All Forum Posts by: Jan Kerr

@Jay Yoo With a crdit score that good, I would strongly advise you to shop more for your mortgage and see if you can score a better rate. Not all mortgage companies are the same. In the future, never, never, never waive your inspection rights, for any reason. If you don't get a deal, another one will come along. I feel like you have been manipulated because you were too caught up in worrying about losing this deal. Get busy and shop for a better rate, ASAP! 

Market cycles are predictable for the most part. Anyone who is paying attention and knows where to look can see the corrections coming and predict them along with the upturns. Some places have low slow steady growth. They don't get the exagerated fluctuations like we see in marktes on the west and east coasts. I have watched and followed three complete cycles in my career as an investor and mentor. Most cycles take 10-15 years to make a compete cycle. Some places on the low end like Utah (10 years average), due to influx of new residents and a high birth rate. Utah tends to be very business friendly and manages the state budgets quite well. Others becasue of comfortable climates see steady growth even with some goverment mis-management. When housing sales trend downward, rental demand increases out of fear of a recession. People tend not to buy if they think values are going down becasue they don't want to over pay and end up, up-side-down on value vs mortgage debt. I have not seen landlords lowering rents during any part of the cycle. They simply freeze rents and don't raise them until demand allows them to do so without losing good tenants. Usually no more than a couple of years within that cycle. Each market is different and independent of the other, so housing prices can be going up like a rocket in one part of the country and down in another part at the same time. 

Don't get sucked into any media hype about what the markets are doing. learn where and how to gather the data yourself. I regularly use the Federal Housing Finance Agency website to get real home sales data on every metro area within the US. They publish a House Price Index Report every quarter. It takes them nearly 2 months to get it published after the data is collected at the end of each quarter. End of March, June, September and December. We will see the third quarter report at the end of November. The current one is for the second quarter results ending in June. Each report is about 80 pages long. If statistics and numbers turn you on, have fun reading the whole thing, but I read only about 15 pages of the whole report to get the data I need. It changes each time which pages I need to refer to, but I'd be happy to explain how to find it if anyone needs to know. Feel free to message me.

@Michael Gorence I like mobile home parks. Renters pay for the living space, so they generate nearly as much in rent as a site built home. That sounds like a lot of vacancies, which tells me that poor management is the problem. Verify what the normal vacancy rate is for that area by entering the zip code on BestPlaces.net Use the left column to find "housing stats" to get the info on vacancy rates. Once you know what it should be, then you can investigate the issue as to why this place is not keeping pace with the norm. If there is high demand for rentals in that area, you have a nice opportunity to turn it around with good mangement. Be careful to calculate in all the renovation costs of the vacant units before negotiating a purchase price. Don't be afraid to negotiate hard to get the price down to a number that works for you. Once occupiable, you can shuffle tenants into the renovated ones, if you want to keep those tenants, and renovate the rest of them. Then I agree with John Thedford about selling the homes to tenants, even if you have to carry the contracts to do it. That transfer's the maintenance responsibilities of those individual homes to the buyers, aleviating you of that expense. Do proper screening when agreeing to sell on contract to make sure they will follow through and complete the purchase. Typical banks do not make mortgage loans on mobile homes older than 10 years old, so you may have to carry some contracts to get them sold. Good luck in your research. I'd love to hear how it goes forward.

@Brandy Bruce Congratulations! You are way ahead of a lot of new investors who start out with no money and no credit. Since your income is not officially verifyable, you will likely need to use more creative financing such as seller finacning, private money or hard money, in that order of preference. Study up on those three things and ask a lot of questions. My favorite is seller financing. I have done it several times with great success. Your $20,000 is enough to give the seller a reasonable down payment and pay your closing costs. Any rehab, etc anc be funded the other two ways. Run all of your numbers carefully and make sure you are fully funded before jumping in and you will do well. I am happy to answer any questions you may have.

@Thien Nguyen I've got a little more to say about this. In addition to checking contractor references, etc., you want verification of their license, proof of necessary permits and REALLY IMPORTANT...Proof that they have Insurance for liability as well as Workman's Comp. Do Not let them hand you their proof of insurance. Get them to name their insurer and contact the insurer directly to have you, or your company, added to their policy as an "Additional Insured" This is a common practice and the insurance company won't even question why. There's already a spot on their proof of insurance form for the insurance agent to add you and your company name as an additional insured. This will then be sent to you directly from the insurance company. Now as an additional insured, you know they have proper coverage and you will be notified if anything about that policy changes in the future. It costs nothing to be added as an additional insured, so there should be no reason what-so-ever that they would refuse to do it for your piece of mind, unless they have something to hide or are not really covered.  

One more tip: Do not pay a contractor directly for any materials that were delivered to the property by the supplier until you verify that the supplier was paid. The act of delivering the materials to the job site automatically gives the supplier the right to put a lien on the property if they do not get paid by the contrcator. Contact the supplier directly in this case to make sure they have been paid for those materials before paying your contractor for the materials portion of the work. If the supplier has not yet been paid, pay them for the materials first and then deduct that from the whole job bid before paying the contractor his final labor payment. 

I did this on a siding and windows job and the suppleir thanked me for making sure they got paid before paying my contractors. They said they had never had a problem with the people I was using, but many other contractors had not paid them, forcing them to put liens on people's houses. They hate doing that.

@ Katherine Stochosky Right here on Bigger Pockets, there is a little known, hard to find page where national and regional REO Banks are linked. Here you can look up their inventory of REO properties from their own websites. Scroll down to the list of banks. Here you go:

https://www.biggerpockets.com/rei/bank-owned-reo

Have fun and good luck! 

@ Jay Woo , Was it your idea to offer 10% more to win the bid or your agent's idea? If the number's don't work for you and you are still in your inspection period you may be able to back out and retrieve your Earnest Money Deposit. However, if your due diligence period is expired you will lose your EMD if you back out now. Don't go forward just to save your EMD if the deal will cost you more than that in the long run. These kinds of lessons can get expensive. Do your math and be careful.

@Jay Yoo

Hi Daniel, It's good to see more investors in Utah. Welcome to the group. I am happy to help if you have any questions. Curious as to why you are waiting until 2021 to go for your first deal? You learn best by the hands on approach. If you wait until you think you know everything you need to know, you may miss a lot of great opportunities.

There are two sites I know of that have lists of Hard Money Lenders. All HML's have their specific areas that they lend in, so search for them based on where the property is located. See: www.reiclub.com and www.moolahlist.com Good luck!

I advise anyone owning rental properties to calculate in the cost of  property management as part of their expenses. If you are doing it yourself, you should still either set the amount you would have paid aside to build your reserve account or pay yourself for doing the management. That way, when your portfolio grows so big that you need someone else to manage it for you in order to have a life, the cost of it will be already accounted for and factored in.