All Forum Posts by: Andy D.

I don't even understand how someone could consider this a red flag? Those who pay in advance are typically the ones losing out. ;-) You're not giving him anything prior to the day of handing him the keys to the place. This is the time that I as a tenant would hand you the rent - if you give me the keys. Why do you think he should trust you more than you trust him? He will have already given you an amount worth one month's rent for you to hold - without anything tangible for him at that point. Jm5c.

Oh, really? I guess you then have also tried getting the house without paying the previous owner? No? Ah, bummer. ;-)

Tenant is an idiot and needs to be educated. Has he given reason why he can't pay? Maybe there is room for working something out, but since you don't seem to "like" the tenant anyway, why bother. In any case, you say its m2m. So where's the problem? Evict him to try to get the outstanding rent and start looking for a new tenant for that unit, plus of course the one currently already vacant. Simple as that, I would say. Good luck!

Not related to lending but: maybe I've watched too much HGTV LOL but what you describe about the place makes me wonder if there is something seriously wrong with it. It's comparatively cheap, meaning a rehabber (sp?) wouldn't really have any issue picking it up paying cash, doing some work on it and flip it for a more or less decent profit. So why haven't they? Maybe because they had their guy do a thorough walk-through and/or otherwise found out about serious issues? Foundation? Termite damage? At least lead and asbestos should not be in issue as it's only 10 years old (is it really...?). Anything unpermitted that would need to be torn down? Etc.

I would look into this as "only 5k worth of repairs" doesn't sound right in the overall picture described. But maybe I'm too pessimistic. Damnit, Tarek! LOL again

At least I don't understand what you are saying, sorry. On the one hand you say that you are approved by the lender for 900k on a 4-plex. Getting pre-qualified is usually for a specific object. Where did that go? Did someone else get it?

So why are you then suddenly talking about an SFH for 700k? Multi and SFH are completely different animals (especially when the SFH is only to be used as your primary) - do you know what you actually want? Investment/business or primary residence only?

Furthermore, you are talking about FHA. That needs to be owner-occupied. So when you look at SFH you obviously are not looking at this as an investment object in the sense of becoming a landlord. Then the parameters are, as far as I am concerned, entirely different with respect to purchasing something.

My personal opinion (owning places in SD myself): that market is too hot to go in now via public listings, especially if you don't want to rehab. And especially if this is your first deal. Go somewhere else, find a cheaper place and start out reasonably. This is for a business/investment object. If you need to live there yourself then, heck, I would check out La Mesa or even El Cajon. If you can stand it...

Sometimes I think SD wants to be as cool and hip as SF (when looking at real estate prices), just without the wind and fog. Nah, just not gonna happen... That city is way too expensive as far as I am concerned. Borderline ridiculous, really. I, for one, am slowly pulling out. ;-)

@Mindy Jensen This is good info! Didn't know about the appraisal being "sticky" that long. One time I tried to get a condo eligible for FHA but eventually it was soled conventionally (HOA issues, don't ask...). Seems like a good thing now that you mention this...

Yeah, that (@Luka).

@Erin K. Indeed they would. But they typically don't leverage. And if they do finance a flip with hard money or whatever then it would really be bad luck if they were caught by this while in the process of flipping and actually losing money. And if so then they probably ran their numbers a bit too tight to actually make a decent profit even in the "normal" course of things.

@Braden Coast Not my experience during the last crash. It's never a "real-estate only" crash. Businesses run into trouble, people lose jobs, get thrown out their houses because they can't pay the mortgage anymore, etc. etc. These people cannot buy houses. They lost theirs. They need to rent. That's exactly what happened 2007/8 (and later still!). While in a tough market it will most likely be more difficult to raise rent, I have not experienced much of a decline in rent in such a market either. But that most likely also depends on the location. Heck, it's real estate! Therefore: location, location... ;-)

I really don't see where this is coming from and why a highly leveraged place would be an issue for an investor (!) in such a downturn. This is, of course, assuming that the cash-flow is good, i.e. DSCR is decent. Maybe someone has some pointers.

Well, landlord owns the place but cleaning up a mess is typically the tenant's responsibility. If tenant does not do that, tenant can be charged. Since tenant is no longer available to be charged, estate could be charged (I guess) or funds taken out of security deposit for that purpose. But not relevant here, since someone came to clean it up.

Then again, Bobby writes "after cleanup...small amount is left": so someone came to clean up (for free) and you still had clean-up costs? Ok...

One might also want to factor in that the kids are now dealing with the loss of a (presumably...) loved one.

Strictly speaking, I would guess that legally the funds (that clearly belonged to the tenant) now belong to the estate - which, typically, goes to the descendants as beneficiaries, once settled. But that's not a given. In theory, therefore, if you give the deposit to someone who is not the executor/administrator of the (not yet settled) estate the executor/admin could demand that the funds are paid to them. Whether they would need to go after the recipient of the fund or after you as the one responsible for the payout is a legal question that would need to be answered by a qualified CA professional. I will not comment on that.

Personally, for a small amount, I would not make any fuss and just hand it out to the kids, who you know are the kids, and get a proper receipt from them. Unless, of course, you are aware that there is an executor other than the kids. But that's getting legalistic again...

Thanks for the clarification Chris!