All Forum Posts by: Bill B.

Make sure you have your cash already lined up. 10% EMD and 28 days to close.

You’ll lose all the reviews/rankings when you buy and make a new listing. It will have no advantage over the house across the street. So don’t pay more than any random house. 

Find out what specifically is included in the sale. I would assume the furniture will all go away (making taking over the Airbnb harder.) but I have been to auction homes where they sold EVERYTHING! Recessed lights, counter tops, garage door openers, water heaters, hvac units. (I got a Tesla home charger for $50 after i was told to use a sawzall to cut the wiring.).  They were losing the home to foreclosure and just held a regular “auction” for everything that could be removed. 

You’ll probably have to discount the fractions 25-50% off their share of the property’s value. (Owning 1/4th of a $500k property is worth MUCH less than $125k, maybe $60-$80k?). Even then you’d have to guarantee a minimum buy back price and time frame. 

Otherwise you’re just selling a bond with no promised return that can’t be easily sold for any real amount. (As you’re discovering.) A bond that could have capital calls for a new roof or hvac system that are larger than the rent proceeds. Or you move a relative in to the property for less than market rent? What if you want to sell, I assume you write in the contract that they don’t get a vote in the plan  

You’re probably better off either selling the property or just getting a mortgage/heloc/private money loan. I mean that’s what you’re really offering. Income in exchange for a claim on a portion of the property’s value. There’s no reason to take the haircut of the reduced selling price. 

@Todd Goedeke. I’m Sorry. The OP forgot to say his 401k was a Roth 401k.

If it is then the only downside to the Roth would be the more expensive financing (as it has to be non-recourse and not to a person.). And the fact it can NEVER be used personally, they can’t  provide any services, or allow close relatives to use it, or borrow against it to spend outside of retirement. 

I guess if you have zero other money to use and you planned to only buy properties you would never want to sue personally or allow close relatives to use. And you were confident you could still retire if this money was lost. Then maybe it’s ok.  

Personally I think real estate outside of retirement accounts is as good or better than any investment inside a retirement account. And that means you can exceed the “normal” limits on how much you can invest in a tax advantaged way. It can be used to help close relatives, it can be personally enjoyed, it could become an eventual retirement dream home, and it can be borrowed against tax free. Not to mention the stepped up basis at death which makes it 100x better than a non-Roth account. 

I can’t even imagine not supplying appliances. All that extra wear and tear on your property when they move appliances in and out to save what? $500 every 4-5 years? And that’s assuming you don’t get one extra $1 in rent and they dont screw up attacking one appliance and cause water damage day 1 they don’t tell you about until moving out. 

You have a $200,000(?) property making $200/mo and you’re wondering if you should buy $2,000 worth of appliance to make $100/mo? It sounds like you’d be better off starting an appliance rental business, make 50x more money. 

Find a place like RC willey where they’ll give you a 5 year extended warranty (6 years total) for 10% of the purchase price. ($200 for 5 years or $40/yr in your case.) They still won’t break and you will have wasted your money. But it will lay bare the lie that appliances break all the time. (They are literally betting its way less than 10% of the time.) But over a 6 year period you’ll have invested $2,200. If you get $50/mo you’ll be way ahead before the reduced wear and tear and decreased vacancy even if they ALL die after 6 years and 1 day.)

If the forums are a place to ask and answer questions/peoblems. It will seem like 90% of the discussion is landlording. Because there are 100 or 1000 more situations that arise. 

Begining wholesalers ask every week. Where to I find buyers, where do I find sellers, what market shoudl I start in. Experienced wholesalers are just head down grinding and even if they felt like answering those questions, they already have 100 times before 

Landlords have questions like is this my responsibility, is this worn out, shoudl I allow this, how do I prevent that, is this a good deal (too many times.), wher shoudl I invest (too many times), which accounting software should I use (waaaaay too many times.) my inspector found this, how do I raise rent, how do I get this tenant out of my California property, etc etc.  

Try using a PM…

Better screening, better tenant management, better/established policies, less stress/work for you. Tenants tend to feel free to walk over single contact landlords than PM companies. 

Ps. You might find they pay for themselves with higher rent or shorter vacancies. 

You’re saying they are “low income”. This means you are going to eat pretty much all damage they cause. I HOPE YOU are are getting this money.(The PM isn’t keeping 1/2 or all of it.) Because you’re probably still going to lose money in the deal. 

Ps. Many/most of the problem tenants are going to “lie” and say they are ESAs so you have to waive the pet fees and pet rent. So there is that. 

I hate AI replies as much as anyone. But thsi is more of a Google results post. Of that makes it any better. :-). 

Mr. Google says 1/2% is normal, 5% might be common, 12% is the upper limit of acceptable and 17% is a cause for concern. I assume your inspector has inspected other beachfront condos since he purposely brought the moisture tester. What’s his average result?

GOOGLE; 

If you've detected a high moisture reading in your drywall, especially in a beachfront property, it's crucial to address it promptly to prevent further damage and potential mold growth. Here's what you should know and what to do:What is Considered a High Moisture Reading?

• Drywall moisture readings above 0.5% Moisture Content (MC) are generally considered higher than acceptable.
• While a range between 5% and 12% MC might be considered acceptable depending on the specific environment, levels consistently above 17% suggest significant moisture damage and potentially require replacement.

Potential Causes for High Drywall Moisture in a Beachfront Property:

• High Humidity: Beachfront properties often experience higher relative humidity due to their proximity to the water.
• Poor Ventilation: Inadequate ventilation can trap moisture indoors, leading to elevated humidity levels.
• Leaking: Even a small leak can significantly increase drywall moisture content.
• Salt Air: Salt in the air can contribute to moisture issues, especially in coastal regions.
• Condensation: Poorly insulated walls or single-pane windows can lead to condensation buildup.

Risks of High Drywall Moisture:

• Structural Damage: High moisture weakens the drywall, causing it to crumble and lose structural integrity.
• Mold Growth: Moisture provides an ideal environment for mold and microbial growth, which can pose health risks.

Actions to Take:

• Further Investigation: If you have high moisture readings, investigate the source of the moisture and the extent of the damage.
• Professional Assessment: Consult with a professional mold inspector to assess the situation and recommend remediation steps, especially if you suspect mold.
• Address the Source: Fix any leaks or issues contributing to high humidity.
• Drying: If the moisture content is below 17% and the damage is recent, drying may be possible with proper ventilation and dehumidification.
• Replace Damaged Drywall: If the moisture damage is extensive, replacement of the affected drywall may be necessary.
• Mold Remediation: If mold is present, consult with a professional mold remediation service.

This is a source of last resorts. 

You lose the depreciation tax write off

You make borrowing harder/more expensive/or impossible

You can’t use or work on the property or provide any material service

You can’t partner with close relatives  

You convert capital gains tax rate to the usually much higher regular tax rate

When it comes to RMDs you usually have to sell the entire property. 

You screw up your separation rules and the entire account, not just the real estate portion is considered withdrawn and subject to taxes and penalties. 

Please consider house hacking with roommates if possible, buying a new primwry every year and renting out the previous home if not. Good luck. 

Are you the 100th person to post asking is the 1% rule dead? I think you are…

You can easily make money at 0.6% and you can easily lose money at 1.5%.