All Forum Posts by: Gordon French

You dont need a website any time soon, that must be a want. 

You need an LLC or an S-Corp ASAP. Talk to your accountant and decide what is better. Mine just got on me for having an LLC when I would have been better off with a n S-Corp. She is trying to convert it.

You need to work with an agent to become a broker. So might as well start working with one now to build a relationship and start the classes to get your license and then work for them when your ready. I am doing that. Bought 11 properties with the same broker. He offered me a job as soon as I get my license. No I don't need the job. But I need to work under a broker for two years to get my brokers license. Each state has different rules. 

Start practicing appraising properties and/or deals. Find a place you want... figure out what you would pay for it and what is worth. Then track it as it sells. Compare your values to the actual values. Do this all the time... as you do it more and more you will find one that screams buy me now.  Your basically training yourself to judge the deals without investing so when the time is right your ready. I did this for years before I could actually get the lending to buy one. 

I have basically done that twice. Difference is I did not sell the homes I rented them when completed.  I double my money on paper. I have $60k in my current home and it appraised for $120k 1 yr later when it was complete. I got a home equity line of credit and bought 5 or 6 more houses. 

Only issue is if your wife will still be your wife when your done. I don't think my wife will go for a 3rd. We make enough now she would likely get a hotel room until I was done with the renovations. 

I don't know anything about the creative lending part and that should not be considered when figuring the value of the property. 

Your other numbers seem accurate. I don't see property tax or insurance. You will l want to know what those are and account for them. Some places the property tax can be very high. I would not buy any investment property with a CAP of only 9%. You have to figure the going CAPs in your area and what you want to invest at. My average CAP is 20%. I will go as low as 15% if I see potential. When you add in insurance and taxes your likely to drop to 8%.... There is no chance I would make that investment. Perhaps fill in the missing numbers then find what the property is worth at 11% and offer that. Hopefully you can agree in a 10% range if your comfortable at that return,

Its worth you time to find out what they will actually rent for. That needs to be a fact not a rough idea. 

13-40-107. Notice to quit.

(1) A tenancy may be terminated by notice in writing, served not less than the respective period fixed before the end of the applicable tenancy, as follows:

(a) A tenancy for one year or longer, three months;

(b) A tenancy of six months or longer but less than a year, one month;

(c) A tenancy of one month or longer but less than six months, ten days;

(d) A tenancy of one week or longer but less than one month, or a tenancy at will, three days;

(e) A tenancy for less than one week, one day.

(2) Such notice shall describe the property and the particular time when the tenancy will terminate and shall be signed by the landlord or tenant, the party giving such notice or his agent or attorney.

(3) Any person in possession of real property with the assent of the owner is presumed to be a tenant at will until the contrary is shown.

(4) No notice to quit shall be necessary from or to a tenant whose term is, by agreement, to end at a time certain. (5) Except as otherwise provided in section 38-33-112, C.R.S., the provisions of subsections (1) and (4) of this section shall not apply to the termination of a residential tenancy during the ninety-day period provided for in said section.

Im not... Baby Boomers typically live in the higher end homes. I invest in the low end. millennials don't care about slowly building the networth required to qualify for that type of house. They will likely keep renting the lower cost homes and multi-units. I rent to several millennials and very few of them care at all about buying. They are happy to not have to pay to take care of a house and don't see the rent as a huge waste. I do not rent to any boomers, cannot think of any that have ever applied. 

There are not enough generation X'rs like me to matter. It seems my generation is happy to buy up everything the boomers sale. I guess some areas could be effect but none that I am in. 

More to the point... you cannot realistically project home values 20yrs out. In 20 yrs my homes will have paid for them selves several times over. If there worth nothing, Im out nothing... So why worry.  

How much was the house payment compared to rent payment?
Why are the selling their house? I hope not because they could not afford it. 
How much below your income to rent threshold? Most of my tenants make below the rent to income ratio recommended on many books and forums. My properties are in a lower income area and people have to have a place to live. 2 times the rent is often fine assuming they don't have a brand new car with a relative giant payment. 

I would be happy to get 6 months upfront provided they pay the 1st months and security deposit before moving in.  My lease would be normal. Rent is due on the 1st and late on the 5th. If they pay it early so be it... but if its late proceed as normal. 

I would defiantly be focus on why anyone would sell a house and move into a rental. 

I am trying decided what online school for my wife and I to use to complete the requirements for our real estate license. The local broker recommended VanEd at $700 a class or $1400 total. Im leaning towards it because he recommended it.  However since two of us will be taking the class I was going to go with Real Estate Express at only $657 total for us both. They have different levels of access. My thought is we can use one text book, and share the live lessons or do them together. 

Has anyone used either of these? 

Thanks, Gordon

10 of my 11 properties are under 75k. I agree the financing is very difficult. I was able to do it with business loans from a local bank. The local bank understand the market and has more freedom.  Mine are all at 15 yrs. I doubt you can get a 30 yr on anything that small. Just need to find the local lender. 

That is a very complicated questioned and so wide that no one can answer it. You need to figure out what makes a good investment for you.

Ask your self: What my goal?

For me I want long term investments. I want to retire in 10 years. I want 15 yrs loans, as little as possible cash expenses, min 15% CAP, GRM of 6 or less, DCR of 1.4. I don't care about curb appeal or estimated growth as I don't plan to sell and trying to project 20 yrs out is not realistic. I jump whenever I can find ways to put less then 20% down. I hate down payments. I would take a hit on the numbers above and do whenever I can find a way to put less down.

If by chance you don't know what those letters mean they are a great starting point for you. You should google them and start reading everything you can about those numbers. They will give you a feel for what is good, bad and what you can live with in your market. Its possible you know them very well and are just asking who uses them and what others people use. 

Are you a reseller? Again, I have learned it is very different. Seems everyone understands CAP rates, but some use projected and some use actual. Its really about learning what your connections like or perhaps getting a good understanding of the most common ones and having them ready.

Can the tenant afford it?
Can you afford to loose the tenant? 
Are they taking care of the property?
How long will it take to get a new tenant? 

I don't like turn over. I would inspect the unit and if the tenant is taking good care of it I would talk to them about the likely hood of them finding a job. I would explain that I need them to stay in contact with me and work with me as I cannot leave the rent that low for long. I would figure the time frame based on the answers to the question above.  If its vacant for 1 month you loose the $1800. So, you can afford to let him keep it at that rent for 4.5 months and not lose a thing.