All Forum Posts by: Ricardo R.

Does it have to be loan on the property? Can you just instead take out a personal loan?

Two things: Cash Flow and ROI

Yes remain skeptical on pricing but don't turn properties away if they cash flow well and the ROI is on the high end (12% and over). Just food for thought: What would happen if you bought an investment property for 200K which cash flowed $500/mo. with an ROI of 17% (just an example) and the month after you bought it the value dropped to 150K? Does it really matter if you're not going to sell anytime soon? --- Now if you're trying to refinance and take the cash back out sure it would affect that and you would be on 'pause' from being able to do so, but you wouldn't be loosing $ on this investment, you would still be cash flowing and making a profit. Still look for a deal and don't over pay but really the term 'overpaying' for a cash flow buy and hold investor is obviously determined by what you pay compared to market pricing but MOST importantly what you can cash flow... if you cash flow only $100/mo. then yes you overpaid (in some markets) if your cash flow is healthier then you should be okay in the long term so long as you don't sell during that time and you are fine not needing to refinance during that time. It is possible to over pay on the purchase and yet have a high ROI say... 20% with higher cashflow which would make it underpaid in a sense Ex: Home1 50K BELOW market cashflows $400/mo 12%ROI / Home2 100K OVER market cashflows $1000/mo 19%ROI......... just know that your probably not refinancing anytime soon and that equity is off the table for now. I hope this helps.

Brian in addition to what @Rick S. mentioned, I would also have the seller have the tenants sign a statement - which you will provide - that they understand they must move out within 30 days after closing (which will actually be longer for them considering it seems like your just in the beginning stages of purchasing) and then assign a dollar amount for each day the tenants much pay for each day they go over 30 days - think incrementally, to give them an incentive to move out. If the seller or tenants refuse to do this, then you can ask the seller to put 45 days of PITI + expenses in escrow with the remaining balance refundable back to the seller if the tenants move out earlier than 45 days (this however, does not guarantee that the tenants will move out within 45 days but it does put pressure on the now seller/landlord to push for option 1 - having the tenants sign something).

There are a lot of things here to think about... did the tenants give the landlord a security deposit? will that security deposit be refunded back to the tenants or transferred to you? --- If there is no security deposit... you are assuming these tenants and in essence you become a landlord by default... what happens if the tenants leave the home in a broken state? what security do you have then?, what if something breaks i.e. a roof leak while the tenants are in there, who will pay for those repairs? ... if you're only collecting PITI then you're in the negative, Who cuts the grass? etc. etc. etc.

An ideal situation is for the now seller/landlord or you to draft a document that states the tenants must vacate within 15 days after closing, have them sign it and then leave that as the now landlord's responsibility to deal with, its his mess, and then also have the landlord pay you (escrow) PITI + security deposit + expenses 10% during the period these tenants are still in there (refunding the security and expenses if not needed back to the seller).

Lastly, if you do not want to be a landlord and are not set up for it, the over goal is to keep that part of deal between the seller and tenants.. you should not be dealing with the tenants at all.. (it would not be fair for you to have to pay for a lease to be drafted up, pay for landlords insurance etc etc) you should instead be dealing directly with the seller... thus when I say you should collect security deposit, I mean you should collect it from the seller, not the tenant.... whether the seller in turn requests the same from the tenants or not... that is his business and his headache.  

I hope this helps

Tim, really if anything about the rental concerns you, you should bring it up regardless of how many concerns you have. To answer some of your questions:

1) Review are what the are, so take them for what their worth. I personally believe that people which are unhappy with service are much more likely to leave negative reviews that those which are happy leaving good reviews. Perhaps check the BBB  for a rating if their listed. You can also call the company yourself and as for rough estimate of how many properties they manage. Ex. if a company manages 300+ properties and has 5 bad reviews as the only reviews... is that really a valid concern? 

2) In some state mine included (MI) you have the right to ask what the charges imposed on the previous tenant's security deposit was and if those charges are then related to property issues than the landlord has to provide you with what was broken. 

3) You can object to ANYTHING in the contract but really its up to the PM to accept your request or not. Personally, that is the thing I will never cater to about the only thing that is up for negotiation is the rent (maybe), pets section and lease terms, for the rest - my stance is 'take it or leave it' it's designed to protect the property and the owner's investment. 

4) By setting clear guidelines up front, having everything in writing and then sitting down eye to eye and discussing those items so that you and the other party understand everything. 

Kevin, I don't think so. If I understand your question correctly, you are worried about receiving all the applications and running all of them first and then selecting the one that best suits you. If this is the case, no I do not foresee any issues so long as you don't discriminate fair housing. I think there is an unsaid rule about accepting like applicants in a 'first come first serve' basis, but this only for applicants which are exactly similar and it really is just a guideline not really a law or rule. But really what are the odds that two applicants will be EXACTLY the same, in the end you need to feel comfortable with the person in your investment property and contrary to popular being a jerk IS NOT a protected class so discriminate at will so long as you don't violate any fair housing laws. Hope this helps. 

@Neal Little does your lease address pets? Do you charge anything if someone introduces a pet without your consent?

Hi @Stan R. welcome. 

Thanks @Jeff Lipple, I was looking more into buy and hold but, I would definitely like to pick people's brains on flipping and wholesaling as well; your thoughts?

Alex

Does anyone know of any Real Estate Investing Seminars in the state of Michigan during the month of August? 

Monica, What type of broker are you looking for?