All Forum Posts by: Jay Hinrichs

@J Scott 

  I agree with your point about smaller rural towns in America that one can get in on the 2% rule, there are thousands of them from the Mississippi river to the east coast and pretty much anything in Rural Oaklahoma for example. Or rural farming towns that values are stagnant. And in the crash I hit the 2% rule myself in suburbs of Atlanta but no more with the hedge fund competition and of course with a highly organized mechanized capitalized business one can pluck out the gems.

The However is though that the average investor does not have those benefits if they are just starting out have limited capital can't just hop on a plane and spend a few weeks months checking all these place's out.. So they gravitate to what they can find on line and that usually leads to marketing people "TK companies etc etc.  And as Chris Clothier mentioned being a premier TK company they don't sell anything that can get to 2% and most TK companies don't.. When you take that same metric and try to get 2% you end up square in the Hood in most of the big cities people would consider investing in.. They don't think to fly to a major hub then go find homes out in the country or little 30 to 50k satellite cities in the mid west and east coast.. Nor do they have the ability to source at wholesale etc.  I know the locals do and do it all the time. But the locals are not going to pay more than what would derive a 2% rule or better thereby keeping values in check and not rising which was my point of the thread in the first place.

As you know there are many bad areas of CA having lived there like you did for years and me living in the bay area for 40 years I can tell you were they are.. But when you compare apples to apples these bad areas have values and rents substantially higher than many if not all bad areas across the country and real appreciation bad area or not.. and the flip side is these areas in the CA also depreciated in some cases tremendously like Atlanta did and other markets.

@Account Closed 

  made some of my best foreclosure buys in the good times.. 03 to 06... pay close to retail by the time I get done rehabbing the property went up 75k  ...Always deals but its crazy competitive as you state.

@Josh Prince 

  JOsh my comments albeit passionate are aimed at the lower end of the investing spectrum. There are Good areas in all of these towns and cities.. What happens is investors just tend to gravitate to the highest yields with no or little considerations to the reality of the asset.. And thereby buy the super low end and get a very expensive education in how not all real estate is a good investment.  At the end of the day and I know this will sound harsh as well.. The fact remains many of these folks venturing out of state are undercapitalized and have no business being in the Rental RE business. They want to buy their first buy and hold they have very little funds but a good job and credit that leverages you into a house in the mid west or out East but the TRUE cost of ownership especially in the low end is so high they quickly go through what little reserves they have.

Its a gamble and a risk.. But the marketing people pound on how safe it is how passive it is and it gives these fragile and susceptible first time investors a false sense of security.

That's another point of reality as well. 

@Kimberly H. 

  of course in theory your correct.. but in practice at least in my years in the bizz.. No lawyer is going to take this kind of case on a continency .. Case's have value  there is a value if it goes to trial and there is settlement value. The damages must be established and the damages just are not enough to fuel this kind of litigation on either side.

@Brian Burke 

 very good point Brian  there is a certain amount of friendship between bidders ( at least here in Oregon) but its like playing poker you keep things close to your vest. And in this bizz the last thing your going to do is educate the general public on the nuances in your market and create your own competition. At least in our market were its uber competitive   

@Kimberly H. 

I fully understand pro bono legal aid shops and complaints to HUD I owed over 200 homes that had HUD tenants in them.. Unless your just blatant ( which I doubt you would be since your already worried about it enough to post on a public forum about the issue). The tenant gets turned down for whatever reason they just go the next landlord that is desperate to rent and will take a HUD voucher as the only qualification from the tenant. this is very common in areas with very large % of Hud tenants.

I guess I just fall back on my 40 years at this and people just get crazy worried about getting sued.. of course it happens but its far more common in partnership disputes than with contract disputes or tenant disputes. At least I have never had one.. and If I did here is how it would go.

Tenant gets mad goes to pro bono shop.. you get a letter.. You respond and make piece end of the discussion those that get in trouble get bull headed and try to fight these little fights instead of just moving on and maybe giving the aggrieved tenant 500 bucks to go away that will usually do it :)

Now if your a serial offender and have a big operation this is another story completely but for all intense and purposes some small time investor with a few homes to rent just does not fall into the category of deep pockets. Law suits cost a heck of a lot of money

@Natalie M. @Brian Burke 

 Good way to start and learn the bizz from the ground up.. Most investors pay for those services so I think you should be compensated for your time.

Although the foreclosure business is cash intensive.. Unless of course your buying super low end stuff in the 5 to 30k range... But what us on the west coast think of as price points and the auction bizz requires REAL capital IE Millions in liquid funds  5 to 10 million minimum if your going to make any real money.  Then the hard work the systems etc.

@Account Closed 

  I will be here... Good time to load up on debt that's for sure when rates are like that.

@Account Closed 

  Joe  I doubt this tenant is a low life.. Many good tenants with valid leases get screwed by the landlord that is ripping the rents.. YOU KNOW THIS I KNOW YOU DO>  Now if someone puts nI a false lease or fraudulent lease after the fact I would concur with your thought process. but on the face we have to think this person rented the house on a lease has paid the lease payments and is the injured party here.

There does not need to be case law by the Way ITS a FEDERAL LAW with the new foreclosure rules you should look those up;

@Melodee Lucido 

  I am pretty straight forward in my opinions.. low end hood crap needs to go to locals.

Out of area be it Socal or Au or where ever needs to be top of the market..

Now I know the AU investors got return glaze in their eyes because they just did not know what they did not know.. and when companies routinely mis lead about fixed expense's and puff return these folks went for highest return Not having a CLUE to the Socio demographics of the mid west and south... The Aussie just thought everyone pays rent on time ..

I remember talking to one that was so frustrated because the rent was not like there rental in Sydney posted on the 2nd of every month ( actually every two weeks)  When I informed them that many if not all renters in lower end homes do not have checking accounts and never will be able to bank like they do .. they just could not understand that. top that off with 80 % of the tenants are single females with kids your just not going to get consistent cash flow ever...Sad state of affairs but reality or if you think I am wrong let me know.

And like what I said about these crooks doing this business Sociopaths all sleep very well that's a medical fact.