All Forum Posts by: Dallas Martin

Thanks for the input everyone.  It seems like the consensus is to evict the tenant.  I really hate punishing someone for something that isn't there fault, but unfortunately the system is set up that way.

I purchased a six unit apartment building in June 2017.  The building had one existing section 8 tenant with a second section 8 tenant to begin renting on July 1.  Immediately after closing, I contacted the housing authority and filled out the necessary paperwork to transfer the rent payments to me.  At the beginning of July, both section 8 rent payments showed up in my bank account as expected via ACH transfer.  However, the following two months, the rent for the existing tenant was missing from the deposit; it had somehow been sent to the previous owner by mistake.

A representative with the housing authority claims she cannot send me the rent money until the previous owner refunds it back to the housing authority.  She contacted the previous owner who agreed to pay back the money in three installments, once per month for November, December, and January.   Last month, the money was included with the monthly rent payment that I receive from the housing authority; however, this month, it was not.  I've asked the housing authority rep if there is any way to get the rent money to me without having to wait for the previous owner to pay them back.  She claims there isn't.  The only other option she has offered is to wait until that same owner has another section 8 tenant and maybe reclaim some of the money that way.

I'm new to the rental business and was hoping some of you could help me out.  Is there any other course of action that can be taken with the Section 8 housing authority?  A way to escalate this to someone with more authority?  In my view, the housing authority are the ones who screwed up; they should just send me what is owed and then try and collect from the previous owner on their own time.  Is there any way I can force them to pay up?  If one of my tenants were giving the same excuses as the housing authority, I would have had them evicted already, but obviously that isn't an option.

Thanks for the reminder @Josh Caldwell. I attended the Pittsburgh REIA club meeting for the first time last month and have been excited for the next one ever since. You guys really have a great group. I'll try and show up early this time for the networking portion.

@Steve Vaughan - thanks for contributing. I suspected the initial steps should be fairly similar no matter which exit strategy. I hadn't considered the differences for the offer process though. What's the purpose of using a LOI vs a purchase and sale agreement? What advantage is there to using one over the other? Is it just to be able to offer 3 different options? Also, if you don't mind sharing, how does the LOI work? I've never heard of doing that before. Are you giving the seller a choice between the 3 options, or are you just stating that if you buy it will be using one of the 3 options and here's the price regardless of which option is used?

@Mike Cumbie - Thanks for the input and good observation; I didn't specify my end goal because I honestly didn't think it mattered.  My intent is to buy and hold the properties for cash flow; I'm specifically targeting small multi-families (2-4 units).  Wholesaling is a secondary option that I would use if for some reason I couldn't purchase the property myself.  So what would be the differences between these two exit strategies when working on closing the deal?  Besides including an assignment clause in the contract (which I would most likely do regardless of which option I'm pursuing) is there a better approach or different steps to take depending on what I plan to do with the property?

@Dennis Canon - A good prospect to me means the seller is super motivated (kinda subjective but I've never seen any objective measurement for this), they have at least 30% equity in the property (based on ARV and mortgage principal remaining), and their price point is in the neighborhood of what my offer would be (i.e., they aren't expecting retail value for their home). So you basically are prepared to make an offer right there on the spot when you go see a house? Do you still include an inspection clause in the offer or is going to see the house considered the inspection?

@Peter Mckernan - thanks for the response.  You answered another question I had about taking a contractor along with me.  The repair costs are one of the biggest unknowns for me right now so I'm glad to know that bringing a contractor along is not taboo.

Let's assume I've found a motivated seller.  This person responds to a letter: they call, we chat about their motivation for selling, I ask about the property details (address, equity percent, condition, etc.), and I ultimately determine this is a good prospect.  Where do I go from here?  Is my first step to go see the house?  At what point do I send them a contract?  I'm really just trying to wrap my mind around the process I'm going to follow if/when I start getting calls from interested sellers.

@Natalie Kolodij - That's a great idea for pre-screening an area.  I'll have to remember to do that prior to going out next time.  I just wrote down all the addresses for the properties I found on a piece of paper and put them in excel when I got back to my house.  I thought about using the My Maps feature in google to create a custom map with all my targeted properties on it after I'd gone out to identify them; but now I'm thinking I'll use your idea along with a custom map to plan out the drive ahead of time.

Thanks @George P.  I'll have to try it next time I go out.  Does that make a big difference in response rate?  I could see how it would, but taking the time to knock on every door would really cut down on the amount of properties you could identify, wouldn't it?

Hello @Robert Zazac,

Welcome to BP! I love that your are taking action to avoid the analysis paralysis trap. I too decided recently that I needed to start taking action otherwise my dream of financial freedom would never happen. I've never heard of Realeflow before; I'll have to check that out. If you come to the next REIA meeting, maybe I'll see you there.

Dallas