All Forum Posts by: Michael Hayworth

1) Fair housing laws do not apply to you if you are renting your own property and are not a real estate agent or broker.

2) Emotional support animals are mainly BS. They are not service animals. A tenant who wants to assert a right to an emotional support animal must show certification from a mental health professional (not a general practitioner) that an ESA is needed. You do not have to accept their generic letter. You have a right to ask that the mental health professional fill out your own form.

3) The tenant did not inform you of this properly. Evict his [butt...wow, BP bleeps out a*s*s*....really?]. Tenants like this depend on landlords cowering in fear whenever they talk about fair housing laws, counting on you not really understanding the law. He/she did not follow proper procedure and does not have a properly documented ESA. Evict. 

Always give your tenants the impression that you have tons of money and a fleet of lawyers, and can make their life miserable. If they ever get the impression that you fear them, they'll make your life hell.

Best place to start is at your local REI group. There will likely be contractors there. You'll be able to tell which ones are held in high regard by other investors and which ones aren't. (Some guys who can't get business anywhere else troll the investor meetings looking for work, so check out whether the credible investors seem to have respect for the one you're talking to.)

In general, contractors are going to fall into the "two men and a truck" version, and the "real business" version. There are gradients in between. The problem is that lots of investors go for the first kind, because they're cheap. Some of them are good, but if you get a bad one, you get the horror stories you hear on here every day about "Help! My contractor did XYZ! What do I do?"

Contractors who are real businesses have overhead and won't be as cheap, but they also tend to hit deadlines better and deliver quality more consistently. But you need to check them out. But if you always pick based on lowest price, you have a high chance of getting a bad experience.

Your best bet will be a contractor who is also an investor. They're out there. And they can give you good guidance, if you're willing to take it. 

Do be aware that a good contractor is maybe the single most important relationship for an investor to have, so others may be reluctant to really share their best guy. But they'll often be at the REI meetings, which is why that's a good place to start.

I don't know your local market, but that seems like a reasonable price. 

The 8' wall is pretty simple. The 24' span is really large. What that means is that he's using two 12' glu-lam or LVL beams, with a column in the middle for support. If he got a beam that was engineered to support a 24' span, thereby eliminating the column, it would be considerably larger and would intrude into the space. 

Good framers aren't cheap. But you want to pay for good framers. I've come in after Craigslist guys did wall removal sometimes. By the time the structure is unstable, it's a little late to call for help.

And plaster & lath walls are harder to work with than sheetrock. Everything is more complex in older homes. If it's a total turnkey job, intended to look completely finished, for $4400, it seems like a fair price to me.

(I don't know if that includes permit fees or not, or if he's even pulling a permit. Some blue state guys on here get apoplexy about the idea of not pulling a permit, but they're indoctrinated that way by their culture. :) The truth is, inspectors don't know span charts any better than a good framer does. The important thing is that you have a framer who knows what he's doing.)

I own one in Muncie in 47305. My impression is that it's not a very active investing city, and that home values in the city aren't particularly appreciating. Can be decent cash flow for rentals, but that's mainly because houses are pretty cheap.

Mainly, I bought the one that I own because I had an old friend from high school in an abusive marriage, and her husband had ruined her credit so she couldn't get a place except for ones that would've made her leave her dogs. I bought a cheap house for cash, did some repairs to it, and she's lived there for 2+ years now. I was able to buy the house for $37K and put about $10K into it. Market rent for it would be about $800, though I charge her considerably less. So cash flow on these things could be good. OTOH, the Zillow Zestimate (I take it with a grain of salt, but don't have MLS access in that area) has only moved from $55 to $65K in about 30 months, whereas similar properties in my home market have gained significantly more.

There was a BP Member named Tim Hollems who invested in Muncie and was quite helpful to me when I was looking, but it looks like his profile is gone now. But if you'd like, PM me and I can at least dig out the name of the realtor I worked with up there. She was kinda a nutcase, but really knew the market well. :)

@Russell Brazil has a point. Some people are on here to generate business, but they mostly do it by actually being helpful. And some of them are legitimate experts in their field.

But the prevailing sense I get is that most people on here aren't even looking for business - they're engaged in give and take, they both get help and give help. I know I try to help people because other people helped me when I was new and clueless. It's rare for me to ask a question anymore, but I still do occasionally, and people help me.  And even after years of doing this, I still learn things occasionally just by reading the threads. That's a good community. 

Like anything else, there may be people taking a predatory approach, but don't assume everyone being helpful is out to take advantage of you.

Like Russell said, if you don't provide the inspection report, I'll move on to the next buyer. There are a couple of reasons:

1. Just yesterday, I had a real estate agent try to turn some minor ticky tack stuff into a $5000 credit request by describing a bunch of stuff he said was in the report, but "he didn't want to send me the report because then I'd have a duty to disclose to the next buyer." (Some agents do believe that to be the case. I'm not a real estate agent, so I don't know/care about the realtor code of ethics. I just know if I was a realtor,I'd be organizing a march on NAR to straighten out some stuff there.)

2. The inspection report usually has photos, so I'm not left trying to figure out WTH the inspector is talking about. To use yesterday's guy again for an example, the inspector was talking about a drain that needed repaired, but neglected to actually clarify which one. Photos help me figure that stuff out.

And 3....unfortunately, a lot of home inspectors are just not very good. They get their training from an online course and don't really know that much about houses. Unfortunately, those inspectors have a stamp of approval because they're "licensed", but those of us who actually make a living in construction consider them one step above the average layman. By reading the report, I can tell whether your inspector actually knows his stuff, or whether you've got another clueless online training course grad. (Yesterday's guy...."Roof shows evidence of prior repairs in various places." Uh....really? Because we replaced the entire roof in February. I guess you could call that a prior repair. )

Did the house appraise for sales price? That's what matters here.

It sounds like you were past your option period, so the only reason you can get your EM back if you terminate is if you have a financing contingency. (If you were paying cash and did not have a financing contingency, I would assume you would not have had an appraisal done, so I would assume you did have a financing contingency.)

The standard TREC contract has two parts to the contingency: 1) You must be approved. There is often a 15 day or so time limit on that - it's a blank that's filled in with the offer. 2) The house itself must appraise for sales price. That does not have a time limit on it.

So if the house did not appraise for sales price, you have a right to get your EM back. If it did, despite the square footage discrepency, then the seller has every right to keep your EM.

As several others have noted, there are numerous ways to calculate square footage. It is typical in MLS to note the derivation of square footage. The vast majority are "per appraisal district". The LA just enters whatever figure the appraisal district has on record. I always keep all appraisals on my properties, and if one of them is larger than the appraisal district figure, I use that and put "per appraisal" as derivation, and have the appraisal available as support.

There's a lot of fogginess around this issue, and I'm not sure I have it all correct, but I have based my policies on info on the National Service Animal Registry (which is actually a pro-tenant website - I figure they're going to be the most extreme interpretation of things).

Some important points here: 

• National Fair Housing laws that require acceptance of service animals don't apply to single family homes rented without a real estate broker, which would be all of mine. Your local laws may differ, however.
• True Service Animals are highly trained and skilled animals, always dogs. They will have supporting paperwork. 
• Emotional Support Animals is where the typical abuse lies - there are websites that will print you certificates for that in minutes. However, you are allowed to either ask for a letter from a doctor or, better, require that the doctor complete your form certifying the need for the ESA.  Also note that this must be a qualified mental health professional, not a general physician.

That's all national laws, and many cities or states may have even more restrictive rules. The professional-tenant types will be aware of all these laws and loopholes, so you should, too.

@James Wise is absolutely right.

Partnerships are hard in the best of circumstances. I've done three, and I'll never do another one where I don't have full control. I'm happy to take partners into some of my larger deals, but the partner will contribute capital and maybe have a very clearly defined role (that can be replaced if the partner flakes out). You just don't know how people's circumstances are going to change, and how committed they will be over the long term.

But in this case, you're partnering with people you don't even know? AND they live in one of the units, so if things go south, you probably can't even evict them? No no no no no.

And don't even get me started about partnering with family. That may be the only thing worse than partnering with complete strangers.

There's a lot of semi-overwrought hand-wringing going on here. Let's break this down a bit:

1. Wholesaling is not illegal in Texas. There are good wholesalers and bad ones. I buy from good ones all the time. Unfortunately, there are far more bad ones than good ones.

2. I have no idea what role a lawyer would serve in this process. You're getting advice from a bunch of people in the northeast, where it's common to use attorneys to close transactions. We don't do that in Texas. You don't need a lawyer, you just need to understand how to read a contract. Most wholesalers use the standard TREC contract, which you need to get very familiar with if you're going to be a real estate investor, and then an assignment form. Read the terms in the assignment form and understand them. Usually, you're paying a nonrefundable deposit, and you're paying all closing costs - you're typically assuming even seller-side closing costs, except for prorated taxes.

3. The folks commenting that there are going to be plenty of flooded houses for sale in Houston are absolutely right. And it's going to cost more than you think to reno it because supply of materials and labor is low and demand is high. And it may take a while to sell because the market will be completely messed up for a while. So don't get deal fever to get your first deal. In DFW right now, I have to make a decision in minutes on properties my favorite wholesalers send me, because otherwise, they're gone. But in Houston, you will have plenty of flooded houses available.

4. But even if you do move forward with it, the main risk is that you lose your $3000. Now that's not nothing - I wouldn't light my cigars with it or anything - but if losing $3K would kill your ability to become an investor, you don't have enough cash reserves to invest anyway.

Good luck. Feel free to DM me if you have questions about the TREC contract, assignment form, etc.