All Forum Posts by: Eddy Dumire

Yeah I was going to say that none of those properties make much sense but it seems like that's already been discovered.

I'm only here because one of my tagged keywords got hit -- Fredericksburg. I invest in Stafford and Fredericksburg, VA because you can find decent cash flow here. My strategy is the BRRRR strategy -- you should definitely look into it. It basically stands for Buy Rehab Rent Refinance Repeat. You need to focus on getting distressed properties at a discount, then rehabbing them. That is the best way by far to get a property to cash flow. Plus, if you have instant equity, you can pull it back out with a cash out refi in 6 months.

If you're more fond of Maryland, I hear that Baltimore is a great cash flowing city too, but I don't have any experience there.

Thanks @Will Martin.  I put $0 in the 5 day notice for both court costs and legal fees.  I didn't want to get them incorrect so I just decided I would eat them.  I hope it goes as smoothly for me as it did you.

@Wayne Brooks is right. I just went through this myself. Seller paid 3% in closing costs and I actually had a little money from closing cost assistance left over. I wasn't allowed to use it to offset my down payment. For FHA, you have to walk into the settlement office with 3.5% of your own money (it's been in your possession for at least two months of bank statements so it doesn't get sourced).

Thanks for the response @Jassem A.

The 5 day notice that I found online included language that payment would not prevent me from trying to obtain possession, but I'll definitely add it to a receipt if I get paid.

I'm really hoping they don't pay.  I'm fairly certain there's some drug activity going on there and I really just want them to go so I can clean it up and start over.  If it goes beyond the 5 day notice I'll offer them cash for keys.

My wife and I went to the courthouse to observe unlawful detainer (aka eviction) cases.  They seemed very straightforward and something we could tackle on our own.  In Virginia, things are pretty speedy and we think that worst case scenario, we would have to re-file and it would cost us about a month of rent.  In this case, that would be cheaper than an attorney.  Does anyone else have experience doing this on your own?  Any advice?

In Virginia, we have a 5 day notice to pay or quit.  After that, we can file for unlawful detainer.  At the hearing, if the defendant doesn't show up, we can get immediate possession which then we must take to the sheriff to schedule eviction.  If the defendant does show up, and they agree they are late, they have 10 days before we can get possession.  Otherwise, if they don't agree they are late, the judge sets a trial date.  100% of the cases we observed did not have a trial date set because one of the two other scenarios held true.

It's been a while and I've had some activity so I thought I'd give everyone an update....

Rent is due on the 1st and late on the 5th.  On the 5th, the tenant texted me and said that she had all the rent, but was short the partial security deposit payment for the month, but she would pay it by Friday (4 days later).  I agreed at the beginning of the lease to collect the security deposit in monthly installments until paid.

Thinking back to the podcasts and one of @Brandon Turner's favorite real estate books, If You Give a Mouse a Cookie... I decided not to give any ground.  I told her that she would owe a late fee because it was late.  I also told them they could keep the partial payment until they had the rent in full plus the late fee.  Of course she wasn't very happy about it.

Friday (the 9th) came and went and I didn't receive any communication from them.  I found a sample 5 day notice online and hand delivered it to them on the 14th.  I also mailed a copy on the 16th (mainly because the notice itself said a copy was mailed) which was sent priority mail so should have been delivered on the 17th.  Today is the 5th day since I hand delivered the notice, but I'm going to wait unitl the 22nd to file for unlawful detainer just to be sure I don't get tripped up because I sent the mailed copy 2 days later.

I'll be doing this myself.  It looked very easy when my wife and I went to observe unlawful detainer hearings at the courthouse.  Of course the devil is in the details, but worse case scenario, it should only cost me about a month's rent if I really screw something up and have to refile.

Part of the problem here is that you're looking at retail ready properties. Well priced retail ready properties move quickly. Poorly priced retail properties make deals unprofitable. The best way I've found to make money in REI is to start by looking at only distressed properties. There are really only a handful of ways to do this:

1. Targeting distressed sellers -- people who can't or don't want to own their house anymore. There are two types of distressed sellers -- ones who need to sell to you because they can't sell it on the retail market because of the condition and ones who want to sell to you because they can't wait a few months for a retail closing. Unless you have $100k+ in cash you can't help the latter. I don't typically do these but plenty of people on BP do. If you can find the right house and buyer you can buy these at 70% of FMV. People preach doing this all the time.

2. Foreclosed Properties -- Buy them at a foreclosure auction on the courthouse steps. These have their own risks around superior liens so make sure you know what you're doing and do adequate research. This also requires cash. 70% of FMV is also common here. You may even do better if there's little competition.

3. REO Properties -- You can find these either listed on the MLS or on the REO auction sites like homesearch, hubzu, auction.com, etc. This is where I've found most of my properties. Sometimes they'll be in good enough condition to get financing on. I've done pretty well here and have got properties from about 60-85% fair market value.

4. MLS -- You can find distressed properties here, but you have to be somewhat patient and strategic. First, ask your realtor to send you listings with keywords like REO or auction or bank-owned and such. Monitor these listings daily. Look specifically at properties that may be just a little overpriced for condition and have been listed for a very long time. Sometimes you'll see the banks dropping the prices in a very predictable fashion. For instance some will lower the price 5% every 30 days. Try to anticipate when they will lower the price again and make them an offer just before they lower the price again. It may take many months before you find something you can strike on this way.

Since you're planning on living in this property, you can use the FHA 203k program to get into houses that are in rough shape that would not usually qualify for conventional pricing. You'll also only need to put 3.5% down. Once you've done the repairs, the value should make a major increase and you could potentially refinance into a conventional loan with an 80% LTV, which will wipe out PMI costs.

Look for BRRRR on BP. This is the strategy that works for me.

Hope this helps.

Eddy

Has anyone been to one of these?  Are they worth the time?  Is anyone going this weekend?

Thanks for posting this.  I think a story like this is even more valuable than a success story.

I suggest you replace your five books with ALL of the BP podcasts.  They'll take you about 200 hours to get through them all and you'll learn TONS.  I've actually started listening to them all a 2nd time.