All Forum Posts by: Diane Menke

Ray,

Why don't you go to the area the house is in and talk to the local small banks there? Just walk in and ask to talk to a loan officer. Tell them what you are doing, the address and what you need. Many small local banks are making money and loans.

They may want 25-30% down but its still not terrible.

I don't know where you are looking, but we price rentals by bedrooms. We can get around $400 per bedroom and tenants pay utilities. This is for transitional areas not fancy. Just neat and tidy.

HUD has rent rates for section 8 that can lend rental rate info as well. We just use the info for pricing reference.

Good luck
Diane Menke

Mike,

I suggest you look for a house you can buy to live in, while at the same time rent space to either some room mates, or if it has a 2nd unit, get a tenant. You can also rent out garage space if there is any.

You want the rental income to pay the mortgage, the utilities, and create some positive cash flow if possible.

Ideally you want to live rent free, so any money you earn from a job can go into your investing "war chest". Leave it there. Save.

Later the economy will improve, your property will increase in value, and you can refi out your equity. You then take the equity plus your war chest and buy a 2nd rental property.

Since you are a student and you do not want your studies to falter, look for a turn key or close to turn key condition REO or other distressed seller.

Before you go looking, establish with a local lender what you will qualify to purchase. From there you can assess what rents can be had, vs costs of mortgage and running your house.

Stick to the numbers and don't get emotional. Buy where people will want to be tenants long term.

Good luck
Diane Menke

In our city the sewers and rain run off systems are connected. So a heavy load of rain water can cause water to come up out of the sewers into the basements of houses. Many old city sewer systems on the East Coast and I think places like Chicago too have this set up.

You can see if the water lines to radiators and or water feed lines or a toilet cracked. Any one crack can fill a basement with 1-2 inches of water during a freeze/thaw cycle if the house is empty and no one noticed it.

I had a dishwasher part close to an exterior door freeze a couple of weeks ago. That small crack with a 1/4 inch water line to it created a lot of steam in the house and an ice slick in the back yard. For some reason I do not understand its usually a hot water line that freezes.

I bought another house with vandalized water lines last year. I got a great deal because the damage to water lines and drywall spooked other buyers. It cost about 9K to make repairs to it all but still a great deal.

Bring in the pro you pay and get some good advice. I bet you develop a nice team relationship with them in the process.

Diane Menke

From Charles and Nick's posts can we understand that they are suggesting that a title company should be on our list of real estate investing team members? Right next to attorney, contractor and lenders for example?

Thanks for this guys. I have been to many closings but it never occurred to me to use the title companies this way. Can you share other good ways to team with title companies? What consideration do you give them when they help with docs but there is no closing with fees?

Diane Menke

I'm with Mike and Harrison. You are buying a business and the business makes money on its customers. The customers are the tenants who pay rent.

You need to know what the contractual obligations are on both sides BEFORE you even price the property. I would want to see proof of payments etc.

Don't you have an attorney doing this cover for you?

FYI an attorneys job is made more difficult when you start negotiations before you bring them in. You may cause certain agreements or understandings to take place without meaning to for example.

In many states the proceedings for removing a tenant through eviction can take many months and cost a lot. Get them out before you close.

Good luck
Diane Menke

Don't you have a relationship with a lender already? Someone you can talk to?

Right now in our area, local small banks are holding paper on loans.

I bought by first house from a local mortgage broker. When I was ready for a commercial loan, she put me in touch with a local commercial lender and put a word in for me. I met with the VP of that bank. I still do business with both people. I can get either one on the phone to discuss my lending issues.

It has happened to me too that my credit report was not "ideal". Maybe there was an old gas bill for a house I sold 3 years ago, or some debt from rental houses impacting personal debt...things get confusing and complicated. Its good you are going to clean it up. Separating personal from business is best.

Your bankers can work together on a deal that will elevate your rating after a refi. Probably some debt will have to be paid at closing of the refi. Its easy.

Call your lending team and set up a meeting.

Diane Menke

Sorry, I was mesmerized by the image in your avatar. Have you spoken to someone about your fixation yet?

Just kidding.

Seems to me there was a lot of great advice here already. Now how about hiring your real estate local lawyer to come up with a contract that can help you.

FYI as a contractor myself I never do a job without a payment schedule. Usually we just break the job down into weekly payments since most folks are not qualified to understand job stages. We give our customer weekly updates and answer the phones when they call. This is usually the biggest complaint against a contractor and easy to remedy.

All the points made about insurance esp workers comp and health insurance are very meaningful as well.

A great contractor will be very interested in developing a great relationship with another business person. Go for it.

You can find great contractors via NARI or Remodelers Advantage, 2 peer groups that hold the members to very high standards.

Best
Diane Menke

Is anyone using them and does it work?

If it works, where is it working (cities vs country, state you are in...)?

Whats the rent price you are working in?

What type of tenants are you getting from them vs Craigs List or the local paper? Same different? Better results or not so much?

Thanks for the feedback
Diane

Tiara,

I see you are still in college? Its great you are so focused already. Why don't you look into some construction management classes and/or interning or being hired by a "mover shaker" development company in your area. You would learn a lot in that situation and they may even help with continuing ed for you.

Keep in mind Fed and State dollars that will be funneling into RE and developent over the next 8 years. You want to get in on that I think. As an African American woman, with skills in property management and RE sales, you would be very well positioned to help yourself and any business that hired you gain access to those dollars.

My .02 and keep us posted on your successes!

Diane Menke

Roger

You should check with local code to see if you would be allowed to do a tear down and then new construction at all. Some municipalities limit the tear down so to preserve the character of the area.

Remember that tear down costs money too. We did a gutt job on a shell - leaving the exterior walls and just that work in a 3500 sf shell cost us 19K.

You still need a design, permits, you still need to run utilities to the new structure and have them turned on. You still need landscaping. The folks who make the pre fab structures do not typically manage anything other than the units being installed. Then they leave. You pay for foundation work to be done too.

And keep in mind a pre fab structure trimmed out at $45 a sf level is propbably going to be low end. Is that going to satsfy your market or do your customers want something nicer?

Stick to what you know. Buy right. An existing home is usually going to be cheaper per sf than building new.

Diane Menke