All Forum Posts by: Heather Schmidtknecht

@Ysabel Y., I had Section 8 rentals at one time... in MN, the conditions you are describing would never fly with the Section 8 inspector. What I liked about Section 8, is that there were always people looking for Section 8 housing (more dwmand than supply) and the rent (or at least the Section 8 portion of it) was guaranteed every month. I personally refuse to own & rent out a property (including its condition) that I would not live in myself. But that’s just me... and I have the financial ability to uphold that self-imposed standard... I’m not living on rental cash flow. I think you have to decide for yourself... it doesn’t matter what anyone else thinks.

How do you back out if the rehab quotes come in too high?  I was under the impression that you could only back out related to stated contingencies, such as if an inspection found something that significantly devalued the property, etc.?

I guess that was my question, Trevor... not sure how to get the numbers to plug into the calculator, as I wasn't sure it's kosher to ask to gain access to the property (possibly multiple times) when I haven't made an official offer -- and I know NOTHING about rehab costs.  This property has been on the market since mid-April... and the property manager indicated that the owner is motivated to sell.  After-rehab value would easily be $299k; using the 70% rule, if I put $110k into rehab, I would want to purchase the property for $99.3k?

Good ideas, thanks!  Is it allowed to get all these budgetary quotes BEFORE making an official offer?  I'd obviously have to get the seller's permission, and if I am getting quotes from multiple contractors, it would mean multiple visits to the property (including access to interior)... do you feel that will be frowned upon PRIOR to making an official offer?  Not sure how else to do it though, other than to try to *coordinate* some of those visits to happen at the same time...?

I have been in this situation... and I don't recommend it.  When I remarried 4 years ago, I moved my family to my new husband's home and put a FOR SALE sign on mine.  Because I didn't want it sitting open over the winter, when fall rolled around, I rented it out.  My rent covered my large mortgage, but I paid heat/sewer/water/trash/taxes/insurance (because if I would have made someone else pay any/all of that, I would have never found anyone to rent it).  To the point, I was putting at minimum $300/month toward that rental.  While it's true that if I had held onto it until the mortgage was paid, I would have a little cash flow then... the stress and the headache until that point is not something I would advise.  I was lucky never to have a vacancy in 4 years, but if I would have, it would have sunk me. 

I had an emotional attachment to that house, and when it finally sold this past summer, I had a really hard time.  HOWEVER, selling it opened many doors for me that were previously locked tight -- like investing in real estate with cash flow!  :)

If it's too late to get out of this deal, my advice would be to build-up your cash reserves/emergency fund so you don't have to stress over vacancies and/or repairs/maintenance.  Good luck!

I am looking at a BIG 4-plex that has been neglected for a while but is currently rented. Here are the numbers: * 3844 square feet, 2-story, 4-plex buIlt In 1882 * Rents for all 4 units total $2930/month * Landlord pays heat (gas boiler) and electrIc whIch Is $350/month total * Landlord pays water/sewer/trash whIch Is $170/month total * Taxes are $3k/year Needs: *ExterIor & InterIor paIntIng *Roof *FloorIng throughout *39 BIG wIndows *Most applIances are quIte old LIstIng PrIce: $199K (motIvated seller)

@Jim Pfleging — I’m okay with month-to-month leases most months of the year, but I live on the WI/MN border and like to have a lease for the winter months... as I don’t want an open unit in the winter and I also don’t think people generally choose to move in the winter months.

@Jim Pfleging -- you don’t use leases at all?

@Miranda Simon the question was what NOT to do.

@Karen O. I think the original question was what NOT to do...