All Forum Posts by: Will Barnett

I'm seriously thinking about organizing our neighborhood and hiring an attorney to negotiate the terms of the contract. I figure the more people we have, the better postion we'll be in to deal. Oil companies don't exactly have sparkling reputations.

A drilling company has just offered everyone in my subdivision the opportunity to lease their land for horizontal drilling. There is a huge shale (the Barnett Shale) here in Texas that is the largest in the country. From what little I understand, apparently there are new breakthrus in horizontal drilling that allows access to natural gas and oil under developed land.

Is there anyone with experience in this? Are there possibilities of damage to the home, like foundation issues. Homes here are already notorious for foundation problems due to the Texas clay. The idea of drilling wells under my home isn't very comforting.

I guess for the right price I would go for it but the first thought that comes to mind is how the lease contract is structured and who pays me if my house disappears in a huge sinkhole! :eyes:

During the Yeltsin years corruption ran amuck and we saw the rise of the Russian mafia. Russia was in need of a strong leader. For better or for worse, Putin has filled that role. I think he considers himself to be a patriot and wants Russia to be a powerhouse in the world again. Whether or not he 'chills out' and loosens the reins when he achieves that goal, or continues to consolidate his power, remains to be seen.

Goodvalley I have a thought you might find useful.

In most cases, low end properties cash flow better but do not appreciate much, if at all. High end properties are harder to cash flow but are a much better speculative play because their values rise the most, sometimes astronomically, in an up market.

I try to find blue collar properties in the middle that I can purchase at a big discount to gain instant equity, cash flow pretty well, and might even have a chance to appreciate tremendously in a market upswing.

My opinion is why risk your money on an upperclass rental that has the extreme possibility of negative cash flow, especially if you're just beginning your investing career? You might as well play the stock market, at least you won't have any tenant headaches.

What I'm trying to say, as well as Mike, is that investing in properties that cash flow well, bought well below market value, is a proven method of generating wealth in ten years or less. It involves far less risk than purchasing a luxury rental and hoping the value will skyrocket sometime in the next three decades.

That's something I've never thought about, but makes perfect sense. Thank you for that little tidbit of info.

I am a newbie myself but I have a few things to add.

When you buy a property it has to be a deal. Traditionally a deal is a property that is 70% or less of it's retail value. These types of deals don't come often. In my area it averages one deal a month, and I have to pounce on it quick or some other investor will lock it up. The most common sources of distressed properties are motivated sellers or lenders (banks).

The property you describe does not fit this criteria. It's been on the market way too long, the sellers are not motivated, and you're buying at only a 15% discount.

The major tax benefit of owning a rental is from a depreciation allowance, which in most cases eliminates taxes from positive cash flow.

It seems that you have not really analyzed the rent rolls in your area. Are renters standing in line to get a good rental, or are their a ton of vacancies in that area, for that particular property type. Assuming that you will get a good tenant by lowering the rent is not a good idea. Good tenants come from properly screening applicants by checking their credit, criminal and eviction history.

Please, please listen to some of the real estate vets on this forum like Mike and All Cash. I've only been doing this for two years and have made a lot of mistakes myself, but by reading the posts here and on other sites, as well as further educating myself, I've been able to do some good things lately. This sounds like a very bad deal to me.

John I thoroughly enjoy reading your posts. You are in a position that I envision myself to be in the future: a globe hopping real estate investor. It doesn't get any better than that!

Joe thank you very much for this valuable info.

Unfortunately, his crimes extend to more than what he did to her. He had his own business and also stole money from his clients. He has a warrant out for his arrest and is a wanted fugitive. While we will always leave the door open for some kind of reconcilation, I doubt he would return stateside.

Thanks guys for the advice. It looks like it's going to be a long process and hopefully at the end she can get some kind of closure. What's sad is that her husband was someone the whole family loved and was a successful CPA. He had a midlife crisis and went crazy. It still doesn't make any sense but the only thing we can do is move on.

If you have no idea what you are doing than don't buy it. Take some time to educate yourself about real estate and general investing strategies.

In this case you need to get comps, or how much are homes of the same age and type selling in that area? Then estimate how much the rehab costs. If purchase plus rehab is 70% or lower of the retail value (comps), then figure out if you want to resell it or hold and rent.

If the area is depressed then renting for now would be a good choice, at least until sales pick up. Figure out how much properties there can rent for. Divide the rent by two and if what's left can cover the mortgage, insurance, and taxes with some left over (cash flow) then you should consider this deal.

I recommend having enough cash to cover expenses for 6 months, but I'm a little conservative. I also recommend getting a full inspection during the option period to make sure there are no unexpected repairs (foundation, termites, wood rot).

These are the two basic real estate strategies that are just the tip of the iceberg. There are all different forms, shades and colors in between that include wholesaling, lease options, and FSBO. That is why you need to READ A LOT and talk to people who are doing it. I've learned a lot just by reading and participating in this forum.