All Forum Posts by: Mike Welch

There is a happy ending to this story.

Yesterday, I called the real estate agent I bought the property from. He contacted the seller's agent.

Early today, I contacted a hauling contractor and had them go by to bid on the clean up. They reported that it had been entirely removed with only a small pile of dirt left behind.

So, the previous owner, in an act of good faith, and in swift order, cleaned up his mess. I take back all of my unkind words!

That said, I still think it is better he is not living in the property in the condition it was in when I acquired it. Between mold, asbestos, contamination to the sewers, etc., he and his family were living in hazardous conditions. Sometimes, even a perceived calamity such as losing one's home, can have a positive outcome. I hope this is the case here.

A big thank you to everyone who took time to reply.

I've been calling around to other hauling services today and have been getting quotes. We'll see if they also refuse the job when they see exactly what is in the pile...

On another note, as I've been working on this property, I've been shocked at the conditions the previous owner was willing to live in and raise young children in. He deferred every aspect of maintenance for over twenty years to the point where the property was hazardous. His literal act 'pitching s**t' over the fence for the next guy to deal with' typifies his approach to home ownership.

In any case, thank you for your collective wisdom and experience. You've all provided a remarkable education to a new real estate investor!

I closed on my first rental property in late July and have been working hard to get it ready as a rental unit. I've got an excellent property manager in place, and we already have several rental applications we're reviewing.

I acquired the property through a short sale. The seller was required to leave the property in 'broom clean' condition.

I noticed, days after the final walk through, that the former owner had discarded a large pile of rubbish into the alleyway directly behind the property. The alleyway belongs (I believe) to the city.

I agreed to pay a contractor to remove the rubbish pile. However, he called today and reported that the pile is filled with dog and cat feces to the point where no city dump will take it and where it is hazardous for him to handle.

I'm concerned I could be cited by the city, and that a neighbor or a tenant will eventually complain of the smell.

Should I report this proactively to the city? Should I contact the seller's agent and insist that he remove the rubbish? Should I find a specialized waste removal service?

I'm not sure I'm liable as 1) I didn't dump this material, and 2) it is not on my property. However, it is clearly behind the wall to my property.

Thank you in advance!

Any recommendations on how to proceed?

I'm counting on the mortgage interest tax deduction to be an almost certain victim of coming austerity measures. This was proposed by the bi partisan debt commission recently and will resurface, but not until after the 2012 elections.

Cuts in defense budget are also certain to follow. With this will be the dismantling of the ubiquitous U.S. presence throughout the world in the form of 1) global military bases, 2) satellite regimes propped up with 'foreign aid,' and 3) wars and other covert activities to promote U.S. interests.

What concerns me with the dismantling of the U.S. empire is that other interests (most particularly our largest creditor) will fill the void through military escalation, leapfrogging the U.S. in naval capabilities, and will begin to exert its muscle just as the U.S. recedes.

One great thing about Angie's List is the care they take to ensure that their system is not gamed.

For example, NY Times recently had an article exploring how Yelp was being manipulated by unscrupulous organizations seeking to undermine their competition by posting fake, yet highly negative reviews.

Angie's List only allows for reviews by consumers of the contractors. They also screen each individual posting to ensure that fake posts do not get through.

That said, it is clear that some contractors care deeply about their Angie's List profile, while the majority have no idea what it is, or why they should care. This latter group might contain some of the best value contractors in your area.

I used Angie's List extensively on a restoration of a home I bought in Tucson. As I haven't lived in that town for ten years, I had only word of mouth and other sources such as Yelp to find contractors. About half of the contractors I used on the project came from Angie's List. It pointed me to a great house painter, a remarkable handyman, and an HVAC contractor who was slightly below the going rates. I also found a glazing company that was a pleasure to deal with and a cleaning company that did a very decent job.

Many of the contractors I dealt with from the site cared very much about their online reputation and tended to work harder to ensure I was totally satisfied as they wanted a continuation of their good reviews.

Angie's List definitely presents its own 'micro list' of vendors that is not exhaustive of any city's contractor resources. Contractors on the 'A' list will strive to keep their reputations intact as it becomes a primary source of leads for them.

It was very helpful for me in doing a 4-day restoration of a home in a city where I did not have a stable of contractors I'd worked with previously. It is also a very inexpensive subscription and, given the cost of the services I was seeking, was well worth the investment.

I've found the program in question outlined at the following URL:

http://www.fhfa.gov/webfiles/22366/RFIFinal081011.pdf

In short, the government is seeking to get properties off of its books and into the hands of private companies. They're requesting information from real estate investors on how this can be best accomplished with the following goals in mind:

* reduce the REO portfolios of the Enterprises and FHA in a cost-effective manner;
* reduce average loan loss severities to the Enterprises and FHA relative to individual distressed property sales;
* address property repair and rehabilitation needs;
* respond to economic and real estate conditions in specific geographies;
* assist in neighborhood and home price stabilization efforts; and
* suggest analytic approaches to determine the appropriate disposition strategy for individual properties, whether sale, rental, or, in certain instances, demolition. FHFA, Treasury and HUD anticipate respondents may best address these objectives through REO to rental structures, but respondents are encouraged to propose strategies they believe best accomplish the RFI's objectives. Proposed strategies, transactions, and venture structures may also include:
* programs for previous homeowners to rent properties or for current renters to become owners (“lease-to-own”);
* strategies through which REO assets could be used to support markets with a strong demand for rental units and a substantial volume of REO;
* a mechanism for private owners of REO inventory to eventually participate in the transactions; and
* support for affordable housing.

So, the government wants these properties off of their hands and wants input from the real estate investment community on how to best accomplish this while keeping the goals above in mind.

With this additional level of details, what are your thoughts? Will this end up benefiting only large, connected players? Will there be a place for smaller investors to benefit?

Also, how (and should) the government structure loans to investors that would include repair costs?

What's the idea?

Currently, the government owns a ton of HUD properties that have reverted to them. They currently favor sale to individual owners as opposed to investors. This is not working as the stock of housing they own is generally in bad condition and requires repair beyond the ability of the individual owner to fund.

The Obama administration is stating two things:

1) The government should not own individual properties that have been repossessed through foreclosure.
2) They want to enact a program that encourages investors (as opposed to owner occupants HUD currently favors) to acquire these properties who can afford to rehabilitate them and then rent them or sell them.

As an investor interested in acquiring a portfolio of rental properties, I'm curious to double-click into the details of the program and understand what exactly is being proposed.

The government clearly needs to get these properties off of their books. The U.S. government is not equipped, similar to banks, to own and manage properties. So, it is a natural conclusion that they should find the most expedient way to get these assets off of their hands in the most effective way possible.

Does anyone have a link to more information on what, exactly, is being proposed? Impossible to offer any sort of opinion without understanding the details of the proposal.

I'm a California-based investor who has just purchased and rehabbed a property in Tucson, Arizona. I studied the market for seven years and got a sense of what areas I'd buy in and where to avoid, and carefully considered the long-range view of the rental market as I intend to rent it out.

First, do not approach this lightly. So far, I've made one trip to scout out properties, and a second trip to renovate the property once I found one I liked.

Jon and Brian's advice is spot on. You really do need an extensive team of people including: 1) realtor you trust, 2) property manager, 3) handy man, 4) myriad contractors who will help you get the place into order for re-sale or to serve as a rental. I was fortunate that I lived in Tucson for ten years and have a decent network of friends who still live there.

Once I acquired the property on July 18th, I had to hit the ground running to get the following done: 1) roof replacement, 2) HVAC upgrade to A/C, 3) painting and restoration of interior, 4) electrical work to bring it up to code, 5) tons of work around the yard, fixing doors, windows, etc., 6) plumbing drain scope, etc, 7) floors restored as original concrete.

I did most of the above in four days, but it was intense. It has been a non-stop project ever since. The property manager visited today, and reported a whole list of additional items that need to be considered (thankfully most are minor).

It is not a trivial manner to put hard earned money into an out-of-state property. If the property is priced cheaply, there is a reason for it!

I've received an enormous, expansive education on the care and feeding of SFH's in the past three weeks.

Real estate is anything but a 'passive investment.' If I do this again, no doubt I'll be wiser for the experience.

My plan now is to rent this one property out for 12 months, then look at the numbers closely before I make any additional investments.

One other note: It is a really great feeling to own the deed to a property outright without a lien holder! Now, I'm awaiting getting a renter in place and the first rent check. Enough checks going in the other direction!

Good luck!