All Forum Posts by: Greg Scott

This is something a qualified contractor can easily resolve. The detectors simply need a common wire such that one goes of, all go off. 

In my home, I personally converted an unfinished basement. I figured out how to connect all the detectors and wire them together.  It wasn't that complicated.

You are in Houston.  Have you done any research on purchasing property locally?

I have personally purchased large apartment complexes from REITs and know how poorly some of them manage their properties.  When investing with them you get almost no tax benefits and usually get crappy management. 

Below are three single family deals that came across my desk from Houston in the past 4 days. These are single family deals that anyone can do and make buckets more than any REIT investment. If done right most of these gains are tax-free

- $40K in equity capture (profit) with $20K out of pocket and 13% cash on cash thereafter (300%+ returns)

- $24K of equity capture with $32K out of pocket and 36% cash on cash returns thereafter (75%+ returns)

- $41K of equity capture with $27K out of pocket and 12% cash on cash returns thereafter (150%+ returns)

None of the above numbers include loan pay-down or appreciation. The above numbers are not fake. They happen every day. I have personally experienced returns like these. No, they are not 100% passive, but NOTHING you do in a REIT, stocks, Bitcoin, or MLM can come close to comparing.

When you put in an offer you are not asking for the seller to provide you an X% rate of return. You are offering to buy at a certain price.  Similarly, the seller (assuming they are not lying) is telling you that at their asking price, the rate of return the property is currently providing is X%.

Here is the important point...  EVERYTHING changes after you buy it. Property taxes change.  Management changes.  Advertising changes. Rents change. Personnel changes. Interest rate changes.  Insurance costs change. Everything.  In other words, the cap rate becomes fairly meaningless upon transfer.

Your job is to assess whether or not you can make a good profit after buying the asset at whatever the sale price is.  FULL STOP 

Your ability to make such a profit will depend on your ability to manage the asset better than the prior owner.

As a seller, the broker should be helping you determine the price point, at that time, that attracts enough buyers to achieve an optimal sales price.

Quote from @Steve Lehman:

@William Vreeland

As a local Indy Investor and RE consultant I have been flowing the IHA development closely to see what kind of developments have been happening. There has been quite a bit of complaints in the past year of IHA mishandling payments or not paying at all and little to no communication. Some landlords have not been paid and some tenants are unable to make up for the rent owed by IHA and have either been evicted or are in the process of. There has been a lot of emotional damage to both sides. 

There is a organization called Mirror Indy who, IMO, has written a couple of great articles about the IHA challenges. The articles show the devastation done by the lack or poor business practices of the IHA. 

Does this mean section 8 is bad, NO, but this can happen in any city or state.

Part 1 - 

https://mirrorindy.org/broken-housing-iha-indianapolis-secti...

Part 2 -

https://mirrorindy.org/broken-housing-indianapolis-iha-hud-s...

I have spoken to multiple investors from OOS and local about section 8 throughout the years. I have found that most have had a positive response to having section 8 tenants. Investors normally get there payments on time, most of the tenants stay for long periods of time because if they move it is a hassle for them, and since section 8 requires that the property stay in certain condition it will help keep the maintenance costs down. The negatives are what you will read in the articles. 

In the end it is about your risk tolerance. 

Great articles.  Thank you for sharing.

Ironically, we have had the opposite impact from the poor management of IHA.

Over a decade ago, one of our apartments was primarily Section 8 vouchers.  They sold and the next owner started phasing out Section 8.  When we bought the place there were about a dozen Section 8 tenants.  This year two more moved out and now we are down to 5. 

The problem we are having this year is that IHA never stopped paying after the last two residents moved out.  The funds are deposited electronically each month.  We've contacted them several times and asked them to stop.  This makes us nervous because we know they will wake up some day and probably try to blame us for their incompetence.  We are making sure we set all those funds aside so they can be sent back immediately.

Usually you hear that when people are talking about wholesaling.  Some title companies are not comfortable with wholesaling, particularly in states with related laws.  If you want to do wholesaling, finding the right title company can be very important.  

Of course, if you are doing a lot of buying and selling, it is always good to know who the players are because there are some that do top quality work and others that do not.

Otherwise, I agree, it is not that critical.  In order of priority, I would put title company after GC, lender, insurance broker, real estate agent(s), inspectors, and several trades.

New construction has a very different risk profile from buying existing properties and fixing them up.  Generally the time horizons are longer and you need deeper pockets.

If you have already had some success in SF rehab, moving to apartments is not as different as moving to development.

Assuming you have already provided the late notice, which is something you should do, I recommend finding a lawyer that focuses on evictions at your jurisdiction and just hire them to do the eviction. 

Why?:
- The costs can be recharged to the tenant. Yes, unlikely, but there is a chance to collect.
- They have a working relationship with the court personnel, which always helps.
- They know the process cold, so shouldn't make a newbie errors.
- They are arms-length.  It is easy to get upset as an owner, but cooler-heads are better.

My experience with Section 8 has been pretty consistent between Indy and several other cities.  Most agencies are slow to process paperwork, have a lot of bureaucratic red tape, and it is difficult to get them to respond to inquiries.

I have to ask this, do they have the right attorney?

I have a special needs son so have worked through issues like this; he can't show any income either.  This is a highly specialized area of law.  You also need an attorney that understands real estate practices. 

I have to believe there is a way to bring this property back to life without impacting mom's care. It may involve creating a trust or moving the deed into an entity.  There is a high probability of a solution, but you need the right team to make it happen.

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