All Forum Posts by: Jerome Hanson

@Ram Kothandan I definitely agree with @Account Closed.  I'm not sure why everyone likes to make this so complicated.  The only thing I worry about is the age of the property because usually that means maintenance issues that I don't want to think about. But if you're ok with that, age of the property shouldn't matter either. We are all mostly in this game to increase income.... so increase your immediate income and forget about predicting what the world will be like 10 years from now or what season you're buying in, etc.

@Casey Trawick as with most things... success makes believers out of everyone.  The best advice anyone could give you is to simply, be patient, find the best possible deal, do the deal, make a good profit and share with your spouse how you did that... then do it again. If you screw it up, then clearly your case needs to be made some other way. But if you believe in yourself, do the research and knock it out of the park... who can argue with that?

 Your "offer" is basically a negotiation.  There's nothing that says offers have to be formal. Talk to them and negotiate until you both have the price and terms you want and then put it under contract.

@Jenny Gremillion so what @Account Closed is talking about here is the return on the cash you put in really. Think of it like an actual "lever" where the lever is a deal.  On the left end of the lever is the cash you put into the deal, on the right end is the property you control.  What many of us want is to be able to control the property with the least amount of money on the left end where you are standing.  If you already control the property with a small amount of money, why put extra money in above your required mortgage payment? If you put extra money on the left end, the only thing that changes is that the lever tilts and the property slides closer towards you faster, but you are now controlling the property using much more weight on the left end (unnecessary).  Your cash on cash returns have dwindled because you put more money into the deal than necessary, decreasing your leverage (you have a shorter lever). 

But surely not everyone wants to operate that way.  Lots of people don't even want to use leverage because they just don't believe in it.  But the numbers do work.

In short -

Zero money down = a really long lever = lots of leverage.

Tons of money down = short lever = decreased leverage.

@Derrick Ward I am in a community property state and title companies will want your wife to sign a memo relinquishing her claim to the specific property when you buy it.  You'll have to do this for every property unless you come up with some other legal way around it. Otherwise it won't matter that only your name is on the title... it still technically belongs to her as well if she didn't specifically relinquish her claim.

It just dawned on me that I should probably be writing off as a business expense all these books I'm reading related to business and real estate. After all, it is technically educating myself on my chosen field, right?  So I'll gonna start using my business account for buying those books from now on.  Have any of you found any issues with this through the years with your CPA's or otherwise?

@Susan Carman I definitely agree with @Mark Gallagher. I don't see how you could have comps with that kind of spread. If you can't value the property you shouldn't be anywhere near trying to do a deal on it. Tie up the property, call in a pro for $350 - $500 and get this thing appraised for both current value and ARV... Appraisers can do that if you tell them updates you plan to make. If the numbers are not to your liking, you only lost $500. But if you go in blind with a $650k spread on comps and 300 days average holding costs, with some crazy HOA that don't allow renters ... you could literally lose everything.

I'd put my paperwork in and claim my property. The bank must be outside of their hot damned minds. It is everyone's fault except yours.  Let them pay for their mistake.  Just for the principle of the matter I'd get an attorney ready for battle and make sure I fight to have the losing side pay the bills.

Most property managers lock you in for a contract.  Could be 12 months (most likely) or otherwise.  The reason they lock you in like that is so that if you cancel early, they are able to collect the remainder of the payments they would have received had you kept the contract through to full term.  Real property managers don't like to waste their time and energy.

If you go with some person you just have a verbal agreement with... who knows what you're getting into.

@Lisa Keutman There's nothing old or ancient about doing a subject to and they are actually pretty straight forward. The issue with it is an age old question of the due on sale clause from the current lender.  This means if the bank is made aware that the property is being transferred, then they have the option to call the remainder of the loan due upon the occurrence of that transfer of property. Most banks will immediately tell you that they do not approve of a subject to.  I just did one, the bank sees I'm paying the note and that I now have a power of attorney for all matters dealing with the loan.. and they don't bother me. I make payments, where the person I took the property from was having serious trouble in that department.  There is risk in a subject to, so you need to understand fully what you're getting into and what liability the original owner of the property still has. Lots of responsibility.