All Forum Posts by: John Chapman

@Ivan Loza, "It worked! #1 on trending plus plenty DMs."  Yep, I'm going stick with my opinion that "going gangsta" along with the title of this thread is rather juvenile.  Maybe it's a generational thing.  Maybe I've been doing this too long.  I don't understand making statements like that.  If you wanted honest advice about how to proceed under these circumstances, you got it in the first few responses.   (The solution is pretty basic)  I'm not sure what stoking this thread continues to accomplish.  You seem like a nice guy but there are a number of statements you've made that are flat wrong and are based on inexperience.  You seem very upset about how you've been treated by this tenant, which I totally understand.  What I'm suggesting is that you rise above those feelings and treat it like a business.  Feel free to DM if you'd like.  

@Courtney Nash, I'm not sure what "going gangsta" really means, but it strikes me as a bit juvenile.  (I know you didn't start the phrase but I see it bandied about in this thread.)  This business is not rocket science. You screen as best you can, gain experience that makes you better at it, and ultimately accept that inevitably some will slip by your screening.  (It just happens and is part of the business.)   Charge market deposit.  Don't waste time chasing broke tenants.  Move swiftly to evict and run it like a business.  

Also, I don't see a lot of upside of jacking up people's credit in the very remote chance they will pay one day.  If we're being honest, it's just being vindictive (not saying it's not justified, just not rational from a business point of view.)  Seems to me you are messing with people who quite possibly have fallen on desperate times and are inviting them to retaliate.  People with nothing to lose who feel wronged can often justify any actions.  Just my two cents.

Sorry.  You're in Texas. No wage garnishment here.  Collections are near impossible, especially when tenants are broke (which is the most likely scenario with your tenant).  You can waste time and energy pursuing in court but chances are not good of collecting.  Just take the lesson learned and move on.

If you are brand new, I completely understand your friend's reluctance, particularly if you don't have any skin in the game. Any HML (including any private lender) is going to want you to have some money in the deal, enough so that you will take a hit too, if the deal goes south. Keeps incentives aligned.

Very well handled, @John Bell.  Leaving happy sellers in your wake is always a good thing and can pay off in ways you never expect.  Can't tell you how many times I get referrals from sellers from whom I've bought because I treated them fairly.

If you have run out of money, then you definitely should not rent it as landlording is a capital intensive business. Also, and I'm kind of reading between the lines, it seems like you might have to do additional work just to get it rent ready. Either that or lower the rent or your rental standards to point where it's not worth it. This market is nuts, so I would probably just put it on the MLS as is. Nothing magical about it. Priced right, it'll move.

I'm confused, have you actually spoken with the seller and tried to clear up the issue?  Has title?  That's where I would start.  Calling a lawyer makes no sense.  This is a $47k house and you guys have a potential dispute over $2k.  Lawyer will demand to be paid by the hour and the amount at stake does not justify it.  Sure, you can always sue for specific performance but, again, there's not that much at stake.

The brokers I know that handle these types of transactions use both a sales comps and NOI approach. Basically, look at both and kind of weigh them or something. However, I don't think you need to look any further since these numbers are horrible and.

An 850 square foot house?  How old are these things?  Guessing ancient and thus increased maintenance.  $200k/house for $1389/month in rent will lose money each month if you leverage at 75%.  

Finally, the seller's estimates on expense are off beyond reason.  Taxes are approximately 3% of value here.  Even if these these were on the tax roles for only $1.2 million, that's still $36,000/year, which is $9000 more than they are saying are for all expenses.

The simple truth is that $10,000 is not going to get you much of a rehab at all.  I don't care what area of the country you are in, how big your house is, etc.  (Those factors will obviously stretch how far your dollar goes.)  That is a light cosmetic rehab (paint, some flooring, cosmetic upgrades, etc.)  and the house needs to be in pretty good shape.  (I've been doing this almost 12 years and I think I've had maybe one $10k rehab).  Sure, you can stretch it and defer but a lot of the times all you are doing is kicking the can down the road.  Obviously, if you're doing the work yourself, that's a different story and you're basically a contractor and trading your time for money. 

@Nathan Gesner, I love the identity theft one.  An insanely disproportionate share of my tenants are always having their identities stolen and then the bank "freezes" their accounts resulting in a bounced ACH payment.  Of course, the ACH payment always comes back with a notice of insufficient funds, not some other indication of problem.  It's amazing how people living on the edge are the targets of these sophisticated scammers and thieves, you would think the thieves would target richer sources.