All Forum Posts by: Joe M.

Have you guys seen this?

It seems to me that certain banks are just dumping homes to get them off their books.

Case and point.

For my second investment property I bought a house asessed at $75K for $27K. I'm now renting it out at $650/mo.

I'm going to look at a house tonight that is listed at $17.5K. It sold 3 years ago for $89K, county has it asessed at $65K. My realtor has been through it and said it is a great house, new roof, new siding, new flooring, newer central a/c etc. It will rent for around $600.

Don't get me wrong, I love getting good deals but geesh, it makes you scratch your head and think about the impact of what these banks are doing.

A couple questions.

In your experience when is the worst time to have a vacancy? My guess is around the holiday season.

Second question is from a risk perspective. I have an opportunity to purchase a house that is next to one I already own. I like the idea of having two places close to each other from a logistics perspective. However should I be concerned about risk factors such as a neighborhood fire, giant crime spree the drags the area down etc. Just concerned about risk exposure with two houses next to each other.

What are you guys seeing with the 2 bedroom 1 bath homes as far as price? In my neck of the woods there are several deals to be had on these.

I currently own a single 2/1 and it rented out faster than my 3/2. Could have been a fluke I suppose. The cash flow on the 2/1 is a bit better than the 3/2.

I'm a bit concerned about resale on the 2/1 when I decide to cash out though.

Honestly about the only thing I consistently watch on TV is college football. Although I have recently become interested in the show Mad Men but typically I'll watch stuff like that on netflix streaming.

I've just never been a big fan of all the formulated, processed, hyped up, made for TV shows about real estate.

There's a ton of different sites you can do this, I just happened to like screeningworks site.

this is a good point. in the ads I run on craigslist and various other places I clearly state the screening process and the application fee. if someone calls in from a yard sign then I explain to them the screening process and the application fee.

So Mike is right, the screening process begins with the first contact with a prospective tenant. It definitely weeds out a lot of folks, but then again that's the purpose of the process isn't it?

I'm still learning how I can better refine this process but so far this seems to work OK.

My first few screenings I used the biggerpockets/transunion screening tool. It worked fine but I found that I was constantly walking people step by step through the process, some folks didnt have full time computer access, some people couldn't provide an email address etc.

So I swapped over to using another tool/method of simply collecting an application fee up front and have them fill out the application on my website or in person. I get all the information I need to run their credit/criminal history report myself. You can use any number of websites to do this,I think they average cost is around 25-30 bucks/screening.

Perhaps some details would bring this situation into sharper focus and why my "spidey senses" are tingling.

This is a peculiar property to say the least. It is about one acre of land that has two homes on it. The two homes share a single well/septic system.

Home 1
This is the older of the two. It is about 1,000 sqft. and is a 2/1. House is about 80 years old, has an old stone basement and oil heat. The upside is it has been completely rehabbed inside already. The downside is the oil heating system which I'm unfamiliar with. House would probably rent for about $550/Mo.

Home 2
This home is about 1,600 sqft 3/2. It is newer than house 1. It has a newer boiler style heating system, no central a/c. This house has also been completely rehabbed inside. It has Pella windows, travertine tile all over the place, a completely pine plank lined den. Also here is the kicker with this property. There is an approximately 1800 sqft. garage/gymnasium attached to it. Seriously I've never seen anything like it. You could park like a half dozen cars in this thing, or two large motor homes or have a full size basket ball court. This house would rent for probaby around $900ish.

The asking price for the whole property? $59K

Now this same property sold six years ago for $198K. This is a bank owned deal so it could be that they are just dumping it, but it really hasn't been on the market that long (about 2 months).

I'm evaluating a deal that on paper looks fantastic.

The numbers all work out, the property is in a great location, the price is incredible etc. etc.

The thing is I have this nagging feeling that I'm missing something, the "this is to good to be true" feeling. I'm doing all my due dillegence on this property but I just can't dismiss that feeling that something is fishy with this deal.

The two other houses I bought this year I did so without hesitation so I don't really have a problem "pulling the trigger" on a deal.

Do you guys ever find yourself in this situation? Ever back away from a deal based soley on instinct rather than hard facts?

Jack:

I was in the exact same position you are now about a year ago. I decided to move money out of the market and begin investing in real estate.

The first thing I did was read every book I could get my hands on. Surprisingly the one I keep going back to quite often is "real estate investing for dummies".

Secondly I also went the "all cash" route. A lot of folks may frown on this strategy but it works for me because I can take the time to properly screen tenants without a mortgage payment breathing down my neck.

Finally the deals on single family homes right now are amazing, at least in my area. I'd reccomend picking a specific geographic area to learn, preferably one close to you own home. Start looking for deals in this area and get yourself familiar witht he rental market in this area.

Best of luck to you.