All Forum Posts by: Frank Bartlo

I used Real Chek America, Inc., based in Michigan. Dunno if they serve your area, but I was satisfied with their screening services. But I got one very bad bit of legal advice, so take any of the legal advice with a 2 ton mound of salt.

It's false to generalize that either the tenants or the landlords are responsible for the condition of the properties. There are "bad apples" among both. But I do think a majority of slums are made that way by filthy tenants whose landlords tolerate them because the rent comes in, and have given up on repairing what the tenants trash.

All it took to see the light -- or rather, the filth blocking the light -- was one lot of tenants who came with a property I bought for less than a year's rent who destroyed every repair I made to the property. So what I did was slum hunt and find them a slumlord.

It was a match made in cockroach heaven: the slumlord got the rent from the state every month without having to lift a finger, the tenants got to live in the filth in which they were comfortable, and I got to fix the place up, put in clean tenants, refi it at a profit of over $15K after rehab and closing costs, and rent it at a positive cash flow until eventually selling it to a first-time buyer. It ended up win-win-win all around. And with that I developed an appreciation for the slumlord's place in the picture, funny as that may look.

That's exactly my original question: how to find the actual rehabbers (which is what I mean by "end buyer": one who actually intends to fix and flip the house).

The obvious things I can do are:

1) Clean up the property and make it as presentable as possible without going to any great expense. That includes some simple "puttering around" repairs. Perhaps invest a couple hundred in a dumpster to throw out anything moldy and nasty. I might even fix up the electrical enough to get power up, since I can do all that, and the cost of materials is next to nil, and that will enable me to run fans to air out the property, power tools to do the "puttering around," etc.

2) If that fails to make it attractive enough for a cash buyer, offer the best terms possible to minimize the rehabber's out-of-pocket expenses and facilitate the easiest deal. One advantage of a land contract would be that it would help the rehabber by seasoning their ownership. Let them assume taxes, ,water, etc., which would be effectively like borrowing the money with zero points, albeit fairly high interest.

One thing I've done is visit the applicant in their current place. It's like a visit to the Ghost of Christmas Future.

The other thing I advise -- especially in rougher areas -- is to be patient. The quality of applicants you get is likely to be in a sort of "bell curve." Wait it out until an applicant comes along that's well above average for the area.

If someone's foolish enough to let you tie up their property with $10 at risk, have at it.

One way to get more "takers" is to do an advertising agreement with the original seller, by which you get paid to market the property upon performance (i.e., finding a buyer).

Thanks, Eric. I've actually gotten to thinking along those lines, but wonder about the legalities.

For example, I could sell on lease/purchase terms, but the property is by no means habitable, so what would be the legalities involving a "lease" of a property that is not used as a dwelling?

I don't see why I couldn't rent out a residential property as an investment, but the law can be pretty twisted and illogical.

The alternative -- a land contract -- would require a larger down payment because taking it back would be about a 5 month process (streamlined a bit by the property being unoccupied, because at least it wouldn't involve an eviction) -- and much more complicated if I do it myself, or expensive (~$400-$500) if I hire an attorney.

The main thing is to make it stand out among the thousands of similar properties glutting the market and catch a rehabber's eye ...

I'm also looking into contractors who might finance someone like me. At least my credit score's pretty good, so it just might be do-able, lack of income documentation be damned.

I have a run-down, but structurally sound and definitely fixable brick 2-family upper/lower which could also be easily be a 4 bedroom/2 bath single-family house in Detroit that I figure needs about 30-35K of repairs (conservatively), and I own free & clear (aside from 1 year of taxes and a water bill).

Last I checked my credit score was 668. I am self-employed and blow out most of my income with deductions, so bank statements would be my only income verification, and even they are pretty complicated, as I use several business and personal accounts for reasons of problem-free depositing and cashing of checks from clients. Also, I had a Ch. 7 bankruptcy discharged not quite 2 years ago (nightmare deal wiped me out then), but credit is spotless since then.

I would need at least some of the rehab money up front. Are there any possibilities out there?

I would also consider a contractor who finances if they can finance someone like me. I could easily manage any reasonable payment amount (i.e., not amortizing or ballooning too quickly).

One thing you can do that helped me get started is "bird dog" and assist an experienced investor in your area. Every investor needs more people to do "legwork" and be their "eyes. ears, and nose" in certain situations.

The sort of investor to look for is someone who's just getting at the point they can barely (or cannot) handle all the legwork without assistance. You can find such people in investors' clubs, by calling "I buy property" ads (that's how I found my "mentor"), etc.

I also echo the advice everyone gave about getting some sort of income (job or business) and building (lots) of credit. Definitely create a business entity go for business credit. The advantages of business as opposed to personal credit (at least here in the States) are too numerous to go into in a little post. I learned that one the hard way.

The only down sides to being a licensed agent are:

1) The fees for maintaining the license, board memberships, MLS fees, etc., etc., etc., etc.. etc....

2) In my state you (technically) cannot sell by owner unless it's your personal residence if you're a salesperson. But this is rarely enforced, and it's not hard to effectively get around this by being licensed under a broker who will not make you pay a commission other than than whatever you co-op if it's your property. Things may be different in your state.

Jon pretty much stole the words right out of my typing finger.

The only thing I might add is that you could consider hiring a home inspector who has experience as a contractor and/or rehabber to get repair cost estimates, rather than a contractor. This avoids the potential conflicts of interest you might have with contractors, so you're more likely to get a straight call as to what really needs to be done.