All Forum Posts by: Jeremiah B.

Yup - I've seen this discussed, but it by-definition limits the pace that you can buy, so it's actually quite rare.

It's also rather difficult to qualify for a mortgage when you have 10 properties already. That's a lot of debt....

Am I missing something? This looks like a marginal deal, and one that I would pass on.

First, HOAs are the devil. 550 - 125 = 425. Consider this your rent.

Next, consider expenses. There is still plenty to brake, and remember that if that pool breaks - you're likely to see an additional fee from the HOA. So, using standard methodology, minus half of the 425 rent for expenses and you're around $200 before any financing. Considering financing and the deal may cash flow - but something like $50/month. Hardly worth my time (especially considering that it has an HOA).

I don't know your market, your situation, or what other options you have - but I'm passing on this one.

With all of that said, if you want to buy this one, look into peer to peer lending sites like Prosper or the Lending Club.

Will is accurate, and the answer is unique to the person, but here's my take:

First, never ever be cash poor!!! As a buy-and-hold investor, I can't emphasize this enough.

Second, your personal finances should have at least 4-6 months of expenses saved up. This will vary based on the security of your job, sources of income, etc., but is a good starting point.

Once you have your personal savings in place, we can start talking about real estate cash reserves. Using rough numbers, I would say that you should have an additional 15K for your first property (given that it's a multi), with a total savings (personal and real estate combined) of 30-40K. And this should grow over time as you get additional units.

To say it another way, you should plan for 3 big bads. Such as: losing your job, new roof, and a malicious tenant who trashes one unit.

I'm probably on the conservative side of RE investing, but that's my take.

Happy hunting!

Interesting situation.

I'm not a lawyer, but I don't think you're in as bad of a position as you might think.

First, if the rent amount or term of the agreement are ever called into question, you would have the burden of proof that you and tenant agreed to those. Note that their payment is pretty good proof. Insofar as I understand it, a lease is not required for the tenant to be bound to pay rent on time, pay for damages, be evicted, etc. To say it another way, you both still need to play nice :)

Second, with no lease signed, the terms of the lease basically default to the state boilerplate lease. This will vary by state, but it will outline tenant and landlord legal obligations. These are probably tenant favored, but they will have protection for you as a landlord in the case of damages, rent payment schedule, evictions, and quiet enjoyment (i.e. they probably can't throw unreasonable parties or create a meth lab).

Third, most leases have a clause that protects landlords from big lawsuits, but these are unlikely to be in a state boilerplate. An example would be a significant injury resulting from a fall. These cases are rare, but is probably the only 'big bad' that I can think of, that you would be at risk for.

But, no, you probably can not assume that the tenant agrees to all clauses of your proposed lease without his/her signature/acknowledgement.

We use Pam Widman at Carefree Property Mgt. We have used her for 4 years and been pleased.

Hey Andres,

I had a similar issue last year - where we decided between riding out the contract or cutting ties and paying the fees. We opted to ride it out. It was the wrong decision. We lost $3000 because of the decision - around 5X the termination fee. Not a mistake that I will make again.

Moving forward, if I'm in your shoes, I'm firing the PM and not thinking twice about it. I would send an email to them saying "obviously this isn't working and I feel that you are not meeting your obligations. As such, I will terminate the agreement as of..." This is direct, and suggests that you are breaking the contract with cause... They may push back, and they may fight it, or they may try and get their money, but even if you end up paying the fee, it's probably better than having a third-rate PM. I would not get lawyer involved because of the costs associated with such.

Welcome @Kuan Jengniang !

There's a big difference between wholesaling (a job) and buy/holding (an investment). I highlight this for two reasons: one is that wholesaling will take time and energy today to set up (even with systems) - and even longer to be successful. And two, it will need even more time and resources to scale properly. These are not good or bad things, but would likely lead you down a very different career path than your current role within a private equity firm. If you already have a good paying job that you can tolerate, I personally wouldn't consider leaving it for another job where the pay is unknown.

With that said, I love your idea of buying/holding a small multi-unit and living in one of the units. If I had it to do over again, I start exactly like that. And Charlotte is an awesome place to invest - so you're already off on the right foot.

As a next step, I would recommend thinking about your long-term RE goals as that will likely help you with your next step.

Also, if you decide to buy in Charlotte, let me know. I have a RE agent who I love love love and would highly recommend (Ronda Copp) - and no, I don't get a dime from referring her.

Sue Washinger! She's been our agent for 7 years and sold us several properties. She's saved us thousands through the process, kept deals together with bailing twine, and is as accessible/informative as any professional that I've ever worked with.

I don't make a dime off the referral, but I couldn't say enough good things about her.

I think her website is http://suew.bhgrealtypartners.com/

I've looked a bit at both, and both are great markets.

I did a detailed review of Atlanta(http://www.biggerpockets.com/blogs/4117/blog_posts/30696-my-out-of-state-search-step-5a-due-diligence-on-atlanta). In short, Atlanta is a volatile, and somewhat dangerous market. It has gone through some huge hits the last few years, and was decimated in the housing crash... and is still recovering. The returns are good, but it has been a hot-bed for investors for the last few years, and I'm a little worried about what this will do to new investors long-term. Atlanta's current economy doesn't look as strong as Dallas, but they have a great source of Fortune 500 companies. And I think the actual houses in Atlanta are some of the prettiest around. So, while it has some downside, it looks like a great market.

Dallas is a safer market, probably with lower returns today - largely due to high property taxes. The economy is, and has been booming, though housing prices are still affordable. A much more healthy market, with a more healthy outlook.

Either is a good market to invest in, and I think the key question is what are you looking for. If you are up for the risk, I would lean towards Atlanta. If you want nice, consistent, safe returns - Dallas looks like a rockstar.

ps - I opted not to go with Atlanta today as I wanted something more stable. So, I will buy 4-7 houses in another market (Charlotte) over the next few years, and follow Atlanta until then. It's very possible that I will be a buyer in Atlanta in a few hours.

Hey man - welcome to BP! And congrats on getting your head on straight at a young age!

I think your statement here is very informative - and a little concerning. Avoiding debt is fine, and looking for a long-term passive cash flow strategy is fine - but the two are pretty much mutually exclusive. The only exceptions to this are:

1. Starting with a huge wad of cash.
2. Going incredibly slowly, and leaving a lot of money on the table.
3. Partnerships (which I personally find far more intimidating than straight-out debt).

Your head in the right place and you have your whole career ahead of you. But I would encourage you to think hard about how you feel about debt.