All Forum Posts by: Cristina S.

Hello,

I would appreciate some solid recommendations for a reliable property management company in North Atlanta. 

A company that covers the Acworth, Canton, Ballground areas would be ideal. 

Thank you so much! 

Well...I think this is a bit of a "duh". 

Being house-poor is not an investment. When you have to heat, cool and fill up that "trophy giant" - then you're asking for it, right? (with it" being anything but net financial gains over time).

In this vein, however, I would also not recommend people marrying (buying?) a trophy wife either. 

Generally speaking, "trophies" of any kind make for poor investments. 

[Though I am not going to deny I sometimes like to fancy myself one - eye lashes batting (ha,ha)].

@Cristopher,

Thank you for your view. We were trying to figure out if what you said would be an option. 

Because this is the only way we could go through with this purchase as we can't start an epic renovation now just to  make this house 100% lead-free. 

We just want to be in compliance with the law and follow safety precautions. 

The alternative would be backing out. 

The house looks promising from an investment perspective - or at least as promising as it can be in this seller's market where most houses sell for prices where the rent is barely large enough to cover all foreseen expenses, let alone leave you with a steady cash-flow, profit.

This one looks like it will allow us to get some decent cash-flow after all expenses, fixed and anticipated (including capital expenditures, vacancy etc) are accounted for. 

In this market it has been excruciatingly difficult to come anywhere close to a deal that would meet the 1% rule. We got it off MLS which is a miracle.

To back out now because of the lead looks like a bad joke.

 @Paul,

That's the thing - my mind is not made up.  I was in the edge a few hours ago, ready to back out.

My husband was OK with going forward despite the lead issue, but I almost backed out because I was not clear on the law. 

I want to be law compliant and I wanted to exclude the chance that we could be sued. 

Apparently, one can never exclude such a chance, only minimize odds - so I understood that.

But first and foremost, I want to be law-compliant.

Once I understood the law DOES NOT require buyers to "test for lead and fix if found" before purchase, I guess I am OK with going forward. 

The law DOES requires to "disclose knowledge of lead, warn and educate tenants" - but the risk of being sued remains, as it is impossible to remove it altogether.

If a tenant does sue - despite the fact that we took all precautions and followed the law (disclosed, warned, educated) and the tenant agreed to sign a lease despite the possible risk involved which they were made aware of - I wonder what chances would they have to win, in case it occurs to them to sue?

Maybe I am catastrophizing too much when none of this is likely to happen (my husband says) - but I am just trying to understand how much risk we are taking by purchasing under the circumstances. 

Again: options are 

1. "buy as is, with insurance NOT requiring lead testing"  

2. "Back out". 

"Test and fix" before purchase is not an option.

Thank you all so much!

The renter has three children older than 6. 

I understand what lead does. I also understand we can test. 

But this is not what I was asking about.

I just need to know what we can do to be able to go through with this deal withoit testing/fixing now, before sale and still be be protected legally - short of buying the house, testing, finding there is some lead somewhere beneath the many layers of paint this house must have collected since the 20's (it will be for sure), kicking the renter out to fix the problem by paying a lead cert contractor to strip off all the paint (large expense).

We cannot do this now - or maybe not even later.

The seller (current owner of this house) bought in 2014 without testing and simply disclosed "I don't know". 

We checked both federal and state laws and what we took away is that our responsibilities as owners and lessors are to: 

1. Disclose any knowledge of lead (which in our case is "I don't know if yes or no") and include a "Lead Warning Statement" in the lease.

2. Provide the tenant with an official pamphlet that educates about lead. 

3. Use lead certified contractors if doing any work/repairs/improvements. 

The law does not seem to say that it is the responsibility of every buyer/owner to test for lead before buying and if found, fix it.

You can simply buy, disclose "I don't know", then educate the tenant.

Am I correct? Or still exposed to liability?

Some insurance companies may refuse coverage but others won't.

Should we go with it if we find an insurance company that does not require lead inspection? 

That was my question. We do not intend to test or fix before purchase. 

Possibly not even later.

Thank you, Brett. Unfortunately, this is a bit of a Catch 22.

If we test and they find it - we probably need to move the tenant out to fix the problem.

We don't want to do this now, plus it's rather expensive if they also find lead and then we need  to fix. 

We could self-test after the current tenant moves out, but it looks like she plans to be there for another 3-4 years which is a major selling point for us.  She seems like a great tenant too.

Can we buy without testing? Are we risking too much?

Seller disclosed that when he bought in 2014, he bought without testing and he never did test. 

He just disclosed "I don't know". 

Can we do the same thing without being afraid of having the living lights sued out of us?

If we disclose "I don't know either" to tenant, what are our responsibilities towards the tenant? 

Hello,

I need some urgent help - thank you so much in advance!

We are in the process of purchasing our first rental (buy and hold), getting ready for home inspection - but we are thinking of dropping out.  Should we? 

The property was built in the 1920's and no one has ever done lead testing on it, as far as we know. 

Current owner did not have it tested for lead when he bought it. However the house was renovated 10 years ago. 

It has probably been painted several times since then. It also has new windows.

Some of the insurance companies we requested a quote from require lead testing.

This had us call someone who did this for a living and he told us chances are he will probably find traces of lead and it might cost us several thousand dollars to test and fix, if lead is found . 

Even though we might be able to find an insurance company that doesn't require lead testing, this is giving us pause and wonder whether we should go through with this or drop?

The seller is firm on the price (because seller's market and all the jazz, shark fest out there) and the house is already occupied by a renter so we can't just kick them out to do lead testing and fixing, even if we consented to pay for it out of pocket, without any extra negotiation.

If we go through, we are afraid we are exposing ourselves for liability.

My husband thinks this is OK - but I am chicken.

Am I overreacting? Should we go trough? Should we drop?

Any quick advice is greatly appreciated as our real estate agent and lender are waiting for us to move forward!  

Steven,

Our goal is to accumulate 5-6 properties over the next 10-15 years, get them paid off so that they will generate some good cash flow to supplement retirement income and even allow for earlier semi-retirement ; over the long-term, possibly build a small company that our kids could take over and expand later.

For us it is too late to build anything BIG - FAST; but for them, it might not be - especially if they will take over the little we could build over the next 10-20 years. One thing I know is I am not going to make the mistake of raising my kids with the "slave/poor dad" mentality - get good grades, get a job, keep head down, don't step on toes, meet deadlines, sit in cubicle.

That's toxic. Very, very bad stuff. 

Not that I don't insist on good grades in the meantime - but YKWIM. 

So our goal is NOT to generate a lot of cash flow NOW, so we can quit our jobs asap. 

My career, at least, has a very nice side to it that I would not give up even as a hundred million dollar lottery winner. Fun stuff - but that would mean working part-time only. Working full-time includes a side I could VERY MUCH do without - but I have no choice right now; so I tolerate the "not so great part". 

We thought that with the RE investments I might be able to get rid of the FT sooner and switch to PT in 5-10 years or so.

These are largely the goals. 

We are already putting money in diversified paper assets every month through our employers; and I have had enough of those. 

Never mind that I don't feel like I really "own" something - just some cash that can be wiped  out by God knows what kind of "mystery market machinations" that big wigs pull strings for to "manage the economy".

When I check these investment accounts periodically, I can't help thinking of that saying: 

"If you set aside a little bit each month, you'll be surprised to see at the end of the hear... how little you have".

The concrete nature of the RE appeals to me. 

My parents have 2-3 properties and in their 70's they still manage them on their own - in a very tenant-friendly place on this Earth. Yet this has been their saving grace in retirement.

We plan to leverage more now. We were going to do 50% just for safety reasons but it doesn't look like it works this way. We now plan to out 25%-30% down instead of 50%. And yes...we continue to look for a deal but this is no easy task. 

All the advice  here has been extremely educational - plus I finished  my book - so we're learning more. 

We don't want to jump into anything stupid - we're waiting for "the deal" and will leverage, as advised. 

At the same time...time is going by and it already has passed a lot for us. 

We had those 25% or so a few years ago but we kept thinking that we should wait for me to get over some career milestone and then decide what we want to do, maybe save more, etc; but it was a bad idea to wait. 

So waiting  a lot longer while prices continue to climb and the market heat up even more...will take us AGAIN on the wrong part of the "pyramid" game.

Kalimah, Terry and Julie 

- Thank you for your encouragement - I do need to get in touch with some people here and I will do so soon.

Thomas,

We will continue to look for a little longer to see if we can get something with cash flow, now that we did our homework and know exactly what we must place under expenses (I finished Brandon Turner's book). If numbers don't add up - we might just have to do the REIT.

That being said, I am not sure I understand what you mean by "breaking even with a paid off property will quickly lose it's shine".

We will certainly not break even with a paid off property. Once the property is paid off...there will be at least 400-500$/month coming out after all other expenses are paid. 

The point here is that someone else will be paying off the loan for us. 

But yes, you have a point - we are already thinking about putting less down - not 50%.  More like 25-35%.

It is my understading that people here favor either leveraging to the max or paying 100% cash altogether. Why is 50% cash bad but 100% cash is good?  I am a bit  confused.

Jered,

I am trying to figure out how to attend the next meeting in November. I have some work-related conflicts in the afternoon-evening on Tuesdays, but I will try to think of a way to make it anyhow.  I hope my husband will be able to accompany me. I look forward too getting to know more people in this field...as this seems to be vital.

Thanks a million, everyone!

Thank you all so much. 

We learned a lot over the past few days - and no, we were not doing the numbers right. 

We were not adding vacancy rate , capital expenditure and repairs as part of expenses. We were considering the cash flow as something that could cover those when needed. 

That means that based on the "correct" property analysis practiced by versed investors who do focus quite a bit on cash flow - NOTHING we've seen on MLS would have worked - even remotely.

(Income - Expenses, with expenses including every single contingency possible).

That also means the only way to do this would be to get a Godzilla-type deal off MLS requiring serious repairs.

This, in itself, would take a serious amount of time and energy (another job) which is not realistic in our position (two full-time demanding professional careers, two kids). 

We thought we could park this money in something other than stock/mutual funds/whatever market where you don't really end up building much over time. 

We were hoping that even with some negative cash flow, the fact that we would be paying off the mortgage on a relatively good property in a good area - would eventually leave us with IT (the property) - which is something more than any REIT or whatever market would be able to leave us with.

Houses are houses. Once they are paid off - they usually don't disappoint. Especially in a nicer area.

But this might not work for us in this market.

Our main regret is that we didn't take 20,000-30,000 dollars just a few years ago when deals were still possible off MLS. Right not, you must make it your main job to find a deal - and we can't do that.

Our question is: could it still be worth it to simply buy a decent property in a good area and just buy and hold for the day when it will be paid off - even with zero or possibly negative cash flow? 

We have 50,000... leverage some.. and then ta, da - you have a property paid off and there's enough cash flow.

If that's a stupid move - then I guess we'll have to give this up. :-(