All Forum Posts by: James C.

Jason, 

Yes it can be done. I'm currently in Korea and have one SFR property in my home state. We don't have a property manager, however I do have a real estate agent who does all my tenant application stuff. I make the final decision based on credit scores, the agents interview and the rest of my written criteria.

Not having a property manager is both good and bad. I rely on the real estate agent for referrals of good professionals,  as well as Internet searches. It takes some extra time to fix stuff.  

The tenants know we are overseas and managing from here, so they stay in touch via email and are good about letting us know about issues. They take care of small stuff (under 150 USD). They are trustworthy enough that in a real emergency,  I wouldn't hesitate to tell them to fix it and send me the bill. I wouldn't try that with many tenants,  but these folks are good.

For the rent, I have them direct deposit into a credit union account specifically set up for the property.  The money is then transferred to another account so there is little to no balance in the account that the tenant pays into. 

The bad is that there is a 14 hour time difference,  so I'm up late or very early to talk to repair folks. The other bad part is not having a full rolodex of professionals to help out. This is mitigated by my real estate agent, family in the area,  and a couple of folks that we know that are overseas with property near us. I also was a real estate agent for 7 years,  so I do have that experience to help. 

My advice is to price in property management in your analysis, no matter what you decide.  If you decide to self manage,  then find an agent that will do all the leasing legwork for you to your specifications and has a good network of property repair professionals. Back that up with creating your own network of repair folks, and if you can friends or trusted family in the area. 

If you decide to hire a property manager. Then vet the living daylights out of them. 

Hope that helps.

Good luck, 

Jim 

Meldeine,

You are doing your analysis incorrectly. Maybe a different way to say this is that you aren't looking at things in a logical,  business oriented way.

Remember, the value of any investment is the return you make on that investment. Notice there is nothing in that statement about the type of investment. 

What you are lacking is information.  When you make statements like "I don't know" coupled with "I am worried", that is a dead giveaway that you need to go get information. In essence, you are whining about what you aren't doing.

Think about it this way, if you knew EXACTLY the entire financial profile of the investment  (acquisition,  rehab, running, exit), then you  would just throw your numbers into your business model and be done.

You can never know exactly (if you want to, it's analysis paralysis), but with good information  (research) you can get close enough that you get comfortable enough to purchase the investment. 

So your job, if you want to invest in multi family, is to stop whining,  and go get the information for how much it's going to cost to rehab the unit. Then put that into your model and see if it meets your return criteria. That's the work of being a profitable investor. 

Ultimately,  there will be some risk you will have to take, but that's investing. 

Hope that helps. 

Good luck, 

Jim 

Amauris,

Yes... it's the BRRRR strategy. Make sure that you price the HML for the entire term (usually one year) in your analysis. Also, make sure that you have everything nailed down as much as possible. When using a HML, the fewer surprises the better.

Hope that helps. 

Good luck, 

Jim 

Ben,

Call 'em all. You should probably start with the recently expired and work your way back. The trick is repeated contact. 

Hope that helps. 

Good luck, 

Jim 

Daryl, 

Using a FHA or 203k depends on the condition of the property. The standard FHA is known as a 203B. The 203B is for homes that are mostly "move in ready". The 203k allows you to wrap in repairs to the property. From a borrower point of view the underwriting criteria are identical between the two.

Assuming the seller of the foreclosure is willing to deal with the process that comes with the 203 B/K loans then yes, you can use them for purchasing foreclosures.  

The major issues with using them for foreclosures center around the utilities being on (most property preservation companies turn them off and winterize the house) as well as repairs needing to be done (the foreclosing entity usually won't allow work to be done prior to closing for liability reasons ). Having points and closing costs paid for by the seller can also be an issue.

Hope that helps. 

Good luck, 

Jim 

Carl,

Two rules when buying property. 1) Always have a title search done. 2) If you are thinking about  buying without doing a title search, see rule 1.

A title search usually runs less than $1000. I can get them run for less than $300 where I am.  

If you are going to spend more than $1000 on real estate, then you should have a title search done. If you don't you are putting your entire investment at risk.

If you don't do a title search,  you won't know if the property has been transferred, is foreclosed on, if there are back taxes or assessments.  All of these can cost lots of money to fix.  You could loose your entire investment.  No, I'm not being dramatic,  it happens more often than you think with folks trying to shortcut the process, or save money. 

If banks, mortgage investors and everyone else in the real estate world wants to know before they buy or lend if a title is good,  you should too. 

BTW,  I would not only get a title search done,  but I would buy the title insurance as well. Oh.. and specify an "insurable quitclaim (or warranty) deed"on your contract. Cheap piece of mind.

Hope that helps. 

Good luck, 

Jim

Alex,

The biggest thing is to check the water and heating pipes. Make sure that they have been drained properly. 

Water pipes can be tested by using compressed air and seeing if the pressure drops over time.  If it drops,  then there is a leak in the system somewhere. 

Heating systems  (FHW and gravity systems) need to be gone over carefully. 

Other than that, you are looking for signs of a leaking roof, or structural issues (bowing roofs, walls, collapsed foundation walls etc.) From snow and ice loading. 

In the south or places with slab on grade construction  (no footers), check your foundations and outer walls carefully for movement. 

Pipes are the toughest,  mostly because they are hidden in walls, and fixing them involves ripping out walls and mitigation of water damage. 

Hope that helps. 

Good luck, 

Jim 

Matthew, 

Pools are a mixed blessing.  You can estimate the size (length and width) and depth of the pool,  then figure out how much it would cost to fill it in. (LxWxD). If you can measure both the deep end and the shallow end, then use the average of the two for the depth.

From there figure out if it's concrete or vinyl lined. Call around to find out the cost to completely redo that size pool,  filter, lines etc.

Once you have those two costs then you can decide how you want to proceed on the pricing.

You won't really know what you are in for until you remove the cover. If you figure your worst case scenario,  you should be covered. 

FWIW most REO companies cover the pools regardless of the condition of the pool for liability reasons. It could be in perfect working order or it could be shot.

Hope that helps. 

Good luck, 

Jim 

Billy,

Yep. 

However, remember that that is a screening rule, not a "buy" rule.

The only way to actually determine if something is a "buy" is to do a complete financial due diligence analysis on it. You then compare the analysis to your business plan to determine if you will purchase it.

Hope that helps.

Good luck,

Jim

Cody,

Having someone who covers you is the equivalent of a partner.  It can tane many forms, but is usually another agent, so they can show the property,  and write the contract. They would then get a predetermined amount of money for doing so.

Theoretically, (check out your state laws carefully) if they are not performing thongs that require a Real Estate license,  then you could have anyone do it. Plenty of agents have teams to help them out.

You should carefully consider what you want your business to look like and how structure it.

Hope that helps. 

Good luck, 

Jim