All Forum Posts by: Whitney D.

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Because if I make $15k on a flip its still broken out to $1250 per month if I put it into a savings account and only pull $1250 each month. If she keeps moving from one flip to another using this method then yes its a monthly income, there will be a gap with the first flip as she has no return yet, but that would be the same with rentals. Rentals give a steady income for potentially more than a year, but flips get more money and would get her closer to that 4k per month if she flips several. Thats why I suggested a few rentals and a flip, you get a steady flow from rents without having to jump from one house to the next but you still boost your monthly amounts with the occasional flip. In theory if she can get $1200 income per month from rentals, then flips two houses per year with 15k profits each, thats almost $4k right there.

Of course the original post in this thread has one big flaw to it, which is, "By the end of the year", it takes time to deal with real estate, the odds of finding 3-4 rentals, and 2-3 flips and not only purchasing them all but renting or flipping them is not very good. Or even for the other suggestions here, its going to take more than a year for this to all get to where she wants it to be.

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Getting hit by a semi truck who then flees the scene is also the exception but not the rule, but still last year a semi truck totaled my car and kept driving. Thats why I have insurance, because without it I would be SOl, but because I had it, I got a settlement to pay for a new car. I learned a long time ago that I am no exception to the rules. Anything can happen to any of us, it comes down more to chance than anything else, and there are certain things we can do to lessen the chances that something happens.

As far as talking about the folks who take good care of my house, I have made several posts about having good tenants in my rental. But I grew up seeing more than one bad renter that my mom had to deal with. I have friends and co workers who have dealt with nightmare situations as well. I know these things do happen, and often more than we like to think.

 As I said in my other post in this thread, some people make great landlords and can handle this just fine, thats great for them, I never said everyone has to have a PM. Personally, I cannot and do not want to handle a trouble tenant or have to go through any of the things I have seen others go through with trouble renters, and I know if it happened to someone else it could happen to me. I dont regret having to pay a PM, even if nothing happens, because I will regret not having one if something does.

As far as who cares for the property best, I would definitely call your statement debatable. There are many great PMs out there who know what they are doing far better than the property owner and will take better care than the owner, partially because the owner doesnt know better, partially because owners tend to be more sympathetic than a PM. I know a dependable PM would get a tenant out ASAP if they werent paying rent or causing trouble where as an owner could easily let things go for longer because they dont know the steps or feel bad. Yes there are owners who can be great landlords and take care of their house, but I dont agree that every owner is going to do a better job than a PM

I dont know about bringing in 4k a month. But what I would do is start with lots of research and patience. Personally I am not afraid of a mortgage in this scenario, because it frees up more cash for more investments which will give you more income per month while someone else pays for the house via rent.

Next I would find the areas that I will get the best return on rent vs what I pay for a mortgage, though personally I tend to avoid dangerous areas just because thats more than I want to deal with, it opens a whole new can of worms.

I would find a house in good shape, not too big, 1200sq ft to 1800, at least 3 bedrooms and 2 baths. Make sure the big ticket items are in good shape and will be for a while. The roof, the foundation, the heater and AC, plumbing and electric. If I can tick all those off as being good for many years to come I am happy. I would look for a house that was cared for but out of date and give it the renters polish. Tile floors or high durable and water resistant laminate/linoleum etc, new coat of paint on the inside for sure, maybe new paint on the outside as well if really needed and get some reliable but not fancy appliances. Then lather rinse repeat until the banks refuse to do more mortgages. This is how my mother has done it and she is probably making about $1200 a month in rental income after paying the mortgages from 3 properties. At this point the renters are paying off the loan and she is just making money from them.

I would put a chunk of money into a savings account for any repairs on the rentals, then use some of the remaining money to do a flip. If I could get 15k out of the flip I have made $1250 a month over the year for it. If I am making $1200 off the rentals thats just short of $2500 a month for the year. If I could flip more than one then that would increase as well.

I know some people prefer to pay cash flat out for a place and then reap the full payments back in rent, but there are pros and cons to both as far as being able to invest more or dealing with interest, the above is just how I would do it.

Thanks for giving some feedback on how many short sales you have gotten to go through. For curiosity, how many have you seen that failed? I mean an aspect ratio of like for every 10 that fail 1 goes through etc. I am still fairly young and the time I started looking into real estate was right around the bubble burst and crash, just worked out that way for me time wise. I was young and excited and did a lot of research and following of properties for years, even after I had my own house. I kept my eye on lots of short sales, all of which were foreclosed on, I am wondering if thats because it was during the crash. I know most short sales I see its because the owners cant afford or need to get out fast, which is why they usually seem to fail, foreclosure hits long before the paperwork ever comes together.  I put in offers on some short sales, some with up to 90 days, but never heard back at all even with full price offers, those all were foreclosed on.

Most people arent going to break a month to month lease, because all they have to do is give 30 days which is not a problem for the majority of tenants. Month to month is probably safer if you are worried about broken leases, because there is little to no incentive to break a lease, because it goes on their rental history and because they lose their deposit. As long as the deposit is the cost of a months rent, you are fine, you get that final 30 days back regardless. However, might want to make it a month and  a half worth, because then they are more inclined to get it back since its worth more than just skipping out, plus its incentive not to trash a place.

For longer term leases its up to the laws of the area and what you have in a contract. Standard is 30-60 days notice regardless, and loss of deposit. Some places tack on an extra month of rent or other penalties, but you need to check the laws because there are limits in some states.

Because a short sale is usually an emergency situation where they are probably going to lose the house or have to leave right now and cant afford to keep paying it along with another residence. A lot of people do try and get approval for the short sale but it takes months with some banks, and thats months the seller does not have. So they put the house up and send off paperwork for approval at the same time in the hopes of things all coming together in the end, which, it rarely does. I have never personally seen a short sale work out. Even the 'approved' short sales most often have to have the bank approve any bids, even full price, which can also take months, most offers on short sales have long expired by the time the bank gets around to looking at it. All the short sales I saw went to foreclosure. I decided a long time ago that I would never deal with a short sale unless it was the best deal on earth, I had a lot of time and a LOT of luck, even then I wouldnt have high hopes of it working out.

I am interested in Wayne Brooks input on how often he has seen short sales work out, because, as I said, my personal experience in following a lot of short sales out of curiosity, none ever sold, all foreclosed. But as a realtor I am curious to see how many short sales Wayne has seen get through to the end.

Most PM's have a cap on how low they will go for % rent wise. I believe mine w has a $70 min and 10% anything over 700. I said 10% because thats what it costs me personally and I find it well worth the 10% knowing just what my family has gone through with their renters, much less other landlords I know.

 I am not in any way suggesting anyone buy a bunch of properties in dangerous neighborhoods and drop it on the PM, and in fact I think its a bad idea to even think that way for many reasons.

What I am saying is, this scenario could happen in any neighborhood and the PM is better equipped to handle these situations than I am or most people I know. Some people do great as landlords of their own properties, but most people I know who own rentals are not at all prepared to properly handle an eviction much less a shooting during eviction. The neighborhood where the tenant committed suicide was a very nice neighborhood, and my mom had some renters dealing drugs in her rental once, it was also a great neighborhood, just bad tenants. I am saying this stuff happens all the time, and it could happen in any neighborhood to any landlord, and I know I am not prepared to deal with it.

This is exactly why I am 100% behind using a PM, though I cant blame any PM's for not wanting to take on rentals in these areas. Its only 10% of my rent per month but to me its fantastic insurance and someone else to do the work for me and deal with these situations.

I had a friend I used to work with, she bought the house down the street and renovated it, luckily for her she had a PM. She came home one day and there were cop cars and police tape everywhere. She found out that the tenant had committed suicide by shooting himself in the living room. It shook her up a little, but the PM dealt with everything, getting the house cleaned, police paperwork etc. She never had to see any of it, and I think thats the only reason she opted to keep the house and was able to deal with it emotionally.

I dont know about 'firing asap'. But you do need to get a new PM and rather quickly. It shouldnt take more than a week to do your research and find a good new PM for the place. Its highly unlikely in that time that the tenants are going to leave or anything is going to change.

 The only reason I would reach out to the tenants in this situation is once you have an new PM lined up, send them an email and let them know the PM was not meeting your needs and you are going to use a new PM. Apologize for any inconvenience for them (more paperwork etc). Make sure you put in something along the lines of "I am sorry for the inconvenience but for all your needs please make sure to contact x from now on." To make it clear that you are only reaching out to let them know whats going on. and not to open a window for them to start contacting you for everything. I suggest this only because its good for them to hear 'officially' whats going on so there are no rumors or confusion. If they still want to build a deck and fence they will discuss it with the new PM and you will find out, otherwise it comes off as greedy to contact them about it directly.

I have had contact with the tenants in my house, I actually found them first then my PM, but I made it very clear from the start that we would be using a PM for their protection and mine (I live out of state) and that everything needed to go through the PM. Even though I have their number and they have mine, we never call each other directly. Its not a door I ever want to open. They are great people with a fantastic rental history and take great care of my home, but this is a professional deal and things can easily go bad when you try and make the relationship personal. I really like my renters as people, and thats exactly why I dont want to deal with them directly.

As someone else said, it depends on the type of debt. CC debt, pay it off period, nothing comes before paying that off. To me car debt is acceptable even though I dont have a financed car, I paid $8k cash for my car. Used cars are not the headaches you think them to be and you dont have to buy a $2k clunker.

To me $18k for a car is too much, I personally would never buy new, too much loss on investment. Used cars actually hold their value better and you can find a very good one in the $10k range thats going to be reliable and not a pain.You can finance again which yes is still debt but is much less, and get a lower interest rate. DO NOT TRANSFER TO A CC. Even though the CC may have no interest, if you dont pay that sucker off thats going to hit hard when your time is up and with lower payments you wont be doing yoruself any favors.

Get a more affordable used car, around $10k or under, and either pay cash or finance with a better interest rate and make above the min payments each month. You can do a dealership or private seller (personally I like private seller, dealerships are just as shady as anyone else and private is cheaper). if its private meet the seller at your favorite mechanic and have an inspection done immediately, then take it for a test drive and based on what the mechanic found, negotiate the price. Yes it costs money for an inspection but its well worth it, used cars can be very reliable with little repairs if you get a good one.

To me the acceptable types of debt are mortgages and car loans for reasonable prices. I am torn on student loans because I was able to find ways to pay for my university without them so I have no personal experience. I wouldnt say you have to pay it all off before investing, but paying it off should be a priority over investing.