All Forum Posts by: Michael Knaus

That has never happened to me but it seems like merely a time delay (you said you are ok with that). Obviously do your due diligence as if you were going to close tomorrow. If it's a deal you would do anyway and don't mind waiting, I don't see an issue. I would say prepare for 6 months. Nothing moves fast in the clouded title world.

There are a few things I would want to address though. That roof! Having $$ in escrow is great but a roof leak can do A TON of damage (and create a mold problem) if it leaks for 6 months! If you are going to move forward on this I would tarp the roof at my own expense to keep the water out. Worst case scenario, if it doesn't close you are only out some labor(I would get my trap back though!). 

I would also ask for a final walk through for re-inspection prior to closing. A lot an change in 6 months. Vandalism, theft, other water damage, mold, squatters, etc, etc. When buying as-is, you may be otherwise bound to close or risk breach of contract. Get it in writing that you can and will do a final inspection prior to close and can walk away with deposit returned if it's not in the same condition as the day you signed the agreement.

That's a tough start, not gonna sugar coat it. When I started out, I had to go conventional financing. How is your credit? Debt to income ratio? Depending on how much you are trying to borrow, the $10K might be used as DP. Conventional loans don't care how many flips you have done, they care about ability to pay the loan back and the strength of the collateral if things go bad.

HML's are usually reserved for experienced investors (exact requirements vary based on the lender).

What about a private loan? Do you know anyone that would trust you enough to do it? If there is plenty of equity and they can hold a first lien mortgage, maybe they would go for it?

No matter the loan structure, just started out can be tricky, regardless of how much research you've done. It get's real in a hurry once the crews shows up! Perhaps taking on a partner that has some experience can help.

Drywall is probably one of the cheapest actually. I am assuming you are hiring/subbing the work out? The cost of drywall is cheap. The labor to hang and finish does add some expense for sure but I think there are few (if any) alternatives that will come close. I love the look of some of those paneling systems but they not only can they be costly to buy, they are costly to install. 

I look at any panel systems (not the cheap fake wood versions that grandpa used to cover the plaster in the entire house back in 1972) as an upgrade, not a way to shave expense. 

PS: Don't go with that cheap paneling!!! It screams I voted for Nixon.

It is a Tudor Ranch. That style went out with the Brady Bunch. Leave the lower section (looks like maybe brick?). You can paint that if you want. Absolutely get rid of the battens that make the Tudor design. Either put siding over the upper section or even stucco/dryvit. Anything to modernize the look will go a long way to add curb appeal.

It is a Tudor Ranch. That style went out with the Brady Bunch. Leave the lower section (looks like maybe brick?). You can paint that if you want. Absolutely get rid of the battens that make the Tudor design. Either put siding over the upper section or even stucco/dryvit. Anything to modernize the look will go a long way to add curb appeal.

A cracked boiler tank is almost always a sign that it froze or ran out of water. Even if it was winterized, it may have been done too late or they didn't drain the boiler. I had one crack in the Poconos after a deep freeze when it wasn't drained. I doubt the gas co had anything to do with it as they merely supply the fuel source to the burner. If the burner quit, maybe but the boiler tank only holds the water.

Depends on what you actually have there. Some very old systems were what they call cesspools. That is nothing more than a pit that has a pipe coming from the house and everything goes in there, liquids and solids. Some were laid up with stone, or cinder blocks. I have even seen a metal tank buried that someone just drilled holes in! Cesspools are the worst of all the systems. They were never designed to handle today's water consumption (dishwashers/washing machines and 10 minute showers). They fail all the time. Especially when tested by a home inspector. There is no drain field, it's just a pit. all the contents stay in there until they drain into the ground.

Another system is a septic tank and drain field. Both liquid and solids go in the tank but once the level reaches a certain point, the liquids leech out into perforated pipes that evenly distribute the liquid waste into the drain field. Then it filters through the ground. The solids(and some liquid) stay in the tank and need to be pumped out every few years. These can fail also when the the drain field becomes saturated and will not absorb any more. A die test can be done to see where the drain field is. A hydraulic load test can be done to see if it's saturated. Usually the tank is not the issue unless it has a crack or is otherwise broken.

I assume it's not an elevated sand mound as those have only been around (in my area at least) for about 30 years. They too can fail for some of the same reasons. 

Investing in areas with on site septic systems (anything other than public sewer) can be very risky. If a system takes a s*** (PUN INTENDED), it's a MAJOR expense. There are some techniques to help but they only buy you time. Eventually the system needs to be replaced. The real trouble comes when the ground is not suitable for a new system either because of the lot size or soil conditions. 

I say have a professional test done to be safe and use common sense. If it's a very old house with a cesspool,  would be inclined to walk unless it's a screaming hot deal!

@James Wise you as cold as ice!

Ok, joke but...I see your perspective. I just feel that helping the old guy find a place and maybe even help with the moving expenses is the right thing to do. He was there for 15 years and has to move through no fault of his own. 83 as opposed to 43 makes moving a little more challenging I would think, so yeah his age does matter, at least to me. He may have made poor choices but I am not going to cast stones. 

Now that being said.....I would personally NEVER sell at a loss for the reasons mentioned. I would sell to the highest and best offer....even if he were 103, he would have to pony up and match or beat the offer.  I suppose a token offering to help is my way to sleep better at night.

What are you bidding on? Auction.com sells REO's directly through their online auction but they also advertise Sheriff's Sales. They don't facilitate that. You have to show up at the courthouse the day of sale. HUGE difference between those two. When they sell REO, you are buying with a clean title (supposedly). Def get your own title policy though!!! Mistakes can happen. If you bid at SS, be careful and DO YOUR HOMEWORK. Some liens are not divested!

Tough one for sure. Here is my take. Now I don't mean to sound cold......

This is a business right? You have a responsibility to that business to do the right thing...for it. It's like your baby, your child, You must protect that business and of course, just like a real child, you want it to flourish and prosper. So from a business mind set, sell it for as much as you can. You can ask him to come as close as possible on his offer but tell him it is a business decision.

Now I wouldn't leave the guy homeless obviously. I like your idea of setting him up somewhere. I wouldn't do it any other way. You stand to make a nice profit from this flip right? So definitely do the right thing and secure a nice place for him. Even help with the moving expenses I say.

As far as charity, I absolutely believe that giving back should be a part of EVERYONE'S mind set. I just keep it separate from business. I never mix the two. You are either running a business or you are running a charity. You decide. Maybe at the end of the year you pick a new cause and give a little more this year because you are grateful for what you have received.