All Forum Posts by: Doug McLeod

Check with a local RE attorney to confirm.  Typically you must honor the lease that is in place, but not sure how you formally get the lease "updated" to reflect you as the new landlord.  If tenants want out early, you can let them out of it, enforce the lease terms strictly, or negotiate something in between.

Don't know about MN, but that's what I hear about TX, too.  However, that does not apply if you are an owner managing your own property.

@Marvin Meng - that maxim about "If it's a real deal, you won't have trouble finding money" primarily applies to wholesalers who are trying to sell properties to investors by assigning the contract (it needs to be a real deal for the investor - if it is, someone will buy it) and to situations where you are partnering or syndicating (bringing on other investors as part owners) where you have an established track record and a good deal that people will be willing to buy into.

Starting out to buy and hold or flip- you need your own capital OR you can borrow from 401k (cheapest) or credit cards (some are cheap or can be kept that way by rotating through various low interest deals) or you can borrow from family and friends and make it worth their while OR you can look for seller finance deals. But investing requires capital unless you find a deal where the purchase + repairs + closing and financing is less than 75% of the after repair value (ARV) - in which case you can find a hard money or private lender to fund the whole thing up front and after you refinance into long term financing or sell, you'll have almost none of your own money in the deal. See Brandon Turner's book on Buying RE with Low or No Money Down.

You also need decent income and credit to qualify for financing.  Be careful about the other borrowing mentioned above - too much of that relative to your income will hurt your Debt to Income ratio and either prevent you qualifying for a mortgage or push your rate up.

You also need to know what a good deal looks like and how to run sales and rental comps (or have a realtor who will do it for you - you want them to value the property from an investor's perspective - ie: most likely appraisal value after repairs). You need to be able to estimate rehab costs reasonably well (check out J. Scott's book).

Can tell you about your deal unless you provide all the numbers and the sales/rental comps, but happy to look at it if you provide it.  As  pro member you have access to the calculators - have you used them to evaluate the deal?  Glad you're using BP for inspiration and learning.  Make sure you are ready before you pull the trigger.  

There are lots of classes and seminars by different groups in Houston.  You'll need to drive a couple hours, but there are lots of resources here.

I'm a buy & hold guy, but I know several somewhat reputable (they still want your money) groups that teach marketing, wholesaling, and flipping and several people who do this things who could tell you how they got started.

a) do you have the cash (or can you pull it together from family, friends, credit cards, 401k loan, etc. then get a private or hard money loan after closing?

b) if so, assume a near worst case rehab and a painful process to get the current tenants out - and remember to keep the taxes/closing in mind but separate - and make them a lowball offer.

Is there a way to pay the taxes and get a tax lien that would allow you to foreclose at some point to force the issue?  These folks don't sound like they are really that desperate to sell and are just waiting for someone to pay them too much money.

Hi Kyle-

Start with the Free How-To Guides referenced under the "Learn" tab above.  Then check out The Millionaire Real Estate Investor by Gary Keller.  And listen to the BP Podcasts (link also under the "Learn" tab).  Also check out some of the blogs and when you have questions, post them on the forums - like you just did!

Welcome to BP!

"Partnerships suck" - have you considered just doing a private loan?  Much less hassle.  Since he's your dad, he may not even require your to secure it.  Just get a Promissory Note template.  I paid my father-in-law 8% interest only on a one year note. Did the same with my cousin, who decided to keep the money with me for another year (but his interests are secured with second liens).  The idea of joint ownership, obligations, and passing through profits and depreciation was more than my father-in-law or cousin was ready for.

But if you want to have him as an equity partner, I'm sure there is an example in FilePlace (look under the Resources tab above).  As a Pro member, you have full access:

https://www.biggerpockets.com/files

Skip the co-signing.  They're grown-ups now.  Take a double (or triple) deposit - they can borrow it from their otherwise would-be co-signer if necessary.  Be tough on them about paying on time and the consequences of not and stick to it.  You will train them to be good tenant and build good credit.

They mentioned "Joshua" the new UI designer on the podcast that posted today (not to be confused with @Joshua Dorkin - the short Jewish guy who runs the place).  Maybe UI Joshua will deliver better UI on the web and the app(s).

@Brandon Turner - you guys were very funny today on the 22-1/2 tips show.  Loved it.

Are you upside down on the townhome?  After 16 years, I'd think you have some equity, even after the 2008 collapse - enough where you could sell above the loan amount.  What is the current market value vs. loan amount?  Let's not assume you must take a hit on your credit until we explore some options.  Sorry if you've already done that.  

Have you explored renting the place out entirely (vs. having roommates)?  You can probably find a different class of tenant that is more stable than a roommate situation.