All Forum Posts by: Matt Swearingen

@Jason C. 

Why is the double close necessary to avoid being an agent?  Couldn't you structure the contract to state that you or an 'assignee' will purchase the property on or before x date?  Then you "sell" the contract to the buyer when you assign it to him/her outside of closing.  You don't go to closing and you aren't paid based on the sale.  You sold the buyer an "option," they have the right but not the obligation to buy the property.  The only drawback would be you'd have to have a gentlemans' agreement with the buyer. 

1. That the buyer won't simply go around you after learning the address before paying you. 2. That you'll give the assignment fee back to the buyer if something goes wrong and the sale can't go through (an undisclosed lien on the property for instance).   

@Todd Curtis 

I would hit beauty salons as an insurance salesman (I was selling disability policies and people that work at salons/barber shops/mechanics are succeptible to carpel tunnel).  I forgot to mention two things yesterday.

1.  Almost every local business has "No Soliciting" signs on the front door.  That's why I recommended actually getting your hair cut, you are a customer at that point... not a solicitor.  Then you just mention what you do when the questions roll in, stress that you're there to improve the community, then ask: "By the way, do you know of any distressed properties around?"  The women in the beauty salon love to talk dirt.  So if you're a man walking into the beauty salon actually pick something up for your wife or girlfriend (ask them what they need beforehand)... and be as clueless about it as possible.  Miss-pronounce L'Oreal or Tresemme when you ask the proprietor for help.  Her mothering instincts will take over and you're in.

2.  Manners and respect.  I got to spend alot of time with my grandparents growing up on a farm, and with them manners were not optional.  "Yes Sir, and yes maam" became defualt programmed responses.  When you are in a war-zone a truly warm person with good posture, unflinching eye contact, a firm handshake and good manners attracts attention; because it's foreign.  When you treat someone in a war-zone with genuine respect you may be the first person to ever do so.  I had a group of three drug pushers notice me in their neighboorhood, and follow me from a distance for the better part of an afternoon.  At one point the leader of the group (a 19 year old) hails me "Hey suit!" To which I responded: "Yes sir, how can I help you?"  It completely disarmed him.  He was at such a loss for what to say he stood at attention and saluted "yes sir!".  We had a good laugh to break the ice and I sold him a $20K life insurance poilicy with his 3 year old as the beneficiary.  When we were filling out the application I asked him "Occupation?" he gives me this dead-pan look... and I go "How about 'Entrepreneur'?"  At that moment he looked at himself in a way that he never had before.  He promptly gave me 15 leads on the spot, many of which became sales.        

The only way to be 100% safe from an unstable/violent tenants is to not own rental property in the first place. 

It seems the 99% safe solution would be to use property management. They show the units, get leases signed, handle disputes, file evictions and appear in court etc...  They are the face of the business.  In this sense property managers are operating as insurance by taking on the risk of violent tenants.  Part of the 10% of rents you would pay them is to transfer that risk to them. 

I recently consulted a PM I know about concealed carry.  He had a man that was never even a tenant (they had just filed eviction papers on the girlfriend) burst into his office screaming and threatening his staff.  They had to call the police, who took 40 minutes to show up.  It was a very eye opening experience for him.     

I used to sell life insurance door to door in war zones (fun times).  One thing that can work to your advantage is the suit.  When locals see a full grown man in a suit walking around a war zone they think one of two things: 1. Detective or 2. Jehova's Witness.  When you introduce yourself and they find out you are their to solve problems you can see the relief roll over their face. 

The absolute best tip for doing business in war zones (I should charge for this one): Barber Shops.  They are the social center of the neighborhood.  If you help just one person in a barber shop, you're in.  Everyone knows everyone's business at a barber shop.  Go in and get a haircut (even if you don't need one).  The guy/gal cutting your hair will ask you why you're in town, because your suit screams that you don't belong there.  Explain to him/her (in a voice loud enough for all the other patrons to hear) what it is you do.  If you play it right you will walk out of there with dozens of leads on all of the abandoned/troubled properties, names of landlords that buy properties etc...

Pro tip: I've yet to meet an independent barber shop owner that didn't have a side gig: rental units, pizza shop... something.      

Welcome to the forum.  If you can't get the wife on board 100% don't do it.  Land lording will take a lot of your time/attention and you'll need her support.  Also if she doesn't want to live in a double-wide don't coerce her into it. Why not keep renting where you are, buy the 15 acres with cash and develop it solely as an investment property?  That way you won't have to worry about taxes and maintenance for your personal home, just for your rentals.  That unit you would have been living in will now make you rents.  Just my $.02.

Thank you both for your help. 

@Jon Holdman  

Dad would be more than willing to give a new buyer easements or sell the right of way and well.  He wouldn't be willing to give those same easements to the reverse mortgage company.  The property was appraised at $165K at the time of the RM and my grandparents were given $90K.  I realize that this is how the industry operates and they pay out based on mortality tables etc... but the family feels they were treated unfairly.  My guess at value was with dad adding the slice of property with the driveway and well, leaving the property without defect. 

@Rick H.

I like the idea of opening probate and then aproaching the RM company.  I was looking at this the wrong way.  So the process would be:

1. Open probate.

2. Negotiate reduced amount to RM company based on "defects" and secure financing from traditional bank for that amount.

3. Have Dad sell the slice of property to the "estate" and have the parcel re-surveyed and recorded at the county.

4. Minor touch up work on the house.

5. List on the MLS.

Did I get the gist correctly?  You two have given me options to explore, and some hope for a positive outcome.  The old standby family lawyer leafed through the RM document and  said "pay them the $150K or let them forclose, that will be $250 for the consult".  Looks like it is time to find a more creative lawyer.

I've enjoyed many of the suggestions so far.  Here's my $.02:

Pro-gun and/or USMC stickers on the windows (can be scraped off with a razor blade before you show the house). 

If a potential burglar thinks someone is home, and they think that someone is armed they'll move on to the next one.

Ask him to prove himself.  See if he won't do a deal with you at 5% commission.  If that deal makes you money and he does all the legwork to earn that 5%, then decide for yourself if he's worth 10%. 

Even if you can insure against the sink whole losses and it appears the problem is resolved, do you have to disclose the previous issue to potential tenants?  If so you will get less than market rents.  I wouldn't rent a place that had a sink whole issue in the past. 

Do a NPV/IRR calc on the dishwasher. Will you be able to charge more for the unit if you install in a dishwasher?

If you can charge more rent: then calculate the the NPV using the cost of the dishwasher as N = 0 and your yearly cashflows will be the extra rent you charge (for ex. $25/month or $300/year).  For your cost of capital use your interest rate on the unit, unless you own it, then use your cost of equity/expected return.  For example: $300 dishwasher, 5 year useful life (tenants break things), 6% interest and $25/month the annual NPV calc works out to a positive $909.16.  In that case I would install it.  Excel has a very user friendly NPV function btw.

If you can't charge more rent: Let's say dishwashers are a standard feature in your market and your competition all have dishwashers at your price point.  I would still only install one if the costs of extra vacancy/decreased rent is greater than the cost of the dishwasher and maintenence.

Also, make sure you or the plumber incorporate the drain from the dishwasher into the sink traps correctly.  I've seen it done wrong quite often.  Otherwise you will get "backed up sink" complaint calls when the dishwasher is running.

-Matt