All Forum Posts by: Dennis Cosgrave

As a buyer, I NEVER get involved in bidding wars. I run the numbers and offer a price that fits my investment objectives. I submit it and let the chips fall where they may. One lesson I learned early on is to find out what your seller wants. I once saw a great deal, offered $10k over asking price, all cash, and I still didn't get it. I found out later that the property was paid for and the sellers did not know what to do with the cash. They took a lower price with sellers holding the mortgage. 

I had a similar situation. The tenant across the street was mentally disturbed and depending on his mood he could be erratic and threatening. My tenants did not feel safe. I tried to speak to the tenant across the street but that was a total waste of time. I decided to take legal action. I had my attorney research who the beneficial owner of the property across the street was and then he was sent a letter threatening a lawsuit if nothing was done to resolve the issue. Most landlords are not going to defend a bad tenant in court. The tenant was evicted shortly thereafter and the problem was solved. 

I am curious to know why you are planning to hire a property management company to manage it when your son will actually be living there. Is he that irresponsible or incompetent? If that is the case, I would not even consider it. I actually began my real estate investment adventure by buying a 3 bedroom condo when I was in college. I did it on my own initiative. I borrowed $5k from my mom and she signed for the mortgage. I advertised for and screened the tenants (who were other students). I had very strict rules. If I got complaints from the neighbours, I dealt with it quickly and evicted the perpetrators. Once I graduated college, and I landed my first job, I finally had the place to myself. I sold it shortly thereafter and invested the proceeds in my first triplex. The moral of this story is, if your son wants to do this and is willing to take on the responsibility while open to learning what he does not know, go for it. It will be a great practical education for him. OTH, if you are going to impose this on him with little interest on his part, don't do it.

From my experience, sellers favour seller financing because they get a better return than cash in the bank. This is especially true in the current ZIRP environment. I have seen retired sellers who have paid off their mortgage and their home value has appreciated considerably since they bought it. They are wary of selling for cash and putting that cash in the bank. They are also wary of the stock market and the return they can get on financing the sale is likely equal to or greater than what they can get in the financial markets with much less risk. 

Steve Morris, if you think the government is going to sit idly by and let bitcoin flourish, you are deluding yourself. All central banks are now in the process of developing their own cryptocurrencies. Once they are introduced, bitcoin and all other private cryptocurrencies will be banned. The government does not like competition. 

It all depends on the hard money lender and the agreement you sign. In most cases, it is a monthly payment just like a regular mortgage. In other cases, the payments are deferred until the property is sold. 

The 2-4 points is based upon the amount of the hard money loan.

My bigger concern would be finding a hard money lender, given that you are a newbie. If you have never done this before, it is a greater risk to the lender. 

Some counties have market value assessment. Once the sale is registered, the property tax assessment will rise (or fall) depending on how the sale price compares to the previous assessed value. Check with the county / municipality to confirm what their practice is. 

I would add to what Steve just wrote. I would charge a fairly stiff daily rent for the 10 days which would increase by 25% for every day thereafter. Definitely hold enough of the proceeds to cover 30 days of daily rent.  

I don't see a crash occurring over the whole country. There is currently an exodus going on from high tax, high regulation urban areas to lower tax areas. Cities like NYC, Chicago, Atlanta, Los Angeles, Portland, and Seattle will suffer significant price declines. Smaller communities and rural areas will see price appreciation. This trend is likely to continue for a few years. 

I got into real estate investment in a round about way. At the beginning it was a matter of economics. I was going to college in a high priced city and rent was exorbitant. Condos were up and coming then and relatively cheap. I borrowed $5k from my mom and bought a 3 bedroom condo. I rented two of the bedrooms to other students and I lived there virtually for free. 

When I graduated college, I wanted a single family home. The area I wanted to live in was very nice but expensive. I had a good job and I could just afford it but I would have been mortgage poor for the next 15 years. 

I decided to buy a triplex for the equivalent value of the house I wanted to buy. I figured that after a few years, I would build up some equity and buy the house I wanted with a bigger down payment and a smaller, more manageable mortgage. I lived in one unit and rented out the other two with a net positive cash flow of $1200 per month. BONUS! A year later, I refinanced, pulled out the cash, and bought another one. I ended up owning 5 of them. I still had a full time job so it became a little much to manage. I sold them all and used the equity to buy bigger apartment buildings. 

It finally reached the point where I no longer needed my job, which I hated anyway. Too much corporate politics for me. I have been free ever since.