All Forum Posts by: Michael Lewis Lee

Hello Bailey1 Ask them why are they selling? It's usually easier to do that method when you can add value. Use a referred General Contractor to see what it will cost. It's usually best to get 3 bids and use the numbers from the one in the middle one. Can you get owner financing? Does he need cash up front? You might get a 2nd loan for that. Take the ARV Times .75 OR .70 less the repairs/rehab cost to get your final price. Just owning one unit can be kind of risky. Only do it with high demand and appropriate evaluation. Their price will vary depending on the owner financing. It may be higher because of their lack of the closing costs including commission.

Use a referred inspector if you can.  Most lenders use their own.  If you get to pick one, give a copy of the home inspection report for the appraiser that should show all needed repairs. Show the lenders your comfortable time to pay them back which will run a various return or a definite one that shows them the hoped, good, return.

Good luck to you!

Hello Alexander!  There is so much to say and I will try to keep this as short as possible.  Do you that owning a house is a liability, not an asset for you, its the mortgage provider.  Home owning a home can be too expensive because of its expenses and they usually are more variable than a rental unit which tend to be more fixed.    Homeownership is more permanent and makes it harder to move where their hot action may be.  Try to start off in your "back yard" and always within an hour drive.  Do not try to do everything by yourself.

Do not assume anything is going to happen.  Do not let your personal thoughts make any decisions.  Just do the average what is that and most internet people are trying to take advantage of you  might make emotional purchase decisions.  At first, be educated but you do not have to know everything before you take action.  There is not anything that is wrong with debt as long as it gives you positive cash flow.  Try to always have curb appeal.

Decide on 1 or 2 types of real estate that complement each other and focus on them.  Confidence comes with knowledge and experiencing field work.  Making mistakes are fine, at least you tried and can learn from them.  There is not a best way to go, just do what makes you feel good.  I'm sure there is more.  

This is from a person that was a licensed real estate broker and in construction for about 30 years. In the last 5 or 6 years I have read about 160 books about REI, sales, and business management. There are short term and long term investments. There's ordinary and passive income. Long term shoot for passive income. Location is important.

Good luck to you!

 Hello Brian!  Do the typical evaluation and get at least 12 months of actual income and expenses.   Do not go by pro forma.  Look at what you can't see.  If he needs cash right away you can get a secondary loan to take care of that.  If you have to do that, figure its cost in your evaluation.  If it still has positive cash flow after all debt payment is made it might be a good deal if that exceeds what you expected.  When you do your evaluation and research and you are looking for long term investment it might work as long as you have a positive cash flow and doesn't have to come out of your pocket to make it work.  Don't count on anything that hasn't happened.  Don't let anything about the future sell you.

Good luck to you!

Hello Jonathan!  There is a bunch not given, like expenses (including for debt cost) and net income and its cash flow.  Make sure the numbers are actual, not pro forma.  Look at every unit on the inside.    There is so much to consider.  Good luck to you!

Hello Erick!  Pay off any negative debt and start over.  I do not know where you are but this a great selling time right now,  but it kind of matters where you are invested.  I think you can file a 1031 on anything.  Not all debt is bad as long as it generates a positive cash flow, does not take money out of your pocket.  Good luck to you!

Sorry about that but I was saying that your two scenarios you mentioned for that property are either ordinary income tax versus passive income tax which is lower and the way I would recommend not knowing your goals.  It depends on your needs.  If it goes down in value, it would still rent out, usually.  If we have a recession or a depression, there is no guarantee about values going down.  If the demand for rentals in that area, you'll still be in good shape because of its rental income and the likelihood appreciation over 10,15 ,or 30 years.  You can normally raise the rent about 3% every year.

Another big consideration in your decision is the historical history of the rentals in that area or its future potential versus the selling demand in that area so your net income could go up.  Your decision could effect your budget of repairs/rehab.  Either way, just do what is normal in that area or go slightly higher to improve its value no matter which way you go.  Good luck to you!

Hello Nolan!  it really comes down to your goals.  Are they short or long term goals?  That is one of the largest considerations to the subject property.  Your

Hello Devyn! I would not assume anything is going on in the future, either home ownership or your financing or anything not in writing.  Make all decisions based on today's economy. 

Good luck to you!

Hello Jeff! Your letter has not arrived yet but I recommend you be honest and tell them you want to help and you do not need any fees to help them sell, even providing owner finance. You just want to help them get out of any problem they may have. Part of your purchase price will provide the money to relieve them of any problem and ask to call you at their convenience. You will make your offer without pain. You will be as close to FMV as you can. They can finance you but is not required. I hope this helps.

Good luck to you!

Hello again Fili! one of the best ways to do that is an Owner Financing deal which allows more ability to earn income.  You get an Option deposit fee, hopefully some spread on their rent for 2 or 3 years and the sale price that you both have agreed on up front.  To maybe help with any holding costs in case that house is empty for a while is what that fee is for on the purchase option.  The people that would take you up on that offer are people that have been denied for a bank loan and are more motivated and are a member of that biggest group right now.  Most of the time they will maintain it better when they think they might own someday.  You also have a maintenance agreement that only involves you over a certain price.  

You typically have to pay with a 20% discount under the FMV or ARV less any repairs needed. You usually figure the value on the income projected, not comps. A majority of Lease Option people do not make the purchase so you can just do that again. It will also give you the price closer to what you want.

Good luck again!