All Forum Posts by: Michael Lucero

I second talking to a local RE attorney, you can have them look at the contract and or provide you with one. Or, you can do the research yourself. There are plenty of contract examples on BP or the internet that people use all the time, whatever you feel comfortable with. You probably want a financing and inspection clause in there. As to your question on offering to pay more for an agent; I don't think you need to do this unless you want to and see value in it. It's going to cost you at least 3% of the purchase price to do so. I would probably make sure to get an inspection on the house for major repairs, understand the market value of the house (agents can help with this for free as a way to incentivize you to work with them, or you can do it yourself using redfin recent sales). Also have a title company perform a title search. You can find title companies who will provide this service for free, again, to incentivize you to work with them to close the deal.

Sure you should ask why they are selling it. You haven't provided enough info for anyone to tell you if you should raise rents, are they under or over the market rate? Are you going to spruce up the place a bit? Yes you should ask for operating expenses, hell you could even ask for tax returns showing what was told to the IRS, since the operating sheets could be fake and the tax returns stand a lesser chance of being fictitious. The lower price question depends a lot on the circumstances, but if it's been on the market a long time or you are paying cash, that can give you some leverage. You should also ask if they use a property manager or not, what type of calls do the renters have, minor things to fix or only major. How old is the water heater, any issues with plumbing, roofing, AC, how old is the place - any lead paint issues, any major repairs since they owned it. How long did it take to rent the place out when/if vacancies occurred.

I totally hear you, it may not feel good, but I think it feels better to have tenants paying on time with no vacancies. It's a personal call, you could make things awkward by questioning them, especially when you don't have any apparent authority to do so, unless of course they are causing damage. Or, talking to them could work wonders and they completely change their ways, sometimes people just need a little push to make a change. If you think the cleanup costs will be higher as a result, such as to remove smells/stains, you could tell them.

I had tenants a few years back that were incredibly dirty. It literally smelled like garbage when I walked into the place, the toilets had um stuff...running down the side, couldn't see the countertop cuz of trash, the list goes on, it was awful really, but they paid on time. I knew I would have to keep more of their deposit to clean the place, which I did, but I could have told them this while they were still living there, to hopefully help curb their cleanliness. But then of course I run the risk of them marginally cleaning up, and then expecting me to not charge extra for cleaning. At the end of the day I didn't say anything until they moved out and they were ok with the extra costs. It was hard for my wife to see it this dirty, because it was our first home we lived in after we got married and was on the nicer/newer side, but I told her the same stuff I'm writing here, there isn't much strong-arming I think you can do, but sometimes it doesn't hurt to ask them. 

If they pay on time and aren't damaging anything, I'm wondering why you care. 

You could talk to them, person to person and simply ask them to keep it cleaner or question why it's so dirty. Mind you, if they aren't damaging anything, I don't see what recourse you would have or why they should listen to you. If you think their dirtiness could lead to damage, you should let them know that you do not consider the way they are living normal wear and tear which could result in damage that they will have to pay for.

The information needed are the facts about the financing options- rate, terms, and fees. Also the price of the duplex, rent rates in the area, quality of the duplex in terms of old/new - are repairs needed or not, quality of tenants you think will rent, other investments or opportunities you would want to do, if any.  Then you can start to calculate the type of return on this, and see if financing or all cash is better, and is it good enough to outpace other investment opportunities. For me, it's not about if I want to own a property, but rather, how much money can I get in return, represented as a % on money invested.

The only response i read was the first one from Eddie, its good. The $100 was probably well spent but please dont sign up for anything more. The vast majority of people that sign up for these programs do so because it gives them momentary comfort to feel that if they spend 10-80k on a mastery program they will be a sucess, which couldnt be further from the truth. In all honesty, that just gets you into their club, you still have to work your tail off. Ironically, if you have the wits, gusto, ability, etc to be a success after buying into the program, you probably would have been a success on your own without the program. If you dont have it, you wont succeed, with or without the program, you are simply throwing the money down the drain, not something you want to do so late in life. They are selling you, run the other way. 

Cant believe they tey and force the rationalization down your throat...Make it up in a few flips like its no big deal.. lol..please run.

It kind of depends on what you want and if you can actually get a better deal with all cash. its simply a numbers game here. If you can get a 10% discount with all cash then maybe go for it, but you also have to consider the opportunity cost of having no cash for other investments. Typically when you use leverage/debt you can see higher returns, however this depends on the terms of the debt and the rent rates in the area. There isnt enough information to make a concrete suggestion.

I'm sorry, am I missing something, this seems to be beyond obvious. The higher your down payment, the higher your chance of cash flowing becomes, however on the flip side, your ROI or COC goes way down to a point where you are hardly making a return. Sure in LA you can get a property for 100% cash at like $1m and rent it for 3.5k and cash flow but even with no other expenses you are at a 3.5% return on invested capital. After taxes, repairs, maintenance, etc you are guna be much lower. Unless of course you are trying to play the speculative/luck appreciation game, I don't see the point, go buy treasury/muni bills.

True, people are always greedy and financially, the masses are stupid, but there needs to be an environment for them to showcase that greed and stupidity, which does't exist now due to regulations. The mortgage brokers, bankers will always want to make money off of others, including from the stupidity of others who took out 95%-100% loans on houses way out of their budget. Any the lamen person will always want that big shiny house, regardless of their budget. However, the under-regulation does't exist. Can't do that anymore.

The only way to really avoid it is to not be invested at all. To try and avoid it while still being in the game, you can do better due diligence in the areas you are buying properties, you may have to go out of town/state and look for metrics in areas that you don't think would be impacted. Avoid places like the one you described. You can also diversify your holdings, obviously in different assets outside of real estate, or if you can, diversify your real estate to different areas and types of properties, that would help spread some risk around.