All Forum Posts by: Jonathan Newman

Sad situation.  He may very well get his voucher pulled out from under him before he gets the chance to look for another place.  Read your contract with the HOC.  You may only be able to keep the voucher money for the rest of the current month.  And, the lady may have special protections as a victim of domestic violence.  Read that section of the MD Code.  You might try offering her money to move out, or offering to advertise and screen for a roommate.  

I think that with my next security deposit, I'm going to use it to buy a Series I US Savings bond for the amount of the deposit.  Then with any rental increases, I'll buy a bond for the difference.  The current earnings rate is 1.68%, which beats the 1.5% we have to give the tenant.  If you redeem it before five years, you lose 3 months of interest, but it's still better than nothing.  And, it complies with MD Code 8-203.  I hate the idea of paying my tenants more interest than I'm earning, so I need to earn more.

Here is a quote from 8-203

(2) (i) In lieu of the accounts described in paragraph (1) of this subsection, the landlord may hold the security deposits in insured certificates of deposit at branches of federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, located in the State or in securities issued by the federal government or the State of Maryland.

I'm not sure if this question fits one of the existing forums. Moderators, please address appropriately.

I have five rental houses that I bought with my own cash and credit. I recently met a doctor who is interested in "getting into real estate". I would like to know some of the ways to partner on real estate. He is interested in the same types of deals that I am -- Buy and hold (rent) real estate, with possible lease options on the back end.

I told him that there is a range of options, from him buying the property outright (with a wholesale fee to me), all the way to me buying the property (with a mortgage held by him). He said that he is looking for something with more risk than just writing mortgages. I take that to mean he is looking for more upside than just 10% interest.

My realtor (c) said that if the investor put up 100% of purchase and rehab costs, that we should split profits (cash flow and equity upon sale) 40% to him and 60% to me.

How does that compare to the other partnership agreements out there?

Thanks,
Jonathan

Jon,
An investor would never look at PITI equal to rent and think he had a good deal. An investor would never look at sale price equal to market value and think that was a good deal either. However, there are enough "average Americans" who will buy at market value and who will think (or can be convinced) that when PITI equals rent, it's time to buy. This builds in a floor as to how far the price can drop as PITI falls closer to rent.

You should have come to Dayton, OH. He was selling his course for $800. The difference would have bought a plane ticket and hotel.

The gentleman who spoke before him was from the local housing authority. Through him, I got in touch with someone who deals in special needs. From him, I got a name of someone else. If it all works out, I'll be pulling in cahsflow the same way he does, without the big investment.

In Florida, there is, or at least was, a legal issue with starting a lease other than the first. The wording for an eviction was written so that if you didn't start on the 1st, you would end up having to wait until the next month to evict. I no longer own property in FL, so I don't know if this changed.

If you need justification to quit, here it is: Most people don't succeed. Most people quit. You will find ample company at the bar willing to share stories about how they "tried that once..." You have my permission to quit.

I learned how to scuba dive a long time ago. It was neat to learn, but by my second dive "on my own" I was bored. Then a wise old-timer gave me a piece of advice. "You need a hobby." As I tried to argue that scuba was supposed to be a hobby, he rattled off a list of UNDERWATER hobbies. My eyes lit up when he mentioned spearfishing.

So don't quit -- find a hobby. I had one agent give me listings of every property she thought I might like. I drove by nearly all of them and went inside many (following MikeOH's advice). We spent hours together, drove hundreds of miles, and in the end bought one house. Then, I met another agent at my local REIA meeting who listened to me and my goals as an investor, and only showed me houses that from his point of view matched my needs. I wrote offers on nearly every property he showed me, and went to contract on about half of them.

Every investor needs an agent on their team. Join your local REIA, meet the investors, and be their agent. It sounds like you'd rather be batting .500 than batting .010

Good luck

GTDriver: Keep looking. The run-of-the-mill agent has their mind set on a piece of that 6% pie. The investor has a bigger picture in mind, and believes everyone who works in the deal should get a cut of the deal.

Some investors pay a flat 1% to an agent to list a property in MLS. When they buy, they pay a reduced commission. The understanding, and it isn't always a contract, is that everyone gets fairly compensated. And, more deals get done because of the good working relationship.

Keep looking until you find an agent who "speaks your language."

Mercury,
Can you be more specific about the background? Were you being foreclosed on or did you have a property you found and wanted to wholesale?

Was it going to auction and you stopped that by submitting an acceptable short sale package?

Thanks for the clarification,
Jonathan

I have to advocate a more middle-of-the road position. I would have phone numbers and references for shelters and other resources. And when a tenant gets a restraining order, I MIGHT be willing to terminate a lease early in exchange for a clean rental, less damages of course.

The potential downside is that tenants talk, and once a tenant knows that all they have to do to move out of one of your places is file a restraining order, you'll find a slew of tenants who are suddenly beaten.

Here is a question. What would you do if a tenant had her door kicked in? Would you evict for "failure to supervise guests"?

Would you file a criminal complaint for the door? Would you insist she file for a violation of the restraining order?