All Forum Posts by: Allen Fletcher

@Jeff Brower

If the inspector notes that the home has K&T it will cause problems. All of those federal home buyer programs will bring up all sorts of issues if the inspector notes it. This link talks about it:

http://www.fhainfo.com/fhaappraisals2.htm as it states there it is up to the appraiser/inspector even if there are no problems if the inspector says it is an issue you now have an issue getting the FHA loan. For that reason I always remove it. The way I see the less that you leave to chance the better your chances of having a successful sale.

Does that help?

Allen Fletcher

@Justin B.

The best thing to do is remove the knob and tube. You will save a lot of money in the long run and the property will be easier to sell down the road (VA and FHA buyers are not permitted to purchase a home with knob and tube wiring). I would not only look for insurers but talk to contractors to get quotes on updating the wiring. Typically, a complete replacement of wiring won't cost more than $5,000. That $5k can be made back quickly on the your insurance savings over the next few years.

Allen Fletcher

@Troy Durrette

I write my own and then have a lawyer proof them (much cheaper than having a lawyer write it).

Allen Fletcher

@Lee Jackson

I do not want to come across as rude or mean, but I have to say this does not sound like a deal to me. Even if you raise the rents that does not leave enough room for covering vacancy expenses especially considering that the store is empty. That commercial store front can be hard to get rented out and it is over 1/3 of your rental income.

 As for the type of financing the current owner is offering, it sounds like a land contract to me which means you go to a title company and through a normal closing, but the seller holds the note not a bank. These are great ways to get a property financed without affecting your credit and you also have the option of refinancing and cashing the current note holder out.

Be careful on this one the numbers seem borderline, but remember fudging your standards is the way you get into negative cash flows.

Allen Fletcher

@Amanda Williams

The only way you can keep your wholesale deals from being sold to someone else is to get them under contract. Otherwise, there are no legal barriers to another investor to go directly to the seller and work out their own deal.

Allen Fletcher

@Matt Siapin

Do not get a degree that is related to real estate. Take classes that have bearing on real estate while you are going for your non-real estate related degree. I say this so you have a true back up plan. If it turns out that you do not like real estate or that outside conditions (i.e. markets, world events, legislation, etc.) make it difficult to provide for yourself and family then you can fall back on a degree in a field that is hopefully unaffected. For this reason I have a bachelors in Aerospace engineering a masters in finance and am in the process of starting a masters in mechanical engineering. I love engineering and finance and know that at times one or the other is having problems so why not pursue both?

Happy hunting,

Allen Fletcher

@Brandon Monaghan

Have you looked into house hacking? Find a terrible, run-down house in a nice area (in a city like Denver there are plenty) buy it for cheap, renovate it (either before moving in, or while you live there), and if you decide to move sell it. By doing this you are a) building equity by paying the mortgage b) building equity by renovating c) increasing the value of the neighborhood which in turn helps build equity in your house. The key to remember is that you are looking for a deal like any wholesaler or flipper but instead of doing the deal quickly and moving on you are enjoying the fruits of your labors and building a nice amount of cash for when you sell and move. The added bonus to all of this is that you can sell quickly when the time comes because you have a lot of equity. If you purchased the home for $50,000 put $50,000 into it and now it is worth $150,000 then you can sell it for $120,000 in a day and still make $20,000 or you can try to get the full $150,000 and take longer to sell.

The only issue I see is having to sublet your current residence, that would be a pain.

Allen Fletcher

@Troy Durrette

Depending on how you structure your LLC (talk to a lawyer or CPA) all the tax burden is shifted to the partners. Yes you just dissolve the LLC when the deal is complete. Remember the LLC is put in place to provide some protection to your personal assets in case of problems down the road (i.e. title issues, litigation, etc.). This also gives you the benefit of not being tied to this other person if it turns out that they are not a good partner and if they are then you can continue to use the same model and just reuse the operating agreement.

Allen Fletcher

@Trey Brooks

Are you going to flip it or turn it into a rental? I do not see enough value in the home to be able to flip it so unless the house is in pristine condition (minus the roof) you will not make a profit on a flip worth your time. Look at the rents and quality of tenants in the area. Remember that in bad neighborhoods tenants do not take good care of your property and can cause the landlord many headaches.

Good luck,

Allen Fletcher

@Alfredo O.

That date allows you, the seller, to drop the buyer without any repercussions and sell to someone else. The date is there to keep someone from tying up a property and taking forever to actually close. Look at the date as a way to protect you from being stuck paying holding costs on a property if the buyer does not have their act together.

In your situation I would talk to the buyer and find out when they think they can get there financing issues worked out. Once you know that date, you can either extend out that far or cancel the contract and try selling to someone else.

Regards,

Allen Fletcher