All Forum Posts by: Glen Wiley

The answer to this depends on the local market. Here's my perspective:

The current rates are historically low, we all got spoiled by free money during the 2%-3% mortgage rate era. I don't think we will see meaningful reductions in rates in the next few years (if ever).

Many areas have SEVERE housing shortages. In these areas, if rates drop, I expect buyers to come out of the woodwork. Basic economics, increase demand without similar increase in supply will raise prices.

There is a growing strong latent demand, people are delaying household formation or doubling up with other families right now.

If rates stay the same, the growing latent demand will begin to force its way into the market as people capitulate and decide they simply have to have a place of their own.

In areas with consistent population increases and current housing shortages, stable rates will lead to strong appreciation of existing housing values and increased median home prices.

Good for you for looking into REI.

One way to approach liability protection is that you can buy the property as an individual with a conforming mortgage and then file a deed to place it in an LLC. You should always have an umbrella policy regardless of how you handle ownership.

We have bought all of our properties via the MLS, we make offers that will cash flow which means that many of our offers are rejected. That's ok. A few strategies that have helped us win:

1. Pay cash then finance afterward. This allows very fast closings which really appeals to some sellers, they will take fast closing over highest offer if they need to move quickly.

2. Offer rapid closing with financing by having everything lined up before we hit the market. Fast closings appeal to people.

3. Do my own inspection as part of the showing and be ready to make an offer on the spot, waiving the inspection (since I already did it). When we go to a showing, I often have a flashlight, ladder and coveralls in the car so that I can hit the attic and crawlspace right there. You need to know what your are doing and be willing to risk missing some things.

Try to use handymen who come via a recommendation. Talk to realtors or others in the area who have their own reputation to protect.

I have also often used large trade specific contractors like Michael and Sons here in Richmond. They are big enough to have a big stake in maintaining a good reputation and have infrastructure that helps keep things running well and can deal with problems. They aren't the cheapest but are less likely to commit fraud like what you have described.

Good explanation of your current state of mind. I suspect you will end up regretting selling the place in a few years but I understand your thinking. I'd encourage you to reconsider.

Having said that, if I were in your shoes and made up my mind to exit the property, here are the ways I would tackle it in order of preference:

1. Ask around and see if anyone I know wants to try their hand in real estate. Be up front with them about the issues and see if you can make a deal. Many people are begging for a way into the RE industry. Maybe find a way to keep ownership but let someone else manage it, handle repairs etc.

2. Go to a local REI meetup and pitch the deal and see what you can get.

3. Put it on the market and see what the market will bring - you can always chose to not sell if the numbers aren't good enough but I think you will be surprised at what houses are selling for.

4. Fix it up and sell it.

Capital is really helpful :)

Focus on finding a way to use your current house to make money.

Can you rent out a room?

Can you convert your garage into living space and rent that out?

Can you rent out your basement?

Are you sure it "needs" new windows or do you just think it would be nicer with them. I usually leave the windows alone in older houses unless they are not functioning. Even old wood windows can often be fixed with some sanding and paint.

Single pane, raw aluminum is ugly and old wood frame is a pain to operate but they work well enough and not replacing them helps me keep my rents within reach for families who need affordable housing.

In some cases I will replace a single window in a house if the frame is destroyed but I never do the whole house. I have never had tenants or applicants complain about the old windows.

I see a lot of landlords that throw a ton of money into cosmetic work that will never earn back the costs - be thoughtful about whether this is truly necessary.

It will be interesting to hear follow up over the next month or two.

 Keep it credible....

No appraisal needed. Establish the value based on your own market analysis.

Your property is a rental once it is placed in service - typically the date it is advertised as available.

Check your home owners insurance policy and make sure it covers rental operations - I expect it does not. You will want to change it to a landlord policy.

Read your local landlord/tenant rules to make sure you cover things the state expects rentals to have. In Virginia for example, a landlord must certify that smoke alarms are working every 12 months (something most homeowners aren't great at).