All Forum Posts by: Chris L.

Frank,
Thank you for your time.
That is very helpful.
I have much to think about.
Chris

Ivan,
Although you are taking in $440 and could get more for rent, you are not absorbing any other of the standard rental expenses (50% on average.)

My wife and I have a decent collection of SFR's here in Ft Wayne. I have been mulling this idea around for the last several weeks: Would it be better to sell on a proper land contract deal than to rent them?

I don't have an answer to my own question but I want to pursue this topic to some degree. Frank's answer is exactly what I have been thinking about.

Sell a home with a proper contract and then you keep all of that payment and foreclose when they stop paying.

Upside: no tenant issues. Keep all of the payment.

Downside: you are selling the asset, you will have to take some houses back through foreclosure, less income tax protection (although not my primary concern), ??.

I am certainly intrigued by this concept.
Frank, any more enlightening thoughts?

I don't intend on selling all of our rentals but I want to add this strategy to our bag of tricks.

I apologize for going slighlty off topic but it is directly related to this discussion.

Michael,
Thank you.
Nice web site by the way. Took a quick look and enjoyed your stories.
We are going to try to shift gears and learn some new strategies in the coming year.
1. We are going to add some retail flips.
2. We are going to start working our rentals to lease options.
3. We are going to explore purchasing some houses and going right to a land contract sale to an end buyer.
Best of success to you in 2010.

What did you accomplish?
Added 16SFR's to our collection.

Your best success?

We created enough credibility to have access to a group of REO's before they were listed.

Your biggest mistake?
No major mistakes this year. Realized that we should not have build 4 vacation rentals in Tn. But that mistake was made several year ago.

What did you learn?
We learned to more closely supervise our rehabs. We have a great relationship and trust with our GC; however, no one cares as much about our investment as we do.

Did you achieve your goals?
Yes. We wanted to add SFR's for cash flow and we have achieved that objective.

Comlete 4 flips.
This will be adding a new dimension to our skill sets. We (my wife and I) have a collection of rentals and have sold a few of them to other investors. We have done plenty of rehabs on those properties to get them rent ready but we have not done any retail flips yet.

I also need to add some relaxation time to my schedule. I have worked way too hard for too long.

At this point, we are not planning to add to our rental property collection. I want to convert from straight rentals to lease options. I also want to learn to potentially structure deals to sell to end users on a land contract basis.

Although not really a goal, we would like to sell at least two of our four vacation rentals this year. I say that is not a goal because we are not willing to sell at the market prices right now. We will hold instead of selling at fire sale levels..

Good success to all in 2010!

Josh,
Would it be possible to make the box sizes bigger when posting quick replies and sending private message?
When I type more than a sentence or two I find that I am constantly scrolling up to check what I have already typed.
Thanks for your consideration.
Chris

Brian,
Will you provide an actual example of what you are doing selling these properties on land contracts.
I would like to know:
Total cost basis (purchase price, rehab, holding costs)
Selling price
Amount of buyer down payment
Terms of the agreement (Int rate and lenghth)
What type of screening do you do for your land contract buyers.

I hope you don't mind the detailed questions. I am contemplating the advantages of a properly structured land contract deal over a straight rental.

Thanks for your time.

Jon,
Looks like most of us missed your Christmas eve request.
Here in Ft Wayne, the market is a little soft. We are holding rents steady but generally offering some sort of concession as in half off of the 2nd and 3rd months rent.
Quality of tenants is about the same and demand is likewise.
We have predominately lower end SFH's that have been rehabbed to quality standards and renters always seem to want more for less. I am not sure if that is any different than normal.
It appears to me that many families are doubling and tripling up. Kids are not moving out or are moving back in just trying to make ends meet.
I read a confidential report recently where a family of 10 was living in a 2BR place. (not mine)
It is also taking longer than normal to get renters but I am not sure if that is seasonal or indicative of the larger economic issue as in "jobs are tough to find." I know of many quality people that are genuinely looking for jobs and finding it tough going right now.

Jean,
My understanding is that a 1031 exchange has to be a like investment and the money will need to be held by a 3rd party so I am pretty sure the answer to your question is no.
I would recommend that you read the 1031 articles here on bigger pockets to get a better sense of what you can and cannot do.
The key point to remember on a 1031 exchange is that someone else will have to hold the money until it is reinvested.
If you are trying to raise funds to pay taxes, the 1031 exchange is probably not a workable plan.
Good Luck

Jean,
Have you considered a 1031 exchange for the property that is fully depreciated?
If you are looking to diversify into another investment, it might be worth investigating that option.
Chris