All Forum Posts by: James DeRoest

Caution isn't the right word.

You need to understand property; how the property has been built, what replacement costs really are, what repair costs really, what potential problems are, what potential problems could be and so forth.

It's about informed desicion making, and so many people (and a lot on BP) are not informed in the first place, yet call themselves 'investors'.

The number of people who replace things when it's repairable. The house we bought the other day - the investors who dropped out complained it needed a new central AC system. If they knew anything about property, and they call themselves "investors", why didn't they just run a coolant check? Takes 10 minutes to check it. It's low on coolant, so no wonder it doesn't cool anything.

Property investors must be the only 'profession' where the supposed professionals know nothing about the actual subject they apparently invest in.

Walk away. Sounds like an appalling "deal".

I'm going to stick with slimey. It's a business built around dishonesty right from the start where the wholesaler signs a contract with no intention of ever honoring that contract. But anyway, dislike of  wholesalers is a whole different thread.

Problem in my opinion is the condition of the properties. I know a few retirement age landlords and they own some very run down properties. You name it, they skimped on it. These people have portfolios that would only be good for firewood.

The key to being successful is tenant screening. Nothing else matters. Want the right tenants, then the properties have to be desirable. Want the wrong tenants, well, that's easy.

Knowing where they move to if they skip the rent - waste of time and will simply wind you up. If they don't pay you, they aren't going to pay you.

So before you do anything more - go look at the properties, and take a cold hard look at the condition of them. Do a drive during the day to see what they look like in daylight, and do a driveby at 8pm on a Friday night - because that's when the drug parties are in full flow.

Why is this even a choice?

Why would you want to make $10k as opposed to $30k? Do you think Bill Gates and Warren Buffet got rich because they choose to make $1m rather than $5m on a deal? Would you ask your boss for a $1000 rise instead of $5000 that you deserve?

Why would you want to make less?

I can't believe all the people who like making 'less money'. If there is money on the table, take it. So what if your hourly rate just dropped - what exactly are you doing in that hour that was so important?

It's not extra due diligence, just due diligence. Every tenant goes through TransUnion. Every tenant. You have a felony record, keep on walking, you have an eviction, there's the door, any drug history, you don't know me. No matter how nice someone is, their credit and criminal record tells all the story, and usually the story they won't tell you.

This one was a wholesaler unfortunately. Slimey creatures. Just want a shower after dealing with them. Needs must as the devil drives. 

Most deals come through a realtor, or they are retiring landlords, pissed off landlords looking for an exit, old folks with a single rental wanting to owner finance, etc.

When you get start to get to 10+ properties people start finding you. (multi family counts as 1). For instance, last summer, a guy knocked on our door and offered to sell 3 houses to us. Our postman recommended us to him. A property we did buy last year was from a call from our gardener who was cleaning out a nightmare rental and the old owner wanted to sell. I know an old landlord and I do want to buy 3 properties off him, but just can't be bothered to call him yet.

If you're in the business, deals find you. If you hold properties, more deals find you. So far this week I've been offered 3 houses and 1 trailer park, and closed on 1 yesterday obviously.

I love cheap properties, but they have to be the right cheap properties in the right area.

The key is to find properties that are undervalued, find the reason they are undervalued, and then sort the problem out.

Any idiot can buy a $100k property and rent it. Thats not investing. That's like buying Apple stock and calling yourself a market expert.

We had to show our realtor our thinking, with $100k he would buy 1 property for $100k and rent at $1400. We would buy (rehabbed) 3 properties in lower neighborhoods for $100k, $700pm each, and have $2100pm income.

The income risk is now spread over three properties and not one, and as the market is coming back, the $100k property is now worth $140k whereas the $33k properties are now worth $70k each.

On every metric our solution is better.

The key is to make sure you have good tenants. Our tenants at the moment are so good - they compete with each other to have their rent paid first each month. We don't chase rents. (Winner gets a $50 Walmart card.)

We bought a house yesterday, $20k. When it's rehabbed (it'll need a small amount of work, maybe $10k), it's worth $70-80k. And because no one saw the extra fully permitted apartment (it had so much trash in it everyone overlooked it - although you'd think the seperate power pack and the fact all the permits are in public records one of the other investors would have spotted it!!), the total package is worth around $1200pm spread over 2 units.

I love hoarder houses as the owners have destroyed value in the property that is easily rehabilitated with a simple clearout.

I'm really not following this. Why on earth are you investing any time negotiating anything with anyone who isn't the owner?

I agree that there is a learning curve in buying/selling/holding properties - but a basic search could have told you that you were dealing with the wrong person from the start.

We had a situation like this last year, very simply "i'll negotiate with the person who owns it, not the person who thinks they own it." Doesn't matter which crackhead turns up at my doorstep with some horse and pony story about why they own it.