All Forum Posts by: Joey Wharton

@Amanda Smith correct you're not paying interest on money you're not using. However you mentioned buy and hold. If you flip, just know you're going in at the peak (assuming you buy in by end of year) and you will most likely be selling in a market downturn. 

Under current market conditions, personally I would not get into a variable rate loan, nor put my home on the hook, especially as a newbie.

I'm going to be very honest with you - you've been making one bad emotional based decision after another - in turn creating a convoluted headache. Now you acknowledge he has depression issues and is looking into disability. That potentially just added a whole new layer of complexity. I will tell one thing with certainty - DO NOT TURN OFF UTILITIES OR CHANGE LOCKS OR PROHIBIT HIM FROM LIVING THERE WITHOUT A COURT ORDER OR AN ATTORNEY GIVING YOU THE GREEN LIGHT or you could end up in a world of hurt.

Every municipality has different tenant/landlord laws. That's why an attorney is your best approach when dealing with evictions when you don't know the full legal implications of your local laws.

You're asking advice to lessen your headache? Get him to agree to leave in 2 weeks (or whatever is the quickest he'll go) instead of evicting him and cut your losses. He doesn't want an eviction on his credit - get that message through to him. This is your lowest cost, "stop the bleeding now and end the headache" option. Forget about what he owes you, don't get lost in the trees. Evicting could cost a lot more time and money. And you'll end up spending more if you hire an attorney. As long as this guy is in your property you will be dealing with issues daily. Is it worth it?

Yep land lording probably isn't for you. But you can be a hands off investor. Get yourself a property management company and just collect your checks - whether you keep this place or 1031 into something new is a personal big financial picture decision. You're a sucker for hard luck cases and let me tell you, from my own experience - no good deed goes unpunished.

Get a 2nd mortgage at a fixed rate not a HELOC as that rate will likely skyrocket and blow your cash flow out. With it being your first investment property mistakes will be made, it will take longer and cost more than you think to get the property cash flowing. You are buying at the peak of the market as well. Yes all looks bright and profitable now, until the market corrects and your HELOC rate jumps up.

@Will Andersen no doubt there are plenty of scammers out there trying to sell RE programs. You know why? Because it's easier to sucker someone into spending $40k on a "course" than to flip properties. A friend of mine tapped me for one of these courses. He said he'd pay for it. He just wanted someone to go with him. I told him if you've got 40k to spend on a course you've got enough to get a property. So I found a multi family property for 160k we bought from an estate. It took 18 months to rehab it and get solid tenants in place. Sold it for close to 900k. It was a TON of work. And that's what these courses don't want to tell you when they're selling flipping to you. If you really want to secure your investment and make sure you meet the timeline and budget you need to be hands on or partnered with someone who is. Someone considering a course is just afraid to jump in, that's why I recommend partnering with someone successful vs throwing your money away on a course. 

They know what they're doing. Seems clear they've done this before. You don't. Get yourself a good RE attorney - ASAP. The longer this goes on the more it's going to cost you. An attorney will let them know you're not messing around and will be your buffer should things get ugly. 

I did this years ago...bit me in the ***. The applicant was solid. 6 figure earner at a solid company excellent credit. He was going through a divorce which is why he wanted to pay upfront. Valid reason. Its an allowable expense during divorce proceedings. Problems came when he moved in his girlfriend who turned out to be a meth addict. My tenant was traveling a lot for work. Well turns out she had a husband who was in jail and she moved him in while my tenant was traveling. My neighbors were the ones who alerted me of meth cooking on the property. I'm in a city that is somewhat fair to landlords, unlike CA, and let me tell you eviction wasn't an option because I found out if they pay their rent, it's almost impossible to evict. My attorney said to find another way to get them out. I went and did a meth test on the property, it was through the roof. The ceiling in the bathroom was full of meth residue and there was smoking and cooking paraphernalia and sex toys and porn mags all over the house. She had a 9 yr old, so I had to threaten child services on her. That's how I got her out. I felt terrible for my actual tenant but the remediation on the property cost me more than the rent I got upfront. Honestly I got lucky. That could've cost me my property. If I hadn't acted quickly to get them out I would've had to tear down the house... moral of the story - find out your local laws, especially what grounds you would have for eviction if rent is paid upfront and things go sideways. Get a local RE attorney to draft your lease.
 

RUN. You're much better off teaming up with some successful investors in your area that are doing what you want to do. You'll learn so much more and gain a network of people in your area. Look for real estate investment groups in your area via FB or Meetup. Guarantee that that program isn't going anywhere. If anything they will only lower the price if you walk away and come back.

If it were my million - I'd invest half in income producing real estate that yields you at least 200k year. I've managed that with half that cash. And invest the other half in psilocybin. I know it sounds crazy but imagine getting into the cannabis business when it was first decriminalized? Psilocybin will be even bigger as it has even broader medical benefits - alzheimer's, addiction, depression and anxiety plus its not habit forming. Wall street is making a push for it for a reason. That's what I'm doing. I've got my real estate where I want it, I'm working with the city to open a psilocybin treatment and research center on commercial property I already own. 

DON'T INVEST IN MI. YES YOU CAN MAKE MONEY WITH THE RIGHT PROPERTY MANAGER. SHORT TERM RENTALS IN THE RIGHT MARKETS WILL YIELD YOU THE RETURNS YOU NEED AND PAY FOR YOUR PROPERTY MANAGER.

Geri the first thing you need to do is understand the tenant/landlord laws you are governed by, or get yourself a good attorney. Or even better - both. Then you and/or your attorney can create an exit plan. Do not go shooting in the dark or more than likely you will end up shooting yourself.

I've been agonizing on whether or not to sell one of my rentals. Bought for 200k 4 years ago, put about 100k into it - now worth $850k. I pulled $250 to purchase another property down the street so I'm only cash flowing $2300 a month. But the loan is at 2.25% - I doubt we'll ever see those rates again and with this inflation its free money. It sits on a double lot and zoned for another house so there forced equity potential as well. The area is rapidly appreciating - and projected to grow to be the largest city in the state. I expect the value will double within the next 10 years at the rate the area is growing. As tempting as it is to cash out, I know I'd regret it.