All Forum Posts by: Matt Devincenzo

That is what I was told out here in San Diego and have seen it as well, house prices have increased significantly in the last year because of REITs and foreign Investors it seems like.

But one of the local guys also said this "focus on off market deals". Motivated sellers that aren't in foreclosure or haven't been contacted yet through direct marketing, maybe tired landlord that have evicted recently, or properties with code violations they can't fix or pay for.

I'm not going to pretend that it is what I've been doing here, I personally decided to focus on buy and hold in a more numbers friendly market back home in FL, but if that many houses are selling for a premium then it seems that if you can find any of the deals that aren't going through the more traditional sources you'd have a good potential for profit.

Personally I think the tenant placement part can be one of the most labor intensive parts; marketing, showing, applications and approving. That being said if you have a good system that keeps the labor to a minimum on that then maybe it's not worth the 50% of rent to have someone else do it for you.

I have met a PM that specifically said they would do it that way, but if there was a problem with a tenant you placed then the services provided by the PM to get them out would be charged at an hourly rate.

He looked at it similar to if you were buying a rental with a tenant in place. He as a PM had nothing to do with placing that tenant so he would not be saddled by a poor choice by a desperate or inexperienced Landlord, if he did help place the tenant(with LL approval and criteria of course) then his time spent on an eviction or whatever would be free as he had a hand if the tenant placement and therefor his job was to rectify the situation and get a new tenant in place as quickly as possible.

Brice Noonan one thing to remember is the "rules" are not rules but guidelines. You have to look at the actual numbers to determine true cash flow.

The 50% rule is used as a quick method of accounting for things you need to analyze yourself like vacancy, maintenance, turnover ect.

The 2% rule is most accurate at about the 23-35K price point and begins to get less accurate as you go away from there.

Something that you can look at that will help determine the value of the cash flow you are getting is cash on cash return, the value of the dollars you bring in measured against how many dollars you had to put out to get them.

My analysis looks like this with your numbers:

Purchase $80,000
Down Payment $16,000
Interest 5%
Term 30 year
Closing Cost $2,000
Rent $1,100
Payment $343.57

Tax $86.43(430-343.57)
Vacancy 10% $110.00
Turnover $500/yr $41.67
PM 10% $110.00
Maintenance 20% $220.00
Ins 500/yr $41.67

Net monthly Cashflow $146.67
Cash on cash return 9.78%

All those expenses are in monthly terms so obviously you might have some good months with no maintenance and you won't be spending $220/mo fixing things, but when a roof needs replacing you've accounted for the expense of it in the years of cashflow you've already experienced.

Hope this helps you see where the numbers are.

Derek Nienaber something to realize with VA loans specifically, that may or may not make any difference for a Sub2. VA loans are only for OO while they live there.

What I mean is that if a VA borrower moves they are not able to even rent the property out without VA approval. They have been giving approval recently for change in station and if they're underwater because it has been an issue recently with so many underwater but it is for limited circumstances so you may want to look into it a little more because it may have more risk than a standard Sub2.

Steve Babiak haha it's FL nothing sheds leaves, it's not really winter it's more of an extended fall until summer again. Really though leaves thin out over winter but only because new ones are pushing there way in to grow.

Bienes Raices another option is confederate jasmine. It's a vine and gets awesome smelling flowers you can smell at night in the spring and early summer(kinda like orange blossom during the same part of the year). It will cover the fence and then bush out about 2 ft on either side so it's a nice dense covering, and once your fence is covered you'll never notice.

My parents home I grew up in is in Orlando and we have about 120' of chainlink between our and the neighbor's house that no one has seen in 10 years because it's under the jasmine.

Michael B. I think you got it backwards Sam Leon is the landlord.

One thing you need to consider is what is your grass worth? if you make the tenant pay and they decide not to keep it up because of the expense then how much does that cost you? Not saying it should be your responsibility but since there isn't anything in writing it's kinda hard to force him to water.

Also I know when I lived in FL (orlando) you could install a separate irrigation meter. It was the same water rate but no sewer charges so it was a little cheaper. If you did that then you could very easily see who was using what water, and if you decided to for future tenants then bump the rent $40 and just pay it. Or depending on the area you may be able to get a reclaimed meter for the property.

Obviously going forward you might need to consider how to prevent these issues with the lease agreements, but at least this should be a minor one to fix to prevent more major ones in the future.

Obviously without knowing specific costs for installing any of these items I honestly don't know what I would do but if you can get it separated out somehow to prevent future problems that would be my best advice.

Did you try to ask the looker you had a few days ago why they didn't buy yours?

Only thing I could say is it sounds over built for a MH and I'd say too pricey, but if your price is still in the range of the others then I'd suggest trying to talk to people who have been through and see what their comments are. That's probably your best source of info on what they're looking for and what their issue with your place is.

Ok I understand now, I did a search and found this post which has a brief mention of it http://www.biggerpockets.com/forums/41/topics/57378-pre-foreclosures-buying-subject-to-

Maybe @bryan hancock can get involved since he made a mention of it in that old post.

Gary Clisele I'm not understanding the question here, what do you mean what point can you no longer help?

At what loan amount does it not work?
How many loans can you have sub2?
What point can the loan be called?
What is the max LTV that sub2 works?

Maybe a little more specific question would help, if you could clarify. I think the answer is you can do it as long as you've decided the numbers work (even if it was underwater the loan is already written, though not sure why you'd want it in that case) and understand the possibility of the note being called.

Hopefully with some more info you can get some better answers.