All Forum Posts by: Bill B.

This is literally asked monthly if not weekly. You can click on the magnifying glass in the upper corner to search for previous discussions. 

TLDR: You will be asked by the buyer to pay off the solar as the seller. They want nothing to do with it. While it may get your home chosen over an identically priced one it won’t add value. As a potential buyer of 7 homes with solar last year 5 of the deals were outright killed by the solar. (They were leases with escalation clauses without a buyout option.) These people were screwed over hard by solar salesman. The other 2 had balances in the $13k-$25k range. I had the seller pay them off before closing and purchased the homes at the same price as non-solar homes. And this is in Vegas. We have some sun. 

Ps. There is ZERO chance on a solar purchase they will guarantee your total electric bill. The only solar people who even talk about electric costs are the lease people with escalating costs. Avoid them at all costs. As has been the case for 20+ years. You add them to make a statement about how virtuous you are, not to make money. 

Pps. I always love the statement “They’ll pay for themselves in 10 - 15 years…”. Do people not understand that’s a guaranteed 0% return for 10-15 years? Give me $10k of your money, I guarantee you’ll get it all back in 10-15 years. (If I can earn just 5% I’ll have $20k in 15 years. Give you your $10k and walk with a $10k. So even if they last 30 years and could have produced double their cost. Now I could have had $40k from a 5% bank investment.)

Sounds more like identify theft. Hard pass either way. 

Did they have bank statements showing utility payments for the rentals? Does their ID address match their last rental? Is there work local where you could swing by, make sure they are there and then talk to HR?

good luck. 

Why would they stop if nobody sues or gets the police involved? Even when they misrepresented the deal and are 2 years behind on payments they’ve faced no penalties. Most of their victims are either too naive or too ashamed to do anything about it. Have you looked up the properties in question? Does this “borrower” even own them any more? Do they have other liens on them? If there’s any equity get your lawyer in to court and try to place a lien on them. 

First, I’ll send my hopes and prayers to the seller that you can perform. They are taking a MASSIVE risk on this deal. I assume there’s no realtor involved or they’d be upside down. Maybe they’re charging over market or could find a buyer. 

That being said. You’re asking for less than 4% annual appreciation to get over 20% equity. If there’s appreciation you refinance. If there’s no appreciation you walk away. You collected 60 months of rent while only investing $2,500. The seller will also be incentivized to extend their seller carry if there’s been no appreciation or the building has deteriorated during those 5 years. 

You have a kick butt deal, if you generate ha;f the cash flow you’re planning on you’ll be ok. So it won’t matter if you forgot things like management fees (or the value and costs of your mistakes if you plan to self manage.) Advertising (photos and listings.) turn over costs, snow removal, and those kind of things. The big deals will be vacancy, capex and appliances. (3 water heaters, stoves, fridges, microwaves?, washers? dryers?, dishwashers? ac units, furnaces, etc etc.) best case you only have 15 of those, not 21 or 27. With an average life spans of 6 years you’ve got 2-3 per year. I know, you have “repairs”already. But that’s going to be toilets, faucets, leaks, garage doors, etc etc. 

I’m not saying you have a bad deal, or I wouldn’t buy it if it was located somewhere warmer without income tax. (Ps. Subtract income tax and tax prep from your cash flow. :-)) Run 2025 through quicken and at the end of the year you’ll have real numbers and you can come back to this post and see how close you were. Hopefully you’ve increased rents and your above expectations. 

Non-issue. I’m billed quarterly in Las Vegas. I simply take a picture, text it to the tenant and they add the payment to their next month’s rent payment. With a dozen properties you’d be talking about several thousand dollars out of pocket otherwise. 

Sorry if I came off that way @Michael Baum. I wasn't saying he wanted zero income. I was saying his current situation is zero income. So that was a low hurdle to improve on. I assumed neither he or his dad were experienced STR hosts and said they wanted passive income.

So my solution was nearly zero work, almost no experience required, and an improvement on their current zero income solution. Especially if they gain tax deductions that might be worth as much the income. 

Because your alternative is zero income. I’d search out an established local operator and pay them to operate it. Even if they took 30% you’d be way ahead of zero income. You’d gain tax deductions, and you’d relieve yourself or your parents of any additional work regarding reservations or repairs. 

If you have less than 20-30 rentals Quickbooks little brother Quicken is much cheaper, easier, and still overkill for such a simple task. A dozen properties take me maybe 1/2 hour a month. At year end it probably takes 2 hours to go through everything looking for errors and printing reports. 

If you put the minimum of 25% down, that’s $125k. Do you have $125k?  If so, and you get a reasonable 7% loan on the $375k your payment will be $2496/mo. So as long as your insurance, property taxes, property management, utilities maintenance, repairs, vacancy, and capex come to $4/mo or less you’ll be fine. And if they all add up to zero, you’ll earn 0.038% on your money  

Or you could put the $125k in the bank and earn a government guaranteed $520/mo. I know which one I would take out of those two choices.  Now you see why the seller is selling. He can put your money in the bank and earn $2,100/mo instead of $4 or less.