefully that’s your case too. Good luck!

I admit I was surprised to hear so many people voice that they would shy away from this.  I usually feel like BP members are tilted more towards cashflow than I am, so it was good to get some different perspectives.  

It seems like I got two types of responses...people from markets where they can get that return for cheaper and they said that wasn't a good deal (surprised me) and those from higher end markets who perhaps couldn't imagine renting to somebody who might live in a house for that value.  Interestingly, the house really is a pretty nice little thing.  Neighborhood notwithstanding, it's a place I would have happily lived in as a bachelor or a young couple (lets be honest, as a 21 year old, I wouldn't have cared about the neighborhood either).

The house is currently rented to two people.  The house is in good shape (photos below) but definitely not built in a way that it wouldn't really change much in value.  The houses in that neighborhood, in my opinion, will always be about the same price.  

I live out of state so it would be managed by a rental management company, but it was a good point that I would need to be sure my property manager wanted to take on this property...

Numbers would be like this:

500 income, less 50 property management, 40 taxes, 30 insurance.  So that would be around 380 each month before capex, vacancy, etc.  But regarding vacancies, there just simply aren't many houses in my area for 500 dollars so I really can't see it being difficult to get this rented out.  

In the end, I am still a bit torn to be honest.  It is a hard property to pass up, but I am likely going to pass it up anyways.  This isn't the best use I can think of for 20k cash and I've got a few other irons in the fire.  I considered using my bank who would do a commercial loan at 7.5% (and perhaps I still will) but at this point, I'm leaning towards not moving ahead.  All the help is much appreciated and I would take any more opinions you might have! 

@David Torres, you're right that it takes a team!  I remember seeing you say once that rehabbing in Santa Fe was tough from Albuquerque and I got a good laugh as I was overseeing a rehab in Roswell, NM from the Middle East!  

This is nothing new, but it definitely does take a huge team.  @Aaron Lee

@Aaron Lee Murphy, here are some of the things I set in motion right away.  

Set up an inspection.  I usually put in my offer that offer is not subject to inspection, however, being long distance it's invaluable to have one.  I ask for as many photos as possible.  I also try to coordinate for my handyman(or contractors) as well as my property manager to be at the house during the inspection to get the information I need.  

POA. Some states require a wet ink signature in order to take title. In New Mexico they do, so I always get the POA documents set up right away. Although my newest solution was to set up an LLC and make my signee a Manager so that he can now perform my bank operations as well as sign all documents.

Next, I start lining up things that in my experience can sometimes end up in delays...I get quotes and set start dates for things like hauling trash, yardwork (which I like to do first), roof estimate, hvac, etc all while under contract when possible.  

The final thing I suppose would be to make sure you have the right GCs.  If you don't have one, or a couple in mind then get creative in looking.  I've built my network though asking everybody to recommend someone.  My current team was referred from a family member.  To get my plumber, I called up a property management company and asked for a recommendation.  My roofer was referred by my realtor and the list goes on and on.  

Good luck!

I wanted to get some feedback.  I've been doing flips and buying rentals for three years now.  I currently have 7 rentals and am closing the sale of my 5th flip.  I feel like I've got my flips dialed in but I haven't developed a criteria so to speak for my rentals.  

So here's my question...there's a small 1 bed, 1 bath on the side of town where I'd previously thought I didn't want to buy.  Values are low, crime is higher, etc...the thing is, this house is off market, being offered at 20k and is currently rented for 500 a month.  So I'm a bit torn.  It's hard to walk away from a place that is in good shape (new roof, new service, stable renters) with those numbers.  On the other hand, it's in a part of town that is questionable.  

Will jumping on this versus walking define my criteria?  Thoughts?  

@Mike D'Arrigo

Great advice. I live in Spain and invest in Roswell, NM where my wife is from...the amount of times she saved me from purchasing in questionable areas taught me a great deal. Your realtor might be able to help with this as well but in my opinion that means they have to invest in rentals too.

I invest in a small city that's had a population of 45,000 for the past 50 years.  Appreciation is slow, houses sit for a long time on market and there's not a ton of industry in town.  While this violates lots of conventional wisdom about where to invest, I absolutely LOVE investing there!  

Homes can be purchased off the MLS for a great value, simple things like a quartz counter top can put a house miles ahead of the competition, relationships go a long way and best of all, there's very little competition from other investors. Does anybody share my enthusiasm for these types of cities?

Any chance a roof repair is on the horizon?  If so, you could remove the chimneys and fireplaces while you're at it, potentially opening up some rooms or making the space more flexible.  You could also just paint over them and put something decorative inside as a quick fix if you decide not to fix them.  I prefer not having a fireplace in my rentals myself.  

Two schools of thought from somebody currently in the middle of leveling a house.  One says you just fix it as affordably as possible.  I know people who have poured leveling compound on top of wood floors to level them.  I have also heard of people simply using a jack until the house lifted up then pouring cement right over the jack and calling it a day.  If you make enough calls, you can surely find somebody to do it under the table for a decent deal...no telling what type of quality you'll get (wouldn't advise this option).  Finally, you could also simply get roll on laminate and not worry about it.  

If you decide to try and level the house, there are indeed lots of issues that could arise.  First of all, permitting it could lead to other required repairs.  Also, it's likely that floors have sloped because of a foundation issue or water infiltration.  Not the end of the world necessarily, but something to be aware of.  You might need to consider diverting water from the house or could discover that you have more problems that you bargain for.  

My current project has been a pain and I underestimated the scope of work a bit.  First of all, my contractor failed to mention that he was going to cut a bunch of holes in the floor to get the work done.  Imagine my surprise when I saw several large squares of wood flooring gone one day!  Because of this, the inspector was able to walk around and examine damaged peers, identify problems with the plumbing and point out more areas where we needed to pour cement footings than we had in mind...it's gotten a bit expensive.  

What does this all mean?  I'd recommend that if you buy this place, you should only do it if you can make it work without extensive work required to level the house.  Also, perhaps consider asking for a further price reduction after the inspection based on a quote to level the house.  Good luck!