All Forum Posts by: Jack Bobeck

If the seller is financially stable, you can do the lease option, without much fear that, if they own a loan, they will default on it. If the owner of the property is teetering on bankruptcy or having a problem with the payments, you want to do a subject to, where you get your name on the deed and you send the payments to the bank, yourself.

It is a great way to buy real estate and Wendy Patton has some great material on it as well, if you are looking for places to eduate yourself.

I know a number of good title companies, but like bad realtors, or worse, I know a number of crummy title companies that were nothing more than wholesalers to get deals done. I have a package of 3 homes waiting to get closed by Regions because my title company is having to go back on 2 of the 3 properties and fix bad documentation on the previous title pages. I'd like to strangle some of these idiots or minimum wage workers who worked at title companies. Many, like realtors, just did not care enough to do the right work.

Perhaps its all part of a bad cycle and we needed to get the bad ones out, and I mean all the bad ones. As it is, it took us 3 months to get 1 title company to send the title work to the Clerk's office, so that the official title would be seen in the Property Appraiser's office and for our other closing.

I had one appraiser recently, who will receive a reprimand from the state, recently pull comps from 2 and 3 miles away from my property, when there were acceptable comps, per sq ft, less than half a mile from our property. he pulled comps from a different zip code, no less. Banks are just full of crud these days too with the games they are playing.

Did I ever say that the rent would be static? Sure inflation rises, but so do the items that renters want. I'd like this upgrade for $25 and a new X for $25, rent increases because people ask for nicities, and as the landlord, you work on keeping the units rented. Sure if the rent stayed at 700 for 120 payments, you would lose your shirt.

I think that 50% ratio is lower than you think. You will always have more income for X or Y or Z with tenants, because you want to offer more and keep them there. Again, it depends on your business philosophy. If you want to leave your properties as slums, your expense ratios will be much higher due to so many revolving tenants.

However, taking money off the top for cash-out deals is a good thing and works, if you maintain a discipline. If you are the type of investor who cannot pay off your 18% credit card each month, don't even bother with this idea. Buy right and this is the best investment vehicle I have found, in this market!

$40,000 in negative cash flow based on how many years? My business plan is 10 years and I do not factor in appreciation. My expenses are not 50%, since I starting using some of Jeffrey Taylor's ideas, I now have good tenants who are leasing to own, I credit back $100 of the equity back to them to buy the house at the end of the 10 year period. This belongs in the landlord area, but it is important to point out that good long term renters can save you thousands in repair/fix issues.

For someone starting out in a cash-out refi program, do as much of the work on your own, to see what the actual costs are. Sure you have a CPA, lawyer, and other items, unless you are a CPA and a Lawyer and you make more money as property manager with both skills. Save the money, do it yourself, learn about real costs in the market, then hire out those expenses. I respectfully disagree on your costs for outside assistance. I do not incur that much cost on my properties, but everyone is different.

The real issue here, that no one has mentioned, is for new real estate investors, you need to have a business plan. You need to have a playbook for every occurrance, and when you get a new occurrance, have a plan for it as well. Buy/Hold, Buy/Flip, whatever, get a plan and then WORK THE PLAN. Educate the tenants and others in the business and share what you know. That is how we all become better real estate investors. You get back 10x what you sow.

First time poster, great site! I also go to some other landlord sights, but this is a good one. You can cash-out refi, but you have to BUY right. You need to start with your business goals. Are you in rentals for 30 years or 10 years? Why ask this? Because your goals change. If you are in a property for 30 years, you are buying, renting and paying down the debt to own it. Me, I like to own for 10 years, and work to sell the property to a tenant, sort of a lease to own, and then move on to new properties.

But storm clouds are on the horizon. Banks have lots of REO property. The same bank may sell you a house for 60k, and it may require 20k of work, I love brick and block homes (no more wood frame, no matter how good a deal) as these are the easiest to fix and maintain. So you have 80k plus holding and closing costs. Can you get the magical 1% of costs for rent (to cover mortgage, insurance, taxes)? With the last huge housing boom, especially here in the SE, no, you cannot. Apartment complexes here are giving away 2 months of free rent, so you probably will lease losing money for 1 or 2 years.

Here is where the cash-out works best, imo. You buy the house, fix it up, upgrade everything for at least 10 years (how long the AC units last here in the SE), and if the bank only gives you 80% of ARV (which is 130k), you have 104k loan, closer to 110k once you figure in closing costs. Your monthly costs are now $900 and you can only get 700 in rent, so you lose $200 a month or $2400 per year. You were able to get it rented for 700, next year, it will be 725, then 750, so on and so forth. (maybe you can get more). At some point, you will reach close to the break-even point during the 10 year period for the rent. But, you will also have 20k from the cash-out, and you can use that FOR THAT HOUSE or YOUR COMPANY. Never use cash-out money for personal living expenses. You will not pay it back, it does not happen.

My plan is to old for 10 years, get rents to within 5-15% of the montly costs and buy homes right so that when the bank comes back with the ARV, I can get enough cash out, to cover the "nut" for the period of holding.

My experience with appreciation is that if you look for it, like a ghost, you will never find it. Never count on appreciation to rescue you, because in a down market, you may not see it for that year.