All Forum Posts by: Lillian Burke

I assume you have a due diligence clause.  First, the insurance is obviously an issue. If you can't get insurance, that's a deal breaker, but I would check. Then get actual estimates on the cost to replace the roof and the heaters, and go back to the owners ask them to give you a concession on the price.  Might as well ask for the entire amount. They will be getting cash out of the deal. If that doesn't work, then ask for some concession (figure out your bottom line but don't tell your realtor even if a buyer's agent), then fold the excess into the loan- work with your loan officer or broker.  IT has to make sense financially with risk that is acceptable to you given your financial situation. 

No obvious problems. You sound as though you are reasonably conservative financially so you have probably figured in the risk if you don't have a tenant for 2-3 months. 

5% is low but probably not for Northern California. 

Personally, I like small multifamily properties better.  If one person moves out of a four-plex, the other 3 are still paying rent, but most people seem to like single properties. 

It's a really beautiful house- which can be dangerous. 

Assuming you actually want to deal with a single family home, you could put in a low-ball offer such as 105K, to make sure it works, but it probably won't be accepted. You could check to see how much they bought it for- few people will willingly sell for less than they paid, even if it makes financial sense. 

On your estimates: capex looks low. Vacancy probably low- insurance probably high- USAA tends to be high, though I really like working with them. I think that selling costs more likely to be higher. 

if you have plenty of liquidity to be able to tolerate a few months without rent, it is fine, but your costs and expenses are very close here. 

I personally would not want to go through the aggravation and work for such thin margins- but that's just me. 

My grandmother always said, "Birds of a feather fly together." You mentioned that some people knew she was crazy and others were tenants that already caused problems for you. Good news:

1. People who know she is crazy will ignore the post and perhaps think highly of it for you. 

2. Her "friends", the "birds of a feather" who think that a trashed apartment is being a good tenant, will avoid your rentals- another win!

IT's a two-fer. 

LB

Here's the first post, admittedly written quickly: 

- SBA guaranteed

- Renters or owners can request loans

- For people who are affected by C19 virus and consequent economic disruption: 

- Needs a standardized and easy loan process; 

RENTERS: 

people bring in their credit rating, proof of rental payments, notice of layoffs or decreased income from job.  

- Funding would be for 3 months to 6 months, with possible extensions TBD and evidence of ongoing effect

OWNERS: 

- documentation = rent rolls and evidence of people who need to leave due to C19 issues

- effect on ability to pay mortgage, other expenses or essential income

- possibly a credit line to fund rent deferrals: this could be offered to current tenants or possibly to prospective tenants who are otherwise good credit risks. 

- perhaps owner would assume 5 to 10% of the risk which is better than the cost of having empty unit and also helps out the tenants. 

INVESTORS: 

- if owners did not want to do this for their renters, there might be a way for private investors to fund rent deferrals and possibly get a good return, such as 8 to 10%, while assuming some small risk. They could apply directly to the SBA or through a local bank. 

It's a quick and dirty write up, but if we don't tell the Feds what is needed, we're not likely to get it.  Please help work up this proposal which could also go to state governments. 

Apparently, the Fed is going to release money to the banks/don't know what this involves.  What I would suggest is that everyone work with their banks and Congressional representatives to get short term loan programs /federally guaranteed/ in place to fund rent deferrals or to cover mortgage payments for investors who are affected.  

The easiest for owners would be if the bank would take applications from renters, but they might prefer to work with owners (or both). There is a reasonable likelihood that things will be back to 90% normal in a few months and you're not going to get any rent from an empty rental. 

This forum has people from all over the country, so get a specific proposal together for the SBA and notify your congressperson and Senator

Nashville is about the best place I have found.  Growing, not enough property.  230K will probably get you a condo. A lot of AirBNB in Nashville also. 

Just to summarize:

- There are different types of poverty and, thus, different types of solutions are needed; 

- Although not all agree, I do think that there is a significant segment of the poor population that makes bad choices. I'm on the liberal side of moderate, and still try to help people, but I've been taken advantage of more times than I can count (though I do stop once this happens- it's better to take a chance on people as some will appreciate it. I've been given a lot in my life when I needed it, so I'm just paying back.)  It's like the parable of the sower. 

- The elderly poor, mentally disabled, and mentally ill: really, it is not their fault. Someone suggested above that we encourage ways to have families take care of their own. This goes a long way, but not for everyone. 

- The programs that provide education in financial management and other life skills are probably valuable, though I see some people with total lack of initiative. This is not much of a problem (for society) if one is a trust-fund baby or supported by a spouse or parent. Some people just want to be dependent; however, when they need to do community service, people do fine.  We don't have that many structured jobs available any more now that factories have gone overseas and farming and mining are mainly done by machine. 

- It is probably good to mix economic and educational backgrounds in the same community

A friend of mine has serious mental illness- schizophrenia. He has spent months of his life hospitalized. I met him as I rented a room for 3 months at his house as an AirBNB when I moved to this area (4 years ago). We have continued to be friends. Due to his illness, he only has limited social security and gets $800 per month + he sells some of his artwork and writing.  He has a house, bought through Dept of Agriculture for rural low income. Problem is, he is easily taken advantage of by various internet scams. Now he asks me and I can divert him sometimes. He doesn't believe that he could live in assisted living due to his mental illness as it might precipitate a crisis. He has been institutionalized several times. Last year, I encouraged him to work in a sheltered work situation, but that did not last long as he had an episode at work. He took in a former friend as a roommate, and that didn't work either as she harassed him and this precipitated another crisis. His one son will not speak to him due to his illness. Independent living is safest for him as he gets on fine if left to himself and his artwork and does not run out of money. The local police know and help him, though one officer targets him. Even with all these problems, he is intelligent, interesting and truly a friend. Assisted living, paid by the state, would be about $4500 per month.  It seems more cost-effective to have him in his home, but $800/month and $15 in food stamps, doesn't quite cut it. What is the solution for someone such as him? 

- It seems like a lot of people on these boards have practical experience with poor or disabled people, outside of real estate.  That's probably why all the landlording books give warnings about letting people slide on their rent.  It's hard to believe how dishonest a certain segment of the population is until one experiences it. 

I used to live in Madison NJ and recently visited for a high school reunion. It is now gentrified and a great little place, but not sure how much property is available. I would look in Morris County and environs.  If you go, stop at the Nautilus diner for great cheesecake. 

Here is a story about one couple who took it on themselves to supply housing but found it didn't pencil out. They're still trying: 

https://www.sandiegouniontribune.com/news/california/story/2019-08-03/homeless-shared-housing-venice-beds-shelter

Meanwhile, government funding leads to excess costs, 600K per unit: 

https://www.sandiegouniontribune.com/news/homelessness/story/2019-10-08/homeless-housing-bond-measure-audit-shelters-galperin