All Forum Posts by: Michael B.

Thank you all for your suggestions! I finally got the house certified and a renter moved in. On to the next project! 

Thanks guys! @Jim Vanhorn did you just do the sump pump and pit or did you install a complete drain tile system? I know that I will probably need a drain tile system in this house as well but I'd like to wait until spring. I already have several drain tile systems installed in my other properties and it will cost me about 8k for the basement size of this house. 

Do you guys have any suggestions on how I could get a damp basement dry for a section 8 inspection. I don't want to go "all out" and put in a drain tile system right away just to pass this inspection. I want the house to be rented out first. We already put DryLok on the walls to keep water from seeping in. I need a quick fix to get it to pass and then I'll get a drain tile system in spring. 

@Nick Maugeri you should meet the cash flow potential as soon as possible IMO. The market around you will keep moving. Contractors will want their money and don't give you price cuts to upkeep the house. As a business owner, you have to adjust to market conditions. Work with a management company to keep the unit filled at top market rents and don't be scared of a vacancy because of a rent increase. 

The proper way to hedge against vacancy loss is to get MORE UNITS ASAP. More units will statistically decrease the average overall vacancy if the portfolio is managed by a professional company. Real estate seldom works on a small scale because one vacancy as a single property owner means your business is running dry. If you have two units then one vacancy will be carried over by the other house - which is why it's important to invest in markets that provide high cash flow. 

@Eric Ippolito - that's a normal return especially in Midwest markets. I invest in Michigan and my rule of thumb is $450 cash flow after PITIM for every 10k invested (leveraged). Most of the time I do even better than that. Btw. I live in Simi Valley, CA so Michigan is not my backyard. 

I would do exactly what @Bob Norton suggested. I would fix it up and rent it out. Managing this rental will let you gain valuable experience and contacts that you can use in the future if you want to become a flipper. 

When it comes to the rehab, I would put some "lipstick on this pig" and make sure it passes a section 8 inspection. Then I would put a section 8 tenant in there on a yearly lease. It's up to you, but I would probably use the unlicensed guy and have him do the lipstick work. If you get the rehab cost down to 25k - which is a sizable budget, then your asset cost is 45k for $1200 per month rental income. After PITI you will probably keep about $650 - $700 which makes for an OK cocroi. If you are lucky then you will even get a good appraisal and can refi it out once it's performing.

While the house is performing I would find other investors that are looking for rentals in the market. After a year,  I would sell the house to one of these investors as an asset that provides a proven stable cash flow. Just make sure you get top market rent for minimal work - which is why I would go the section 8 route. There is a shortage for affordable housing in this nation so being a section 8 landlord is right where the money is! 

Congrats on your first out of state rental! Keep it up! Let me know about your experience with the carried over tenant. In my experience, every single tenant that I carried over turned out to be bad. They usually stopped paying at some point and had to be evicted. I carried over 5 different tenants this year alone and 4 of them had to be threatened with eviction to get them out. With one of these tenants I'm still on the brink but my property manager thinks he can get him in line. In my experience it's best if there is a month to month lease to raise the rents to maximum right away. This will get the old tenant out. After that, fix up the house and put a good screened tenant in there that can afford to live there. 

Great work! Just one question. Why didn't you leave the H in the shower? hahahah

Currently working through a nightmare portfolio deal with a 76 year old lady. Closing is supposed to be on Friday 8/30. Now, towards the end of the transaction she is suddenly demanding more money at closing - which she said we verbally agreed on. Obviously there was no verbal agreement and I found out that the lady has a medical procedure done on Wednesday and probably wants to stiff arm me out of additional funds. In fact, she just signed another addendum last week (for the terms) but there was no mention of additional funds at closing when I drafted that up and had her sign. I told her yesterday that I will sue for performance if she doesn't show up to closing on Friday. 

Has anybody here ever done a lawsuit for specific performance? How much did it cost you and how long did it take to enforce the contracts. Did you have to show up to testify in person - I don't necessarily want to show up in person. I'd rather do deals lol. 

Thanks a lot for your help everyone!

Thanks @Chris Seveney, maybe I'll have to combine all 6 properties on one promissory note to achieve one mortgage payment for the servicing company. I'll have to outweigh the risk when it comes to that strategy. $120 Dollars per month would certainly s*** too...