All Forum Posts by: JD Martin

It sounds like you are really close on the price of the duplex with your equity + cash. It depends on how fast you can amass cash, if you are doing any work yourself, etc. When starting out you can trade labor for equity by DIY means. 

If it were me, and you don't/can't go the HELOC route, if you are certain you are going to invest somewhere, I would take the cash out, make the cash offer on the duplex, and they may just take your lowball offer. If not, you have $65k waiting for your next deal. Yes, you will have carrying costs, but if you are going to invest in real estate you need to be ready to act when something worth acting upon comes your way. By cashing out now and sitting on your reserves (and adding to them, as it may be), you will be ready to fund a purchase when it comes available.

Old school and dealing in cash is not the same as someone getting paid illegally, i.e. not paying taxes. That is the whole meaning of "under the table", it is unreported income. If the OP knows the tenant is cheating the government (and, in turn, all of us, who pay taxes), what is to keep the tenant from cheating the LL? Or the LL trying to meet some reasonable burden of proof in court that they verified the tenant had income? Now if someone told me they were paid in cash and reported their own earnings, and had bank accounts, tax returns and good credit to verify, I could care less if they were paid in pennies! 

I don't care what family handyman says, no way would I put ceramic tile on top of ceramic tile. Mastic and thinset both age and lose elasticity over time, which is why tiles eventually start falling off walls on their own (i.e., nothing is forever). Adding more lateral weight to the original adhesive is a bad idea if you don't know what the original compound was, since different thinsets and mastics are designed for different shear weight. I have done *a lot* of tile jobs myself and the right way to do it is starting from a fresh base. You are talking about wall tiles here - I would have to see a picture, but I can't figure out in my head how you would have trimmed that out without it looking like crap or how it would meet surfaces properly, i.e. sink, etc. 

Whether or not they should have torn out the walls without you saying OK is another matter. Personally, if someone hired me to put tile over tile, I would have politely told you "No thanks" and moved on to another job. 

Probably not. If you ever had to go to court to try to collect or evict, you really wouldn't want it coming out that you knew the guy was getting paid illegal, or worse, that you rented to someone with no apparent income. And as someone else already mentioned, someone who cannot be trusted cannot be trusted.

I'm not flowing that kind of money per door, but one thing I note is that you have one property that is doing that with 4 doors. That is only $200 per unit, which is really not that great unless the rent is $300 per door. If these are $700+ units that is a fairly tight margin. 

They may be inexpensive but I vote "no" on best countertop. They are way too fragile, and anything heavy dropped on them like a can of peas, a pot or a heavy dish is going to break them. I would go with either laminate or granite, even a low-end granite - something that you either swap out in a few years when it looks rough or can take just about anything a tenant can throw at it. 

FWIW, I have 18" porcelain floor tiles at my house and despite sitting on a solid subfloor and 1/2" concrete board, with the high-end most flexible thinset available, about 5 or 6 of them have hairline cracks where my wife has dropped a can or similar. 

The person who is living in the unit should always be the applicant. You can have a co-applicant, if someone else is willing to be financially responsible but not live in the unit - this is common for college students, and sometimes with older adults who have bad credit but otherwise good income and their parents are willing to co-sign financial responsibility - but no one should live in your unit over the age of 18 without being checked financially and criminally. 

^^ This is spot on advice. Anything that is not obvious that is uncovered during an inspection I bring back to the seller. I assume that the hidden areas are in good shape, and if my inspection tells me otherwise I expect to be compensated (or, as I have done before, just walk away from the deal) for addressing those issues. If the seller is unwilling, unless I am already stealing the place, they can sell it to the next sap. 

PS: One thing I forgot to mention: DO NOT soft pedal issues that come up in an inspection (don't overblow cosmetics, either) because you've already become emotionally invested in a property. These things are commodities and there will be a house right around the corner if this one does not work out. It is real easy, especially after you've spent money on an inspector, trips to view property, etc, to downplay the amount of time, money and difficulty involved in repairing/replacing some items; never let the psychology of prior investment prevent you from making the best financial move for yourself. Sometimes that means you go down the road to the next property, and you end up having some sunk costs on the one you didn't buy. 

 That's true! Maybe it was a trick question ;)  . I assume the "lost their job and won't leave" meant that they weren't paying because they were unemployed, and they were squatting on the property. 

One thing I have learned in life is that the soft people get paid last. That's why you see people squatting in properties behind 1+ months in rent but talking on cell phones and driving cars with payments. If you don't pay Verizon, Comcast, Ford, they just shut you off or come collect their stuff, and then sue you for the difference. Personally, I don't want to have to toss someone out because they lost their job, so I try to only rent to stable people with enough income that they (should) be able to provide their own 6-12 month cash cushion to get them through a rough spot. If you only rent to low-income, non-Section 8, you are probably going to experience this scenario quite often.