All Forum Posts by: Kevin Yeats

Eddie, you are correct.

It really depends on how accurate your vision of the future is. If you own rental properties (even without mortgage debt) but most of your tenants are on fixed (nominal) income (seniors on SS), during an inflationary period, your tenants may not be able to keep up with the rent payments increases.

I didn't want my post to go too long.

Again, you reinforce my point. The best position is to have something that many people want and can afford to buy (or trade for). Housing services or bullets and water purifiers - it depends on your view of the future.

Amazing (on several points).

"The two most common elements in the Universe are Hydrogen .... and stupidity"

In anticipation of periods of inflation, your best financial position is to make long-term commitments for fixed payments but receive payments that reset frequently.

Homeowners loved the high inflation days of the late 70s and early 80s. Most had long term fixed rate mortgages but could renegotiate salaries and wages with current employers or find higher (nominal) income elsewhere.

If you expect double-digit inflation in 2012, you could try to take out long-term (30 year) fixed rate mortgages today to buy rental properties. If the inflation occurs, you would be able to increase the monthly rents while still paying a fixed rate of return to the lenders. Unfortunately, lenders have learned their lessons too. Typically, they will not "go long" and fixed on investment properties. They protect themselves by limiting the term of the note and/or require periodic (nominal) interest rate adjustments.

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I am surious about those who feel that precious metals make sense. In a crisis situation, you have to sell the physical metals (gold, silver etc) to someone else for currency or at least trade those pieces of metal for something else. Depending on the depth of the crisis, other items may have higher value and more readily accepted in trade - food, water, water purification systems, tools. My point is that someone has to be on the other side of the transaction and be willing to accept what you offer.

Nick, what else is available that you could buy and rehab?

If you make a good paycheck on this house after paying off the relatives, they will forever come back and say that you own them more money even if they agreed in writing to settle for what you pay them today.

Is it worth it? This is your wife's family. Does she want to forever part with them for $10k - $20K?

You have some good advice here - meet with an attorney. Since the death was 2 years ago, I am surprised this has not settled yet or is at least working its way throught the probate courts.

If I were in your shoes I would first determine the upside of pursuing this deal. You stated that the comps are maxing out at $55 K. This gives an estimate of the upside. Second, what are your expenses for pursuing this. I'd find out what taxes are owed. Next what obvious repairs & maintenance will this house need before it can be sold or rented. Any utility bills owed on the property even if vacant? What will you have to pay out once you become an owner?

Finally there is the disfunctional family. This is where you really have to meet with an attorney. The owner died leaving 4 bloodlines. 2 direct bloodlines are living (I assume one is your wife), the other living direct descendant has issues. Of the grandchildren (children of the dead children), how many are there? Are they adults or minors?

Talk to the lawyer about how the assets are passed down in this situation.

I assume that the property is in Texas.

The bottom line: "Is this deal worth it?" Your upside is about $55K. Is that worth it for the hassles?

Without checking with all of my lenders, generally, the most viable lender will want the borrower to contribte 20% down and have 6 months of working capital in the bank. This lender may not require experience but would require a personal guaranty and would also conduct a fair amount of Due Diligence.

Let me know if I can help.

Reid, the court system became an enabler long ago. In this instance, the homeowner was lucky that the guy was even caught. There is no effective enforcement or assistance for someone who refuses to change. Thank God no one was killed.

"There are lies, damned lies and statistics." - Mark Twain

"I'm proud to be an American and I am happy to pay my taxes. But I could be just as proud for HALF the money." - Arthur Godfrey

How much did the previous owner PAY YOU to take this house?