All Forum Posts by: Josephine Wilson

Newbie question here: There is a SFH I would like to buy and rehab for my mother to live in. The current owner lives OOS and rented it out after his father died. The rent they are charging is about half of market rent. (It was rented to a couple. When the boyfriend moved out, the girlfriend said she could no longer pay the full rent, so the owner halved the rent so she could stay.) The property is one-year past due on property taxes. Interestingly, the property is still claiming a primary residence tax credit, which is not allowed for rentals. Someone could report them, which would raise the property tax bill by 40%.

The property is managed by the current owner's older brother, who is local. He seems to be bad with money because both the father and the father's sister left their property solely to the younger brother. The younger brother inherited five investment properties here, while the older brother owns only his primary residence. 

Reading the tea leaves, the younger brother may be letting his older brother manage and take the income from the dad's house. The older brother may need the money. The younger brother may not know that property tax hasn't been paid. The younger brother may not care if the older brother is too lazy to get a new tenant, but he probably would care that taxes on a property in his name are not being paid. (Incidentally, the older brother is also not paying the tax on his primary residence.)

So I'm wondering what's the best way to convince the younger brother to sell. I'd also be curious if there is other publicly available data I should pull on the house/brothers. Experienced folks will probably say I'm spending way too much time researching a single property, but the location and design of the house is pretty perfect for Mom. 

@Shiloh Lundahl "What you should be asking is, who out there is buying properties in Tucson that cash flow. Will you show me how you are doing it." This is just such good advice. I totally get what you are saying, and those three deals you mention sound really good, and make me optimistic that there are good deals to be had in Tucson. I'll check out the meet-up!

Great topic, @Chihiro Kurokawa! It sounds like this is a tactic for a certain size of multifamilies in markets that haven't been completely saturated. 

@Gerry Logan If Biden wins, interest rates will stay low. The Fed will still be propping up the economy because the coronavirus crisis will still be going on. The Fed is largely politically independent. The Dems want to raise taxes on the Jeff Bezoses (Bezi?) of the world, not on people making under $50 million. Those of us on BP don't have to worry, in spite of the fear-mongering from the right. But I agree Dems could make moves favoring tenants over landlords, like a continuing eviction moratorium. Overall, a Biden presidency would be better for us because he may actually do something to help out the middle and working classes, which would mean more people able to pay more rent. Higher unemployment payments, higher direct stimulus payments. It all puts money in people's pockets. Sure some will blow it on big screen TVs, but many will use it wisely. Trump's 2017 tax bill largely rewarded his rich friends. 

@James Hamling Great insight on private investors. I did not know until this thread that those guys were interested in the triplex around the corner. Kind of a bummer for us small fry looking for both safe investments and cash flow. 

@Gerry Logan Kudos to your partner. That is a great stroke of luck. Good luck with your property. A 10-unit sounds really cool. You start to get some economies of scale there that you don't get in the small plex market. 

@Joe Splitrock "lease breaks, LLC, cat pee" - LOL!! That was literal LOL. So true. I actually know a guy here who just sold a large multi for...$41 million and oddly enough, I have yet to see him on BP! He spent most of his time worrying about bank underwriters, his sugar daddy in Fla and getting his latest project through city council.

@Steve Vaughan How many of your sellers are libertarians? This sounds to me like a libertarian perspective. But yes, I also get what you are saying about convenience and speed. I could see that appealing. You have to be pretty confident in your appraisal and inspection skills, and have a lot of cash to do this, I'm thinking. 

@Darius Ogloza What sort of lenders are flexible on DTI, community banks? Under the DTI, I have about $500,000 to play with before I get maxed out. That's two small properties or one larger one. Not sure I want to use it up on properties without cash flow, as opposed to having cash flow that can push me above $500K. I get your argument though.

And I am totally with you on C versus A, although I'm looking more at B now to provide a bit of a buffer in a downturn but hopefully still get reliable tenants.

@Steve Vaughan I am really digging your strategy, from the off-market relationships to looking for B over A. But I have to admit, I really don't get the off-market seller. I mean, what the heck is in it for them? Sorry, I know this is a newbie question because clearly there are lots of off-market sellers. But, no matter what the condition of the property, they will get top dollar if it gets put on the MLS. All they have to do is make one call to a RE agent to get top dollar. Why would they sell to you? Is it all about saving themselves a commission?

My research is pointing toward targeting an area, getting a list and writing a letter to them. We have a lot of older people owning properties outright or kids who inherited the property. We have a lot of big high-rise student housing going up and I think the rental market for students will be softening. I'm hoping they have started to feel this (along with the students not being around due to Covid) and are thinking of selling. But I feel like I would have more success if I have a better sense of their motivations. It just seems to me like a bad move for them.