All Forum Posts by: Scott N.

So I've realized that I am one of "those people". 

Lazy.

 Motivated but I don't follow through. Disorganized, so my life is full of crises that show up due to my poor planning. Self-important, so I have a hard time delegating. blah blah blah, the list goes on.

I sit around, read the internet, dream big things....AND NEVER DO ANYTHING ABOUT IT.

I have a wife and a young baby, a blue-collar hourly job that exhausts me every day, and live paycheck to paycheck.I have the "POTENTIAL" to do huge things.... but I don't. I am determined to change this.

Anyone have any practical (non-philosophical) ideas on successful ways to make small, incremental changes to create a pattern of success-inducing behavior?

I have thought, read, listened, dreamed, been tutorial'ed to death over the past two years, my mindset is that of a wealthy person but my actions and habits are those of a poor person.

I have made a commitment to make small, everyday corrections to my behaviors to turn them into habits that will help me become financially free (passive income from real estate and/or business).

I am just starting to take 10 minutes at the beginning and end of each day to keep track of our personal finances, and to make sure that I am thinking "REAL ESTATE" at the beginning of every day, and hopefully throughout each day.

Anyone have other ideas on small, repeatable, effective actions that I can gradually add on a daily basis to change my daily habits and actions? I know it will take time, but hopefully this will be the first post of a long success story. The way to change my life is 5 minutes at a time.

Many thanks in advance,

Scott

Hi guys, thanks for the replies, suggestions, and questions.

Have been on a more sporadic schedule than I had expected so have not been able to get back online recently. And I've not figured out how to call out peoples names (yes I've read the FAQ but it doesn't seem to work for me somehow).

@RobertHarvey, you are 100% correct, I need to get the property under control. It's on the list next week when I get back to town to get a signed Purchase Agreement. Thank you for the rehab suggestions, those are good and I need to remember those things, instead of working on making the place "perfect" or "awesome"... it just needs to be "rentable" and professional.

@DouglasLarson, yes, I was too vague. My main objective is to try to salvage  our money. I know that it is gone, but in my mind that creates instant value/equity/price/something that's worth analyzing.

We are undecided about staying here or leaving within a year, so we are looking at both options of buy-then-sell-soon (basically a flip, I guess?) and buy/hold/rent for cash flow. I have the rehab skills part covered, I'm working on a materials budget. Carpet locally is gonna be about $20-25 per sq yard for durable stuff suitable for a rental, plus installation. (about $10/yard). So about $1800 for carpet alone before installation.

ARV is hard to figure, there's not many comps; only 1 condo in this town has sold in the past 4 years, same unit type as mine, I'm trying to find the property records but can only find that a mortgage was recorded for $105k so don't yet know the purchase price. Next door unit (with a MUCH nicer interior) is listed at 129k but owner would come down prob 5k, another bigger unit (1250 SF versus my 1100) is listed at $145k but those have both been listed for 2 years or so.

My current main focus is to get the property under control via a purposefully vague and short purchase agreement, with down-payment refund contingencies written in, so that even if we end up not buying it, we will have a legal basis to file a lien and hopefully get paid when the condo sells.

Spoke to the owner for a while last week. He's being very stubborn on refusing to take a "loss" below what he paid for the property, and wanted his original price of $120k, but agreed to come down to $115k for a price.

Current mortgage is assumable with following numbers:

balance $84k at 3.750 interest rate (3.89 APR)

closing costs $2,600

prepaid items $1,000

total monthly payment (P&I, HOA, hazard insurance, property tax) comes to $840 if we assume his loan.

So the 84k plus 25k comes to 109k, leaving us 6k apart. I don't want to put any more money into the deal. Prepaid items, okay, but def no more cash, and preferably not even closing costs. He is equally determined not to put any money in, and as a matter of fact he is pretty set on getting some cash out of the deal.

Any ideas on how to try to structure this to present him with several different options under which I would purchase? I have 1 option (assume his loan and the price would be 109k) but need to figure out 1 or 2 other methods to present to him.

Don't think that subject-to, using a land trust, would work, as he and I have both been in to speak to the local bank, and they would likely be suspicious enough to investigate (it's a very small town and there's not many RE transactions). But maybe. If his name was on the trust and I just had it assigned to me but didnt record the assignment yet.

I am also going to give him the option of listing it himself right now for the next 2-3 months and see if he could get more money than we are offering, and he could pay us back our $25k out of the deal. (My preferred option, I think)

Ok, that's where we are at, I'll have more info next week when i get back to town and speak to owner again and hopefully get a Purchase/Sale agreement signed.

Hi @Roy Schauer

We have not discussed rent credit per se (I'd not even thought about it).

That is probably the right word for what I was thinking - taking over his mortgage at its current balance (or a new mortgage for the same amount).

Yes, the owner is pretty ready to get out from under it, especially after we moved back in and I blew up his phone the first week with gripes about plumbing leaks, but he is not what I would call a "hugely motivated seller" and has very poor financial skills, and so is pretty attached to his price. But we will see what develops when we negotiate.

Part of the problem is that there is so little in writing, and it's such a small town that it would make life very uncomfortable to have any kind of legal proceedings going on to get our money back, and yes, we are planning on living here at least for the next year.

So I need to have a Purchase Agreement drawn up, with some purposefully broad contingency clauses (such as "Subject to Buyer Inspection" and "Down Payment shall be refundable if Buyer chooses not to purchase" etc).

I'm mostly trying to figure out how to structure the paperwork right now to give myself the most protection during the buying process and some legal standing RE our $25k deposit, and also how to turn this into a win for both he and I. He has already gotten the cash and bought an asset with it (a fishing permit that he purchased for $18k and it rapidly appreciated to about $35-40k now) so I think he can be persuaded to just get out from underneath it, if the numbers can be put on paper and worked out in such a way that both of us are content.

I'll need to find out what he owed on his mortgage around the time that we originally agreed to purchase, in order to calculate some sort of rent credit, right?

I.E. " On Sept 1, 2011, mortgage balance was $93k and today mortgage balance is $87k due to 2.5 years of our rent"

So how would the rent credit be calculated into our purchase price?

Purchase price - $120k

Down Payment - $25k

Rent Credit - would this be the whole $6k (or whatever) of the reduction in his mortgage balance during our stay? Principal, interest, both?

Those numbers (which are close but not perfect) would leave a balance of ~$89k, which should be close to his balance, but not quite.

I am strongly opposed to us putting any money into this deal, we already have 25k cash into it, but not sure if I can get him to put any cash in either. Closing costs will be a big negotiation point, I think.

Hi all, 

Thanks in advance for reading and offering any advice. I am working on a boat in Alaska, so my internet is limited and sporadic, after I post this, I will only be able to check it about once per day for update and will reply at that time, so please allow a little time for me to answer your questions.

New to the whole world of REI, new to Bigger Pockets, this is my first post outside of the Intro Section.

I'll get right to details:

Short story is: stuck in the process of buying a condo from a friend (first bad move). Have already given down payment  (long since spent by said friend). Numbers are pretty jacked up but may be salvageable. Just moved back into said condo - discovered it needs a (probably typical) amount of work and updating. Need to figure out numbers, make a proper written offer, and figure out how to recover some of our money. We had been living in the condo for two years after giving the down payment but decided to move out of state, but then came back. So all in all, this is a pretty big screw up. Thankfully, the condo is basically sound, in a desirable location, and will rent for a decent amount when updated. If the details can be worked out.

We have already determined that a fix-n-flip or wholesale are way out the window due to numbers, but potential for cash flow exists, particularly if we live in it for a year or so and get it updated (which, BTW, works into our bigger life plan).

Numbers:

Condo, 2-story, 3 bed, 2.5 bath, about 1200 SF, parking included (1 spot covered, 1 uncovered); on a tidal inlet, 2 blocks to downtown, yet secluded and quiet. Built 1985. HOA is pretty solid, I have been to a number of meeting over years and it is financially sound for the most part and recently making exterior upgrades, taking care of the complex, and planning for future big items (roof in about 5 years, etc). In a 9-unit complex.

Agreed upon purchase price: $120k (this is going to be negotiated downwards)

down Payment given: $25k (in July 2011)

ARV: $110-120k, hard to state because it's a very small town on an Alaskan island. It's the only condo complex in town, 9 units. Others are currently for sale, next door for 130k asking, and a bigger unit for $145k. Comps are very few, only 1 or 2 have sold in the past few years. So ARV is less of an issue for us, not really in the picture. Cash flow and rents will be more important.

Potential rent: $1300-1400

Repairs:

Tricky to say, I need to get some better numbers and estimates from contractors, but there are very few in this town and are exorbitantly expensive, so we plan on some sweat equity, purchasing materials in the lower 48 and having a cargo container shipped up and repairing / updating at our leisure.

Downstairs will need new carpet (about 400SF), other half of downstairs has Pergo, but we might re-do the whole floor as the Pergo is in the entryway, kitchen, and 1/2 bath, all high-wear and moist/damp places, and it's a few years old.

Upstairs will need new carpet. Whole unit will need paint, but not much structural. We may decide to remove one downstairs wall to open up the floor plan, re-locate the washer/dryer upstairs, and open the kitchen and make a much huger usable living space.

Owner (friend) currently owes about 87k on house at about 3.5% I think; I can get more specific numbers in a couple days. Mortgage is, I believe, transferrable / assumable. Will find out as well in a day or two.

We agreed in 2010 to purchase it when we moved in, agreed on $120k at that time. Nothing in writing. In July 2011 gave check for $25k to owner, have written receipt that says "Owner receives $25k via Check #xxx for down payment of property at XXX." That is only paperwork we have for that.

Lived in it for 2 years, paying $900 month to owner, for $620 mortgage and $280 condo fees, until we could get financing and complete the deal. At time of original agreement, financing was 100% unavailable due to state-required paperwork not being filed by condo complex board, so banks would NOT loan at all (and only 3 places to get financing anyways, Wells Fargo, and the other local bank, and govt-run Alaska Housing finance Corp).

Moved out of town for a year when we decided we couldnt get a loan, owner agreed verbally to give money back when he could or when we sold it (yeah right). Moved back INTO the condo this month with intent to purchase (owner agrees). Have found that condo has not been kept up AT ALL in the past 15 months, barely even cleaned. Worse than before. Also finding lots of minor maintenance to be done - small plumbing leaks from dried out seals from not being used much the past year, etc.

So, big ticket repairs are:

- Flooring

- Paint

- Possible first floor wall removal / remodel etc.

- Wood stove needs to be replaced and chimney flue as well, it's out of date about 2 years ago according to fire code.

 - Kitchen appliances are almost at end of life, cabinets could badly use at least a facelift or full renovation.

Obviously we are going to have to sink a fair amount of money in materials alone to this place. I work as a commercial fisherman, so am away from home for long times but will have several months off over the winter when I can work on the house, so that will work well in saving some labor costs. I will hire pro's when necessary and for some of the finish work, but have a great next door neighbor who is a hobby finish carpenter and does most excellent interior design / remodels.

i've run the calculators on here (Rental Property). Not sure the 70% one will apply, we are in a weird situation.

My opinion is that the down payment money is gone unless we buy. It's cash that I havent seen in 3 years, so in my mind it doesnt even exist. So, theoretically, we will have either instant equity or a good purchase price. I am thinking that I can just take over his loan, have him pay closing costs, and we will soak up the rehab costs.

Okay, I'm almost out of cell range and want to get this posted. I'll continue later tonight or tomorrow with any more info I think is relevant. Please ask any questions or post any thoughts. I know it's a jacked up situation but feel free to chastise anyways!

Thanks, Scott

Thanks y'all for a warm welcome!

Brandon and Josh, I am impressed with the community and brand you have built here, thanks for taking the time to stop by to say "Hi" to the new guys.

@Antonio Chasten, I'll send you a message, we will likely be heading through Dallas in the next few weeks as we drive West, maybe we could meet up for a visit and chat.

@Michael Lemieux , I am just south of Boynton, I'll send you a message also and see if we couldn't link up sometime for a coffee and conversation!

Thanks guys, I look forward to continuing to see what others talk about and are involved in, and hope to be contributing my own ideas / opportunities / "deals to analyze" and other things of that nature.

And a big shout-out to my good friend @ChrisAvera who pointed me here in the first place! (for some reason it won't let me link to him, still working on understanding the name-linking system here)

- Scott

Hi Gary,

I am also a new member, just put up my first intro post.

Good to hear you have been studying, I also have been reading a ton of the Rich Dad type material over the past couple of years. I took one of their coaching courses about 18 months ago. Now I'm about to take the dive into creating a plan to wholesale and put it into action!

I've heard a ton of great things about the Denver market, but don't know anything personally. I did live in Durango for a few years, though, so I appreciate the Colorado lifestyle.

Best of luck in your endeavors, keep talking to everyone possible and you will find a mentor!

- Scott

Hi everyone!

My name is Scott, I've been reading on BiggerPockets.Com for probably two years now but have not yet posted anything; so today is, as they say, the first day of the rest of my life. I am currently in South Florida for the next few weeks, but will be re-locating to the Northwest this summer; not entirely sure what the final location will be, but I will update my profile when I'm there.

I've read the various posts by Josh Dorkin and others about the proper way to introduce one's self here, so my profile is filled out, I've uploaded an avatar (a temporary nice nature picture, until I can find a photo decent enough I'm willing to use for people to associate with me on here), included my location in the title, and now it's time to share a little bit about myself!

Let's see...

I am currently a commercial fisherman to pay the bills, but not at heart and not for long. I have been reading and studying many things in the past few years, mostly things that have taught me to look at money and time in a different way than most Americans. I have no desire to get a good job, do my part, and retire with a gold watch and a pension. I'm not foolish enough to even believe in those things anymore. I'm not even foolish enough to think that the "American Dream" is currently fueled by much more than easy credit and the next looming economic disaster to hit this great country.

I *am* smart enough to know that there are far better ways to put money in my pocket than to leave home for weeks/months at a time on a small boat with a bunch of smelly men and hope that we hit it big. While fishing provides me two things (a decent one-earner income, and good big chunks of time off, about 3-4 months of completely free time throughout the year), it also forces me to always trade a lot of my time for a small pile of money.

I don't want that. I don't want "piles of money." Not even a REALLY REALLY BIG pile of money. Cuz a pile will always get smaller and smaller and smaller and then run out.

I want a FREAKING RIVER OF MONEY, MAN!!!! I want to have money come flowing to me without me having to go trade my time for it.

So, naturally, the potentially infinite streams of revenue from real estate, constantly coming in, checks every month, are very appealing! (Yes, I know that REI is a job, at least until you are a fully automated big dog, and I know that I'll be starting off with tiny streams... but where do you think the Amazon and the Mississippi start? Look how they end!)

That is why I am choosing real estate to be my preferred vehicle to create the wealth that will give me and my family true freedom - not having to get up and go off to some job, no matter how well-paying. To be able to spend the time I want with my family, and provide a comfortable life for them. To be able to give generously and share my blessings with others. To provide decent, safe, comfortable housing for others who may not be able to purchase homes, but that doesn't mean they should live in some smelly rat-and-roach-trap.

So, I plan to use my off-time to start out by learning to wholesale, move into something like a rehab/flip or similar, and then upward into buy/hold/cashflow. The end goal is large multi-family and/or commercial, but all of this is still in the learning and dreaming stage, so I don't know all the details yet.

Okay, I think that one key to anyone actually reading something on here would be brevity, I'll try harder at that next time. If anyone is still reading, why thank you!