All Forum Posts by: Larry Zucker

@Jose Pachon

Are you doing something wrong?

Absolutely!

You are worrying about this tenant when you should just cut her loose as fast as you can and be happy she is out. Find a better tenant.

@Alfred Uda

This is a single townhouse with one unit of 3bed/2.5bath. It throws off $215/mo free cash flow and has a zero vacancy rate so far

I repeated the same deal a couple of miles away which throws off a bit more cash due to higher rent.

@Jonathan Carter

Sorry for the late reply @Jonathan Carter. Just saw your post.

My goal from here is to keep picking up buy and hold properties and possibly (if I can muster the will) do a couple of minor flips. Ultimately, I want to do real estate full time but for now I have to pay the bills.

Always great to hear from another Raleigh person. Thanks for the post.

@Mary Mitchell

You made the right decision getting started with renting. I am sorry your first experience has so much negative drama.

Perhaps I do not understand something here. But you keep referring to this woman as a tenant yet there is no documentation that she is a tenant at all. Seems to me the term squat may be a better term. I am sure tenants are protected under the covid rules but someone without a lease...not so sure. An attorney may be able to help there.

Then there is the matter of the sale itself. Not disclosing there is a tenant in place or that the heat does not work are material facts which must be disclosed. Failure to do so is fraud which enables you to go after the seller or any real estate agents involved. Which I would strongly urge you to do. BTW I am assuming the tenant was not disclosed because if it had been then the security deposit would have passed to you at closing.

I would at least approach this as if she is squatting and force her to produce the lease.

From a financial perspective, if you took a mortgage to buy the property perhaps the covid rules can help you get deferred payments from your lender to buy some cash flow time.

@Brandon Beatty

Leverage is the way to go. The returns are better. If you put down $40k on a $200k property and it goes up to $240k you doubled your money but if you paid cash for it you would have only made 20%. You could pay cash for negotiating leverage and refi later but then it would be a more expensive cash out refi.

From a risk respective...if you hold the cash you have it to cover empty units, unexpected repairs, etc. sounds like reduced risk to me, not more. Besides you can always use the held cash to pay off the loan later if need be. And let’s not forget being able to use that cash on another deal.

@Chris Martin

Thank you @Chris Martin. Lots of great information and I appreciate the links and the time it took to put facts together. Looks like I have my reading cut out for me.

@Daniel Fitzroy if the landlord pays for the door it becomes part of the real property and stays with the property. If the tenant pays, then it remains the tenant’s personal property which they can remove and take with them when they leave (they will have to fix any damage caused by that process). I would not split the cost because it muddies the water as far as whose property the door is.

Thanks for all the great responses, especially @JohnDean for his clear, and very helpful, answers plus (point-taken) cautionary words.  Once the world opens up again I will definitely attend some court house steps auction to get the feel of how it works and to meet the players.

I have been researching the process of purchasing foreclosure properties at auction in Wake County, NC.  I understand there is an initial auction "at the courthouse steps" (announced in the local paper) in which the winner must have funds available immediately.  As I understand it, the amount of funds available is 10% of the winning bid price.  Then a 10-day upset bid process starts where the winning bid can be overtaken by a higher bid and each time a valid upset bid is placed the 10-day clock starts again.

But I still have a bunch of questions I can not find the answer to online, that I was hoping someone in the BP universe might be able to guide me through.  Things like

- How to determine what encumbrances remain with the property that a winning bidder will have to pay. 

- Why even attend the initial auction if there is a 10-day upset bid process and how does one determine what properties are in that process

- How legit are all those auction sites like auction.com.  They say they are auctioning foreclosure properties but the requirement is for auctions to occur at court.

- Is it permitted to contact the trustee of the property and negotiate a purchase prior to auction?

You get the idea, someone that has been-there-done-that who is willing to share the details.

Many thanks in advance.

Great advice @Jiri B.  Thank you.  Will definitely track down the most recent financials.