All Forum Posts by: Brad L.

Really good attitude on not banking on politicians. There have been many issues with the existing student loan forgiveness programs where people worked often low paying public service jobs for a number of years to follow forgiveness guidelines, only to get to the finish line and the loans didn't get forgiven.

If I were in your position I'd pay down debt, but I also wouldn't clear out my emergency fund to do it. I'm sure most will tell you that the interest rate on the student loans is too low to justify paying it off, but in my opinion it will give you a lot of peace of mind when you do start buying rentals. If COVID has shown us anything, it's that nothing is guaranteed and a lot of things can go wrong. Paying off the loans means having one less thing that can go wrong for you.

https://www.irs.gov/instructio...

Scroll down to the "Who Must File" section

I think the main cause of you not receiving calls back is that PMs, realtors, etc. all get tons of calls just like yours from which nothing ever actually materializes. Too many tire-kickers and people with good intentions but never make the leap. Get your ducks in a row with financing and the rest will fall into place. Advertise your pre-approval letter to the realtors you speak with. Call contractors & PMs the day you have an accepted offer and let them know that you have financing in place along with an accepted offer. In theory it would be super nice to have a PM and contractor lined up right away before you even start making offers, but they're all so busy they can't deal with "what-ifs". As in, "if I buy 10 properties will you manage them" or "if I buy these fixers will you renovate them".

You need to show them that you're serious for them to take you seriously because they deal with a lot of wannabes.

In reference to @Peter Walther post about foreclosure, the following is copy & pasted directly from the State Bar of Wisconsin Form 11-2003 Land Contract:

"Purchaser agrees that in the event of a default in the payment of principal or interest which continues for a period of
days following the due date or a default in performance of any other obligation of Purchaser which continues
for a period of days following written notice thereof by Vendor (delivered personally or mailed by certified
mail), the entire outstanding balance under this contract shall become immediately due and payable at Vendor's option
and without notice (which Purchaser hereby waives), and Vendor may singly, alternatively or in combination: (i)
terminate this Contract and either recover the Property through strict foreclosure or have the Property sold by foreclosure
sale; in either event, with a period of redemption, in the court's discretion, to be conditioned on full payment of the entire
outstanding balance, with interest thereon from the date of default and other amounts due hereunder (failing which all
amounts previously paid by Purchaser shall be forfeited as liquidated damages for failure to fulfill this Contract and as
rental for the Property); (ii) sue for specific performance of this Contract; (iii) sue for the unpaid purchase price or any
portion thereof; (iv) declare this Contract at an end and remove this Contract as a cloud on title in a quiet-title action if the
equitable interest of Purchaser is insignificant; (v) have Purchaser ejected from possession of the Property and have a
receiver appointed to collect any rents, issues or profits; or (vi) pursue any other remedy available in law or equity. An
election of any of the foregoing remedies shall only be binding on Vendor if and when pursued in litigation. All costs and
expenses including reasonable attorneys fees of Vendor incurred to pursue any remedy hereunder to the extent not
prohibited by law and expenses of title evidence shall be paid by Purchaser and included in any judgment. The parties
agree that Vendor shall have the options set forth in this paragraph available to exercise in Vendor's sole discretion."

My suggestion to you is to print off a blank copy of the entire Land Contract form and read through it a couple times. If you aren't 1000% confident that you understand the entire form, get an attorney. You really should get an attorney regardless but I know most try to skip that part to save a little money, when in reality the attorney could save you a lot of money in the long run.

@Meredith Mihm

1. Yes you Refi out of the land contract with traditional financing

2. Yes there are tax benefits to him selling via land contract

If you are a buy & hold investor, the Land Contract doesn't mean much for you unless you were trying to then sell the property or obtaining additional financing with this property as collateral. The details are what matters, just as they would in any other deal. Are there prepayment penalties, is prepayment allowed, when are you granted possession, is the Vendor paying for title insurance on the front-end or are you responsible for it? One unique aspect of a Land Contract is, are you responsible to pay Vendor directly for property taxes & insurance, or are you responsible to pay property taxes & insurance directly? Vendor is able to call the balance immediately due (page 3 of the WI Land Contract form 11-2003) if you fail to pay as this page outlines.

To be honest, as long as you're holding up your end of the deal it's more of a risk to be a Vendor than a Purchaser in a Land Contract because they're assuming the risk that you run the property into the ground then have to take it back via foreclosure. In my opinion 20% down, 3.9% interest. 30-year AM with a 10-year balloon is a good setup for you for a 6-unit property, as commercial financing in my area is 20% down, 4% interest, 20-year AM with a 5-year balloon.

Were there any specific concerns you had about a Land Contract? I have been the Purchaser in a Land Contract for almost 6 years now and I worked on a fair amount of them with clients in a previous life so I know enough to be dangerous.

@James Hamling She asked me if it was possible, I provided personal experience to show that it is. That’s all my post was.

@Kalanie Tran Yes, I bought 8 properties consisting of 25 total units about 6 months ago, and that package is close to 1.2% with current rents well below market. Will exceed 1.5% once rents are at market. Off-market deals are where it’s at when the mls has low inventory or high-priced properties. Send out letters and make cold calls

If your plan is to grow a portfolio, this property will likely weigh you down significantly moving forward. Don't let frustration get you into a bad deal or you will end up being way more frustrated down the line.

General rule of thumb when analyzing is that gross rents should be at least 1% of purchase price. Even if you were to get $950 from the current tenant and if we assume $950 for your side at some point in the future, you're at 0.88% when looking at monthly mortgage, property taxes and insurance. This doesn't take into account repairs, general maintenance or capex which would push you lower than 0.88%. 

That being said, this all doesn't necessarily mean it's a bad deal for you; what is your goal with this property? Will you live here permanently? Do you intend to move out and rent your unit in the future? What would you be paying in rent elsewhere if you did not purchase this property, is this purchase reducing your living expenses? Do you see a good amount of appreciation in value in your area? Not a deal I'd do personally, but just because it doesn't fit my goals doesn't mean it won't fit yours.