All Forum Posts by: John M.

Planning ahead is great, but you really need to gain some familiarity with a market/area before jumping in. IMO, with your budget and experience level, I wouldn't suggest you start with MF. Generally that's a strategy people work up to after they've gained some experience and built up some capital or financing relationships.

Regarding mobiles, you can probably make some money with them and the cost of entry is in line with your current budget. Research "lonnie deal." Bear in mind, if you go this route and hold some MHs for rentals, you will likely earn every penny you make dealing with nuisance landlording issues. But that's just the kind of experience you'll need before venturing into MF. Good luck, Charleston is a great city, just don't expect the beach and water to look like Clearwater of St. Pete Beach!

I should have mentioned that, like others, I several other documents in addition to the lease, such as the move in/out inspection checklist, and a full page move-out addendum that explains in detail what I expect from them when they move out in regards to condition, cleanliness, obligations, etc. in order for them to get a full refund of their deposit. Much better to make this clear at the start!

Unlike others, many of the things people have mentioned having an addendum for I choose to include right in my lease, like guest policy, smoking, pets, smoke detectors, etc. Also, contrary to what Yiv L. said, I don't feel the need to have an attorney review everything I say or change. Many of the docs you may need such as eviction notices, pay-or-quit, etc. are available online for free.

My rentals are not here in our area, they are all out of state, at places I lived before moving here -- which is a whole different topic of discussion. I do think Sevier county has good opportunities, though.

The reason I never start off with a MTM lease is the hassle and expense that go along with tenant turnover. You have advertising costs, a period of vacancy, cleaning/repairs (I always rent my houses in spotless condition and good state of repair. That's a little different strategy than many landlords, but I believe it pays dividends down the road.), and the hassle of screening, educating, and signing up a new tenant. In short, it's not worth it to me if the tenant isn't going to be around for at least a year.

@Account Closed , I totally agree with your dilemma. My leases are 5-6 pages at 10pt, about 40 numbered paragraphs. Your lawyer would have you cover every conceivable circumstance with dozens of pages. The generic 1-2 page leases only cover the basics. I suggest you find a compromise in-between that you are comfortable with. I've actually shortened my leases over the years as I have become more comfortable being a landlord and decided that some things were so unlikely that I didn't need them. That might bite me one day if I end up in litigation with a tenant, but I'd rather have a lease simple enough that tenants can actually read and understand it. The longer the lease, the less likely tenants will actually absorb everything they are agreeing to.

Regarding lease term, I generally require one year minimum because I want longer-term stable tenants and minimal turnover. Turnover repairs and vacancies are the bane of SFR landlords. My lease automatically converts to a month-to-month tenancy after the one year period, that can be terminated by either party with 30 days notice. Most of my tenants end up staying much longer, like 5 years or more.

Give me a shout if you ever want to discuss anything REI related in our area!

A little new information has come to light. I'm not sure what they told her, but apparently the agent and this SS negotiator found this seller and got her to sign an exclusive listing agreement. Agent isn't presenting anything, everything is going through negotiator.Negotiator presented the offer with his $5k fee included and my offer price reduced by his fee. No acceptance or rejection from lender, and negotiator thinks they still might postpone the sale and try to work this deal. I think he's nuts. I'll go to the sale tomorrow, but I expect lender to bid close to what they are owed and get title. If I still want it at that time (have another deal in the works), I can try to get it as a REO without the silly negotiator.

I've found spraying isn't really a time/money saver on most of my projects because so much time and materials goes into masking. The sprayer really shines when it comes to textured ceilings, though. I don't even consider using it if the floors are done already. When I do use the sprayer, I normally do the ceilings first with minimal masking (generally just a sheet of plastic over the windows, don't worry about overspray on the walls since you're going to paint them anyway). If the walls are dark, I'll spray a base coat of white/light on them too. Then I roll the walls and brush the trim, in that order. If you're installing new trim, lay it out or prop it against a drop cloth and spray it before install. You'll have to touch it up after, but the sprayer will save you time here. Generally, though, I've found that masking and dealing with overspray is just to time consuming to make spraying worthwhile on most projects. Let us know how it goes.

Sorry Ari, I haven't bought sub2 before, but you can find lots of good info here on BP if you search through the forums. Best of luck.

Welcome Chuck! I just wanted to suggest that you check out the BP podcasts, if you haven't already. I just recently started working my way through them, and so far I think they're great.

Anthony, I think the main reason Anish is concerned with location is that typical cap rates vary from one area to another. I don't have much experience with multi family properties, but I do know you want to use the cap rates of similar properties in your market as a benchmark for evaluating your deal. Through research and talking to property managers, agents, etc., you should be able to come up with a range of cap rates for similar properties in your area that you can use to better evaluated the deal you are considering.

Hi Ari,

Just my thoughts, but first you should come up with your own estimate of ARV based on comps. Second, you should come up with your own estimate of repairs (based either on your personal knowledge or bring in a contractor). Third, calculate or ask what his outstanding principle balance is. At this point, you will have a realistic idea of what you can pay and how likely he is to accept it (based on what he owes) and can talk to your friend and determine if there is any possibility of working out a deal.

If he won't consider an offer in your profitable range, then resorting to buying sub2 and pursuing a lease option is probably working too hard to make a poor deal work (IMHO).

I recently drove by a distressed property with an agent's sign in the yard. I pulled it up on the MLS and it seemed to have potential for a fix & flip, so I called the agent and scheduled a showing. After seeing the inside I confirmed that by my estimates it would be a good deal if I could get it at about 90% of asking price. During the showing, I learned:

-The property is in foreclosure and the sale is scheduled for just 11 days away; one sale on the courthouse steps has already been postponed from last month.

-The agent said there had been a previous SS deal that fell through due to buyer issues and so she (or rather one of her co-workers) had a good idea of what the bank (WF) would take. If I talked to him, he could give me a good idea of how low an offer the bank would likely accept.

-The agent said her company charged a $5000 buyers premium on short sales. I asked if this was in lieu of a commission or in addition to it. She said she didn't know and would have to check(!) This is the AGENT saying she didn't know if there was a commission or not! In fact she seemed a little clueless and spent most of the showing tapping away on her phone.

-The showing occurred on a Friday and the "man in the know" wasn't available until Monday. I needed the weekend to think about it and fine tune my numbers anyway. On Monday I talked to the agents associate and he told me a number he was confident the bank would accept, it was about 93% of list price.. I told him that it was close to what I was willing to pay and I'd like to put in an offer.

-He then explained to me that his role in the deal was "negotiator" and that he got a flat fee of $5000 which is in addition to the agent's commission of 6%. The Purchase & Sale agreement he was sending over would indicate a sale price of my offer minus the $5k negotiation fee.

-The deal still makes sense even with the fee if the bank & seller accept my offer which is only a little below what they apparently accepted before. I'm prepared to put in a cash offer, close in as little as 8 days (which is 1 day before the scheduled foreclosure sale), and waive all inspection contingencies except for the requirement that the property be in essentially the same condition at close as it is now.

-Also, the seller/owner is apparently passive in the deal. The agent and the "negotiator" both said she would very likely agree to any contract they brought her and that the lender was the only one that was an issue. BTW, list price is about 74% of the outstanding mortgage principle.

OK, so lots of backstory; here are my questions:

-This is my first SS. Although I appreciate having some help negotiating the sale, especially with what seems to me an impossibly short time-table, I feel like $5k (around 8% of offer) is overpaying. Where did I go wrong and get corralled into working through this "negotiator"? The agent directed me to him when I indicated I probably wanted to make an offer. Also, now that I realize the lender is going to see an offer 5k less that my actual offer, I'm skeptical they will accept. I feel like I would have a better chance of getting the deal done if I was dealing directly with the lender. Even though I don't have any experience working a SS, the extra $5k in the deal would probably compensate.

-From what I found in the forums, this is way more than is typical for negotiating a short sale. In fact, if the bank counters within of couple k of what I offered, I think I'm going to suggest that the "negotiator" or agent (that doesn't have to split the commission) kick in the difference to make the deal happen. What do you think?

-Is it realistic to think this could go through with such a short time-table? I doubt the lender can get their ducks in a row that quick, but "negotiator" said that having a solid offer with a close before the sale date could clinch the deal.

-Would I be better off waiting for the foreclosure sale and either buying it on the courthouse steps or making an offer directly to the lender if/once they gain possession (very likely they will gain possession if they bid close to the outstanding principle balance)?

My apologies for such a long post. I appreciated any and all comments and suggestions regarding this short sale deal.