All Forum Posts by: James H.

You have to make a decision as to what is more important at the moment since you can't have it all at the same time. If you can make 60K in a year, why not buy your own house cash, wholesale for a few months and resume with the plan to buy your rentals?

Or stay at your current job until you get financing and once you get your house, your mortgage payment replaces what you were paying for rent and then proceed with your plans. Use your wholesaling skills to find a place in an area you want to live with comparable monthly payments to what you have. You could let off your some of your cash to put a big enough DP to make affordable payments and still have cash left over.

Why not buy a duplex/fourplex/XXplex in the college area and occupy one unit?

The bottom line is this: You can't keep your money and also spend your money at the same time. If you want to spend money without spending money, you will have to look into leveraging and at that point your plan becomes more complicated, but possibly larger albeit with more risk.

Look bub, nobody is telling you to change your deposit practice. You asked so I told you. If you want to discourage people with money from your properties, I won't stand in your way. If you think somebody having the deposit money a couple weeks in advance makes them likely drug dealers, who am I to change your mind. As I said, what I do is typical common practice in my market.

I had a bank in the grocery store try to sell me the Dinar too. Its a long shot. If I had an extra thousand bucks to wipe my butt with I might try it.

how about pulling out of Afganastan too? If anything spurs terrorism against the U.S. it is merely our presence over there. I agree with Ron Paul's sentiments about foriegn policy.

"This seems like it could just encourage people who have no realistic chance of being approved"

Rather, it helps discern who is serious and has money apart from the rest.

It is common to take a deposit to reserve a house or apartment in my area. The guidelines are clear: If your application is approved and you move in (after paying first month's rent), the deposit converts to your securtiy deposit.If your application is denied, your deposit is refunded.If your application is approved, but you change your mind and don't move in, the deposit is NON-REFUNDABLE.

This way if you have someone who wants to rent your house, but they can't move in for a couple weeks, they can still reserve the house as you would want to do for a qualified applicant. But if they change their mind for whatever reason, you keep the deposit and don't loose the money you could have possibly made renting to the next qualified applicant. If they are not approved, they get their money back. It is simply a way of keeping them invested in the process. This is hard work, I like to see that they have some skin in the game too.

You also have a better idea of how serious the people are which can help making an approval or denial if you are on the fence about whether or not to approve an applicant.

Also, there is no bait and switch here regarding the app fee either. We hand them a copy of the written criteria and tell the verbally what our expectations are.

I forgot to mention, the only reason I would consider this deal is because you want to live there yourself and you will have another half to rent out. If you really like the place, it could give you a nice equity position later on, but its not going to make you wealthy.

Strictly as an investment, it appears to be more trouble than its worth.

Depending on your expertise in construction, I would consider taking the contractor bids and adding 20 percent. You need to get that asbestos price and shop around because I bet the prices will be all over the place. But asbestos disposal can be pretty expensive. It still might not be a deal breaker. Is there some way you can work around the asbestos and leave it there? As long as its not in particulate form, its not a problem and will last forever. A lot of people just cover it up.

Once you have your rehab costed out, you need to look at rent prices for the neighborhood. From there you can figure your profit potential. Search for 50 perecent rule in the forums to get an idea of how to do that quick and dirty with some conservativism. Then you need to look at the life cycle of how this investment will play out in the long run should you sell it in 5, 10, 15 or so years and see what each point looks like. You need to know how long you are going to be locked in before you see profit and if you are comfortable with that. I always consider teh oppertunity costs as well. This would include what if I just invested my money in stalks at 5 percent interest (average) over the same time span (5, 10, 15 years etc.)

Anticipated rent is very crucial to determining profitability.

Meet with him and get him to sign the contract....Then start marketing it....

You went through the effort of itemizing the needed repairs, I would't expect anyone to do a take-off for you on this extensive list. Call a contractor and have him bid it for you. Ask for materials and labor and markup to be separated out. But nobody is going to be able to give you anything closer than +/- $10,000 without looking at the place. And you are probably grossly underestimating or possibly overestimating what is needed or appropriate, respectively. But just your windows alone is going to cost you at least $20,000. This is obiviously a very old house and my guess is you could tear it down and build a new one cheaper than fixing this one to prime condition. You've easiliy got 30K in materials alone and labor is gonna kill you if you don't already have people and have the skill set to oversee it.

How would we be able to give a lead time? We don't know who is going to do the work. My guess is that you are over your head and should start with a smaller project.

Out of state makes me nervous. I would not rent to anybody without deposit and first months rent before they move in. She doesn't want to pay for a hotel, she won't want to pay for her rent. Does she think that she will save money by NOT paying your required deposit?

We are also trying to find our first tenant for our first house and have only gotten 4 apps out of 10 showings out of about 30 calls in two weeks. Many people schedule a showing and don't show up. It is par for the course if you are in a low income unit like I am. And just from your story I can tell that you are. A bounty hunter? Hahaha! I guess even bounty hunters have to live somewhere. Doesn't sound like a stable income to me. Are you charging your cost to run the application? That fee alone will weed out 90 percent of the people as the loosers don't even have the 25 bucks for an app.

The best motivator I have found is to tell them that we will approve the first qualified candidate and it is first come first serve. If they really like the house we give them the option to give us a deposit (equal to the amount of the security deposit) to hold the house for up to the end of the month. If we approve them we will transfer the deposit to their security deposit and require first months rent before they move in. If they want to move in early we might give them a few days or we will prorate the rent. If they are denied we refund the deposit but never the app fee.

The hardest decision I had to make recently was declining someone who gave us the app fee AND the deposit to hold. It wasn't hard to refund the money, but it was hard to turn down the first applicants who put their money where their mouth was. Still, they were trouble waiting to happen.

I would treat utilities like this: Figure your own average monthy utilities. Multiply times 1.5 and add that to the rent. If you loose money over the course of the year, adust up until you make some profit for providing the utilities. I would also work in some language into the contract to protect you from extreme increases above the anticipated utility costs. I hope to never have to deal with tenant's utilities.