All Forum Posts by: Alyssa K.

@Gary Abner

Because the alert I received from Cozy said “fraudulent”, and the tenant was telling me it was due to the insufficient funds, I had her reach out to both her bank and Cozy and ask they provide me with written statements of what had transpired on both ends. The bank confirmed it was due to insufficient funds, and Cozy confirmed it was their error in marking as “fraudulent” rather than “insufficient”. The tenant rescheduled payment, as well as late fees/bounced payment fees, and I have thankfully not had any further issues with Cozy.

https://www.cnn.com/2020/03/15/economy/federal-reserve/index.html

CNN just released the article linked above. All the sudden relators are posting about being able to get 0-0.25% interest rates. The article says the fed are "willing" to go into the negative if necessary. As a relatively new investor (2 SFH rentals, 1 live in flip) I'm curious to hear the thoughts and strategies of seasoned investors regarding all this.

@David David This has been my thought as well. I’m completely confident in my ability to negotiate the transaction just as a 3rd party would. In managing the rentals I act as a detached property manager, and refer to my husband as “owner/landlord” if an issue ever arises. This has seemed to serve us well. I am considering getting my license as well, but every time we look into it, it seems it complicates being able to self manage, and we are hesitant to alter a system that is working well.

My main concern in fsbo is buyer perception. Because our current renters wanted to renew, I offered them first option to buy. They were interested and asked for my relators information, when I explained I wouldn’t be using one if we sell off market but I’d be willing to pay their realtors commission, they dropped off the face of the earth. I have encountered multiple relators who bad mouth owners who fsbo, making it seem as they are doing so because they are trying to hide something or are money hungry. I’m not sure how to navigate around this perception hurdle, but also have a hard time paying 20k in commissions to overcome this one obstacle.

Safety is something I strongly consider each time I do a showing. When renting I require a pre-approval questionnaire to be completed prior to scheduling a showing, which has given me an idea of who I am to meet, and weeds out the people who are just board and like to check out showings. I think this might be perceived as too much up front effort for a buyer however.

We are meeting with my husbands mentor tomorrow to really hash out the details, but this group has always given great insights that would be valuable to include in that discussion.

Thank you for your time and advice!

@Angie Shires Definitely is the question. I’m confident we’d be able to do all those things for ourselves (we’ve bought every property we have off market and are familiar with the process on the buying side). Thankfully once numbers are involved we are both good at detaching emotionally and just looking at the numbers. If we use a realtor, it will be because buyer perception requires it, not because they would be able to negotiate the deal in a way other than I’d be capable of doing. It would be less of an issue for me if we only had to pay for the realtor who represents us. Subscribing to a system that allows a buyer to choose whoever they’d like to represent them and their interests, and for some reason it’s the norm for me (seller) to foot the bill for them choosing to hire someone seems counterintuitive to me. I’m sure this view is largely because I’ve yet to meet a realtor on the buyer side who is a value add. We’ve made the rule for ourselves to only use relators who are also investors, and this has greatly strengthened the value add of a realtor for us when we are buying, however, even still, we’ve found all our deals off market because we always seem find them before a realtor gets the lead to us.

Little backstory...my husband and I bought our first home in 2015. When we started trying for a family in 2016, my husband got into all things bigger pockets, and read/listened to everything he could get his hands on. When we got pregnant, we knew we’d like for me to stay home with the baby if possible, and so we started putting my entire paycheck (I made good money working for a large university) into savings to make sure we could live off just his income. We figured we’d need to save for quite awhile to get our first property, but were still driving for dollars, running numbers, going to tax auctions etc. to see if we could find anything we had a chance of getting. I drank the kool aid around this time, and started reading/listening to podcasts as well.

A week after reading rich dad poor dad I happened to meet a lady in our neighborhood that was getting ready to loose her house for back taxes. She had completely let it go, hadn't mowed the yard in a decade (no HOA rural neighborhood), and we could see the garage was packed to the brim with boxes. We bought it for 20k cash (sfh, slab, 1400 sq ft, 1/2 acre lot, 3/2). Got in and confirmed what we expected, it was a hoarder house; exactly like the tv show. We flipped it on no interest credit cards, did a cash our refi (147k), paid off the cards before interest was due, and put 70k (20%) down on a new live in flip.

Rented out the hoarder house, and decided to also rent out our current house in the same neighborhood (1 story, slab, 4/2, 2000 sq ft). It's now been a year since we moved into the new flip, both rentals are doing good, cash flowing about $400 and $500 each. However, we need more money to finish the current flip, and will most likely keep it our homestead for a few more years because we really like it and the area, and it will give us a great opportunity to HELOC. Our level "comfortability" has also gone up with the kiddo.

Our goal has always been for long term wealth over immediate cash flow, and the plan has been to buy new rentals every 2 years when the previous rentals fall off the w2. My husbands w2 isn’t as strong as it was a year ago, lots of factors with the business that are thankfully just growing pains, but we’ve decided to start flipping to get extra cash in hand to scale more quickly, and eventually allow my husband to leave his w2 job. To get the cash to do this, we are going to sell our old homestead. Because it wasn’t intended to be a rental, while it’s cash flowing well, it’s “too nice” to be a rental and has a lot of features a buyer would appreciate more than a renter, and would be costly to repair if damaged by a renter. We bought it for 185k, put around 30k into it renovating/updating. Current loan is 153k.

We’ve had great success listing and managing our own rentals, however I’m aware selling is another ball game. My husband, with the recommendation of his mentor (mortgage broker), and considering how confident we are in self managing rentals, would like to give selling the property by owner a shot. Comps put the property at 285-295k. While I’m confident I can sell it, it’s a highly desirable area, I worry about the perception of fsbo driving away qualified candidates, managing multiple offers, logistics of coordinating option money etc. I’ve identified a realtor who is also an investor, she wants to list at 290-295, but wants to pay 2500 in staging (which I’m sure would help but don’t feel would be necessary is our rural market, she specializes in Austin TX, our property is a suburb of Austin), and after all is said and done, we’d walk away with the same as if I just “cheap” sold it for 275k. I’m not worried about the investment of time if I were to sell myself, I’m still home with the kiddo and managing our rentals, and my husbands schedule is flexible enough to watch her on short notice if need be for showings etc.

All of this to say, I’m curious of others experiences selling by owner, and potential hurdles/pitfalls I should be aware of. Or for the sake of ease of transaction/paperwork, would you always recommend using a realtor? I fully believe the Relator we would use is worth the money, however if we have the opportunity to walk away with more cash, it would put us leaps and bounds ahead as we begin flipping. As always, I appreciate yalls insights, advice, and experiences.

@Jane S. If you don’t have a signed lease you don’t have a tenant. Sounds like you need better screening. If you are chasing people down, either your system or your price need adjustment; possibly both.

@Nathan G. That makes sense. Ensuring the business is legitimate and he isn’t earning income illegally was my main concern. I’ve asked for tax returns and crickets so far, so I’m sure you’re right on all fronts. Thank you!

Coming back to give an update as many of you have reached out asking how this turned out.

After two weeks of calling every person I could find a number for at Ft. Hood and Ft. Bliss, it became quickly apparent my tenant was never stationed at Ft. Hood (as I was told he was and was stated on his application), and every “supervisor” contact I was given was a buddy rather than a superior. Apparently he had hoped to transfer to Ft. Hood, and thought being obligated to a lease would greaten his chances of having a transfer approved. I was able to get in contact with the CSM for Ft. Bliss, and he promised he would look into it. Both JAG and the Inspector General encouraged me to sue, and began an investigation in all the fraudulent paperwork I received. My lawyer suggested suing for the remainder of the lease term (14k) + fees/legal. As a last ditch effort to avoid having to go to court, I called the tenant and gave them one more opportunity to abide by the terms of their lease before we escalated through the court and the Inspector General. I think someone I got in touch with on base explained to them the severity of their actions, as they agreed to pay their early termination fee and have done a significant about of cleaning (the property was filthy). I’ve called everyone on base I spoke with to let them know the tenant made right by the situation as far as I’m concerned, and am working to get a new tenant as soon as possible to reduce their liability.

Thank you, all of you, for all of your help guidance and advice on this! It’s been a learning experience for me, and my system is forever improved. Thanks again y’all!

@Nathan G. Definitely felt irresponsible to me at first as well. However then realized he’s 25 and making really good money, so I think he’s just feeling like the money will keep flowing, like young people do. Supposedly, based on his pre-approval, his credit is really good. All loans are through the same bank with reasonable interest rates, and he’s never missed a payment (in the 4 months I’ve seen, haven’t run credit yet). Definitely not desperate, so if they don’t work I’m fine to wait for a better option, but I’ve been choosing over qualified tenants who have consistently broken their lease to move on to owning. This particular property I’ve had two people break their lease this year. I’d like to pick someone who will rent a little longer, if possible to do so responsibly. Primarily I’m wondering if renting to someone self employed, what measures do others typically take to ensure the business is legitimate.

Have an applicant that looks good on paper, met them and like them a lot. Young family. He makes good money (hardscape), she’s a stay at home wife with a baby (she’s a permanent resident as of last month). They were honest about her not being on their current lease because she didn’t have papers yet (but does bow); and I always appreciate honesty. They are young, appear to make their money in cash, and are lavish in their spending (lots expensive nights out, $75,000 truck loan😳, 10k personal loan, 10k 4-wheeler loan 😳, $600 for boots etc) BUT despite all that he owns his own company and makes enough where the numbers still work. All that said to ask, what paperwork do you require of an applicant who is self employed? They’ve given me 4 months of bank statements. To verify the business is legitimate, I feel like I should ask for more, but am highly suspicious he is getting paid cash...and not sure if I care/that’s a red flag, when all other indicators point to paying rent wouldn’t be an issue.