All Forum Posts by: Joe Davalos

However you buy If your looking to buy rehab and sell I live by the formula of 70 percent of after repair value less repairs and that's your offer. Of course if your in a very high dollar area you might be able to work with less since that 30 percent discount would be of a higher resale value. You need to figure the value yourself As a buyer you need to be realistic on your values and bid worse case on repairs. Don't buy real estate as a hobby take up yoga or something it's less expensive and relieves stress. Losing your *** on a deal isn't. If you bid higher than 70 percent less repairs your cutting into your profit. Bid to high and your reaching into your pocket to get out of the deal. Here's an example with round numbers. Property Value 100,000 (my value) It has 20,000 in repairs. I bid 50,000 70% of 100k less 20k for repairs and get it I borrow 50k from a PML at 11% plus 500 originate I sell it 6 months later for 100,000 Pay 2% to my realtor 3% to buyers realtor 2% for title 3% of buyers CC for a total of 10% to sell Taxes are 200 a month (Texas) So after repairs I have 30,000 to pay out the following 2,000 closing purchase 3,250 to PML 10,000 closing to sell 1,200 property taxes 16,450 is grand total less 30,000 i had to work with I walk away with 13,550 If my repairs are really 25 instead of 20k I make a whopping 8,550 not nearly enough for the risk If I paid more than 50k I need to deduct every dollar from that 8,550 so if I paid 55,000 instead of 50k I make 3500 bucks I have only lost on one house by 1500 dollars over the last 30 Buys and that house I myself over estimated the resale value. I bought it directly from the owner so I can only blame myself but I won't do that again if I can help it. Right now I have two offers out if I get em I close em and sell them for a good profit. If I don't I move onto the next opportunity I learned my lesson. This is how I feed my family and I like Rib Eyes not chop steak. If your buying and selling stick to the formula if you don't your gonna loss something directly in between your bottom torso and the top your legs. In my opinion only and what do I know. Either way best of luck to you.

Originally posted by @Paul Wakim:

@Joe Davalos thanks for the info. I know the laws could be very different here but were there any hurdles you found to rapidly raising rents so fast? 

My concern with doing something like that, other than the possible legal complications, is that the tenants have been there for 20+ years and have made a home there. 

In Texas unless you have a valid lease it's month to month and I believe you only have to provide 30 day notice. Both tenants knew they were paying under market and yes the units needed work but not a lot. In reality the previous owner allowed themselves to be taken advantage of or didn't care about the money.  It's. Business if my  lender  said I'm gonna cut you a break on your terms of the loan since your being a nice guy and if that That tenant stops paying  rent so can you I might think about it  if not I need to protect my family first and my business. I might have compromised and given someone in dire straights 60 days but that would have been about it

I sold that 4 plex and made a good profit leaving under value units needing repairs would have cost me equity and profit 

TLO you have to be a member pass application and site review. They will probably deny you if you tell them you are skip tracing absentee owners since they might consider this marketing. Marketing is against the rules in place Tony Battle is a member here and he provides skip tracing for a reasonable fee. I believe you need to provide 50 skips for best rate but Tony could provide his rates and perimeters I use his services and have been pleased American Tracers has very fast service sometimes within a hour for 1 search I buy 10 skips at a time I think 80 dollars For 10. I use them when I find a lead and want to contact asap. Pleased with AT as well.

Had similar situation last year. 4 plex 2 units occupied way under market. Gave both option to stay at market rate or vacate within 30 days. 1 stayed and 1 left.

I would build a list of distress property owners Code violations city liens vacant property registration and such. You could buy a list from list source of absentee landlords with certain criteria equity age of owner zip code. A small percentage may be motivated Building your own list takes more time but I feel you have greater odds of speaking w motivated sellers. If you have the time you can research each lead and see how many motivating factors each property has. Is it an absentee landlord deceased with city liens behind 3 years in taxes and vacant. That would go to the top of my list. Find that heir and solve their problem.

If the numbers work yes. If your trying to sell then it in most cases has to be on an approved permanent foundation as far as financing is concerned. In south Texas the less expensive way that most lenders including FHA approve is called retro fitting. It's about 3000 to 3500 on a double wide. Maybe it's already on an approved foundation need to check into it.

On a Life estate if the person named as the party with the life estate has passed away I personally would pursue. County records such as mailing to and whom are hardly up to date so do some research. personally would pursue a life estate where the party has passed away and I would pass on a life estate where I couldn't be certain Some sellers use PO Box address for a variety of reasons One to not be located It allows some privacy. I have a PO Box and receive mailers all the time. It should not stop you from mailing with consistency though Joint trust no idea. Disclaimer I'm not an attorney so take this with a grain of salt for legal advice and clarification seek the advice of an attorney

3000 over 6 months to the same list of motivated owners. Repetitive contacts. Many people need to be touched more than one time. In today's world we are being bombarded with attention seeking especially online. It takes awhile to get someone's attention. Of course if they are ready willing and able to do business they might the first time. Or they might be ready 4 months from now. Shot gunning would get you less bang for the buck.

It's your business your money you take the risk. Pay your closer well but don't give away the farm. The most important thing is to buy the property right. Marginal deals with cost overruns and you make nothing and depending how your compensation is structured with your aqusitions manager you may be reaching into your pocket and come out in the negative when it's all said and done Map out a plan where your source of leads will be derived and what is their level of distress or desire to sell. Even the greatest salesman cannot get someone to sell unless they have a motivating reason to do so. You are right to handle a few before you take on a salesman It's going to take some time before the calls start coming in on a regular basis Just for the purpose of discussion let's say you pay 1000 upon the purchase and 2000 when you sell. That's 3000. If you are closing 10 a year that's only 30000. Peanuts to a good salesman. If you close 30 deals a year that's 90000 Not bad but most importantly you need to be making 12000 a house after you pay your salesman. That's 360000 less marketing costs of 5000 a month and your netting 300,000. You put up the money you take the risk you have more to lose. Pay him well but your the boss and the boss should always makes the big bucks.

You can look to Get approved with a credit bureau. TLO is trans union Trutrace is equifax those are skip tracing companies that are part of the credit bureau I have also heard of Lexus nexus. I think these companies have an application process. If you say your skip tracing for owners of real estate they might consider that marketing and turn you down. You can go to an outsourcing skip tracer. You provide basic contact info and they do the rest. Tony Battle is a member here and offers that service for a reasonable fee. There's another company American Tracers. They are I believe actually private investigators I've used both and I am pleased. I have a hot lead with a short fuse to get a deal done. I bought the 10 traces for 79.99 and sent American Tracers the basic contact info by Email. I had a good contact number within the hour. My partner and I are calling and texting a couple of times a day. If I sent a postcard or letter it will be one of many. Bulldog em with 6 calls and texts a day will get a response. Even if it's telling me in a nice way to go screw myself. It's still a reply. I've also heard there are VAs that have access to skip tracing but I couldn't elaborate on that. I like going with an outsourcer or third party skip tracing companies. You pay they do the work for you If you go directly to the credit bureau you are given a lot of personal data on individuals. Social security numbers and such. I don't want that responsibility. I could see risk In hiring someone and they accessing that data and stealing identities. Worst yet giving access to a VA to access and compile skip tracing data. Get the wrong VA and disaster can happen Chances are small but why risk it.