All Forum Posts by: Anna Laud

@Account Closed  Good post and lots of great feedback here, I think one issue that is missing is SHOULD wholesaling be outlawed and, while I know this will draw fire from some, overall the answer is probably yes at least partially. If you've spend more than one week in any market (I'm primarily in Indy and in the midwest) then you've seen:

- Houses that are "pending" and the realtor thinks closing is coming but it is being fished out

- MASSIVE spam and abuses of people that get HUNDREDS of calls a day from "wholesalers"

- The same deal advertised with 10 different prices

- Sellers who are lied to and taken advantage of

- Wholesalers lying about values, rents, etc.

Yes there are ethical wholesalers for sure but our collective immune system should be stronger and there shouldn't be so many people like this.  Yes I do think eventually the laws will pass in more states and wholesalers will have to provide much more value.  We do a lot of free training by the way on how to build your business correctly with wholesaling.  Hope that helps. Thanks everybody!

@Hayk Sarkisyan S8 can be tricky and often 50-100k houses will be turned by many property managers.  There are many cities throughout the midwest that can work well but I would suggest moving your price point up to 150k at least.  When you can rent for $1,500 you get a much better quality of tenant.

This is also why the Section 8 list is a great source for motivated sellers now lol, so many of them want out and into better areas. My team and I help out of state investors create passive income with Indy real estate, we've worked with many CA investors, that's what I'm basing this on. Hope that helps.  Please reach out and I can send you specific deal examples. Thanks!

Hi Adelaide, we help out of state investors create passive income with Indy real estate, both commercial and residential. In that 800k-1M price range you may want to consider less cash flow for 1-3 years because in the right areas the rents and value appreciation is kicking in faster.  Please reach out if you want more help and I can give you a few example deals. Hope that helps - Thanks!

@Hoshi Soul

Hi Hoshi! 

First of all, congrats on getting your license = ) As far as the contract portion goes, that can be State by State in terms of what's legally required.  I am assuming that it's likely you wouldn't need to as this person isn't affiliated with your managing brokerage and it would be more of a personal payment from you directly- but again, need to verify with managing broker on that one. 

As to the worth it portion, I would personally say "no". No. one what good is it going to do you to have these skip tracing leads really? Yes, you may get listings from them but this is where it gets muddy. You've got to have the listing under contract, the exclusive right to sell. This means you won't be using an assignable contract that the person doing the skip tracing established. These won't be 'off market' deals if GA is like IN, and you need to get all listing on the MLS in 24-48 hours after contract- so it will be under your name as the listing agent.

So what's the problem? Well this comes from the general spamming involved with getting these from leads to contracts. On average I would say these homeowners are getting spammed by wholesalers at least 5 times a day, and it's why wholesaling is becoming illegal in various areas. Doesn't seem to suit your reputation to be known as the 'spamming agent' to me. 

That's issue number one. No. 2 paying this person may not be ideal in other ways as you could possibly get into issues with them having an assignable contract and not informing you, the seller not realizing they can't have an exclusive right to list contract with you and then you end up with the skip tracer coming back to you for more $ as the 'procuring cause' of the sale. 

I personally see this as not going so well, but maybe that's just me. It seems like a better plan of action would be to get involved in local REIAs where you, yourself are making investor connections. My advice would be to skip the skip tracer and try your own on the legal side of things with C-SPAM laws in mind marketing to generate leads. 

Hope that helps some! If any of this seems much more Indy specific than GA, I would for sure reach out to managing broker. One more thing here, I guess No.3 being there's only so much spread on a deal. If you're paying fees to your brokerage, fees to your local board, and paying into your cap- that 15% is going to really take another chunk out of things for you it seems. 

@Joe Matthews

Hi Joe! 

I'd be happy to help you with this here in Indy. There are few areas that would be ideal to start looking in at this price point. For this price range here in Indy, you'll be looking at either rent ready or being able to get deals under this that need some rehab work. We've put three in this same range under contract in the last two weeks. I would look around Brookside Park as well as Riverside Park areas. Grace/Tuxedo may have some finds for you as well. DM me if you'd like some listings pulled from the MLS that have more details. Most of these are going to be in areas of gentrification and have value add possibilities for refinancing if BRRRR method is your thought.

Thanks = ) 

@Tyler Patterson

Verify with local legislation here, but as this is considered a 'common' area you should in theory be able to use the footage if it's posted you're recording. A simple sign stating video surveillance  is in use as well as leaving written notice about extra fees for dumping large materials should suffice on both fronts. When it comes time to update lease agreements, simply include this as well in 'from now on/moving forward'. One more thing here, exterior access points may be under a local ordnance (i.e.- can you point the camera at the door or not)- so double check this as it may technically infringe on right or quiet enjoyment. Other than that, you should be set if local laws uphold as this is a common area. 

Hope that helps some! 

@Robert Parody

Hi Robert! 

Yes, you have it correct at the 51% here- that's as long as there isn't anything on the commercial said that will affect the heath of the occupants/owners. 

I will say that it may be a little tricky perhaps getting the FHA appraiser to 'pass' it, so I would take that into consideration when it comes down to appraisal.

Side note here in dealing with an FHA loan- let me help you, help yourself from the very start; FHA requires a paper-trail unlike a conventional loan for some things. So one thing I would be sure to do is have any extra funds you've got laying around (like a coffee can of $20's buried in the backyard)- deposited now- in smaller amounts over the next few weeks (less than $500 each) as all cash deposits have to be verified for that 3.5%.

One more thing, if there's been nay recent work on this place, I'd check to make sure the appraiser that comes out don't order a second one done- this can happen from time to time and really slow things down if it's overlooked at first request. 

Just basically make sure that every single thing you're doing now you document it like it's your job- FHA game' rules' - unwritten of course.

I'm sure some lenders will chime in (broker here), but overall best advice- start documenting  as much as you can now.

Hope that helps! 

Hi Shivateja!

I'm maybe not seeing the full picture here on this and why you'd pay for a SFR at $55K to add beds/baths for an ARV of $180K? The rehab on adding beds and baths is okay if it's within budget to do so, but adding them just for the sake of playing the 'value' add game is a newbie mistake.

I'm not trying to be mean or poke holes here in this, just trying to help- but for $55K and adding all this into a house where you're likely going to be looking at new water lines/pex (I'm TOTALLY assuming there's no sewer scope done etc), updating electrical, there's probably (or could be) asbestos siding, roofing and other far outdated items- PLUS the addition of beds and baths in costs for total rehab- PLUS you're adding onto here right in SqFt- not within the walls work for these rooms so survey to lot line etc-right, well that's one part. 

Preface; - I do have my broker's licensee but I was a wholesaler first so I see both sides- but let me say -and ARV of $180K- purchase of $55K, and rehab of at least $50K okay but then this was a cash deal?

I mean it seems really unlikely that there was another investor that had $135K+ closing costs to drop in Q1, then come Q3 they want to take a $85K loss? That's minus the $5K 'assignment' but I'm sure it's over $5K honestly. Hard to imagine that this is really for sale unless it's a trust fund baby that simply has more millions than they know what to do with and doesn't care.

Bottom line- RED FLAG- too good to be true on the sale price, likely not even known to seller the house is being marketed, etc- Ask to see the assignable contract and what their equitable interest is in the property- the wholesaler I mean.   

Hope that helps!

Hi Sarah!

While I don't have experience near Oneonta N.Y. I do have some suggestions for making the most of your student rentals that may help.

There are a few different types of renters college towns can provide;

-Typical ‘in session’ student renters

- Year round student renters (usually those out of state or from abroad, or university/residency renters)

- Faculty/staff renters

Your typical ‘in session’ renters are going to make up the bulk of your tenants in most cases, and this can be a pretty ideal scenario. They are in most cases not looking for anything fancy, and a house offered at ‘apartment’ level finish would work in most cases. Meaning they usually have their parent’s predetermined budget in mind, so cheaper is better.

In most cases this means you won’t need to dump in a lot of funds for updates- just the basics that are in good repair usually work. Only in areas that are bringing in more money for tuition (such as private college/universities) would it be considered advantageous to ‘compete’ with a few upgrades (basically keeping renters closer to a lifestyle in amenities they might be used to)

Perks here are -

• Minimal ‘basic needs’ updates only needed most of the time
• Rent often paid by someone else (first bank of Mom and Dad in a lot of cases)
• Never really a need to market property/have scarce renter pool

A lot of folks are worried about the lack of credit history with student renters, worried about property damage and this is the key to help with that;

1. -Add the parents/legal guardians to the lease and screen their credit/background just the same as any other renter
2. -Get the maximum allowed by your state in terms of security deposit
3. -Have utilities paid by renters (this lessens the likelihood of seasonal utilities being out of control)
4. -Use an app/online payment system to ‘remind’ of payment due/accept payments automatically (like AHC deposit)
5. -Use an online (or even via text on group with co-signer) to report damages/issues
6. -Use this same app or text thread to respond to anything abnormal/red flag likes noise complaints, too many overnight guests etc- keeps a ‘report’ in to parents as well and can be used as leverage for offering ‘responsible housing’
7. -Offer a GPA discount; this sounds silly maybe but it takes responsibility to make good grades and carry a higher GPA. Car insurance companies do the EXACT same thing for this very reason- it promotes responsibility. For incoming Freshmen, senior year GPA’s will work just the same.

This covers your property for not only rent payments, but also any damages in most every case.

In terms of what happens during summer break to the renters? This is a time where you can consider Airbnb options as well as your yearly rental income kind of leveling out ‘offseason’ payments. If you’re much closer to campus and know walking distance will allow you to charge more rent than a house 10 blocks away, while purchase price is the same as other said house, use this difference in charged rent ‘in term’ to help offset your ‘off season’ bottom line.

You might consider breaking down the rent in a more ‘per person' way than a monthly flat fee as well- and this can increase your monthly ROI quickly. As this is a common place practice, just make sure you're competitive, and don't overprice yourself out of the running.

One more commonplace thing is to offer a discount for repeat renters- especially those that are in good standing - this would be like a ‘discount’ for signing a new lease agreement at the second semester end of one year, for the upcoming fall semester etc.

Keep in mind too the perk of ‘family’ discounts along these same lines and renting to siblings (again, if you know parents are qualified co-signers- you’re setting yourself up for another good renting situation in most cases)

You could also consider a month to month with another tenant during this time as well- just be sure to let them know in advance and screen them accordingly before going this route. Bottom line is, you can account for year round payments, even while school isn’t in session.

Renting to faculty, out of state students, students from abroad and more of year round (such as residency) students will not carry the same short term renter displacement, but may require a higher level of finish in some cases as this becomes a year round home.

Perks here are-

-Year round rent under the same renter/ as your lease terms apply

-Some renters having supplemented housing stipends paid in the form of allowances, stipends, and other arrangements

-Lesser degree of potential property damage for those in graduate/residency programs (simply based on age and maturity - again, use the automobile industry here in why most car rental places won’t rent below age 26)

-Less need for obtaining co-signers (allowing tenant to solely establish some credit history as well)

When your tenants do move on and out, as a ‘thank you’ for being such great renters for the span of their academic career, it can be nice to offer a letter of reference as well for future renting needs. Informing your tenants you’re willing to do this is simply one more reason to be kind to your property as well as make timely payments. Not necessarily needed, but can be nice to offer!

Hope that helps some and may avoid a few of those requested to mention struggles! 

@Seth Larson

I was on the fence with it, but after your reply and others, I do see the other side of the coin now = ) Decision to paint it and go the updated route made!

Thanks for your input!