All Forum Posts by: Andy Luick

I don't know anything about Terry Brown but good for him for popping in and responding. I'd suggest you take it privately although the original post was just trying to find Terry...which it seems to have accomplished. Seems the best place to do that would be privately lest another lawsuit gets started. Just MHO.

It's always let the buyer beware...always has been. A $75k street become a $85k street if the market makes it so.....and it comes down to market being what a buyer at arms length is willing to pay for it. Our group doesn't concern itself with appraisals....they are relatively worthless as many of us can tell you. Our valuation is very simply....what is the net cashflow divided by 10%, the cap we and our investor partners prefer to use.

I don't know a ton about memphis but parts of it are pretty rough as one would expect from the #1 murder capital in the US. There, as here in atlanta, you will find that the best property managers for C properties are unlicensed, in the streets operators. Just be as thorough as you can be in checking them out before you do business with them. There's also another side to this....with C properties you'll have tenants claiming to have paid rents for many, many months...always in cash but, of course, they never got a receipt for it. If you want the "great" returns in C-class stuff...then expect some of the risks. That's why I prefer shared housing and am actually trying our model on a couple of inner city homes to see how it performs. Happy Investing

From the pic, it looks like you have 5' of dirt on the other side of the retaining wall. This isn't something for a homeowner to attempt on their own....it's a good way to get killed or hurt. I'd suggest you get several local contractors to come out and take a look at it. Check with you local government (without giving the address) to see if this is something that needs to be permitted or not. In most major metro areas, you will need a permit for this but I don't know your part of the world.

No one goes through the time and expense to build a retaining wall like that...so they had a reason for it. You want to know the reason before you take it down. Railroad ties usually last about 25 to 30 years. The stacking concrete retaining blocks you can get at home depot can be a good replacement. Ask some of the neighbors and see what they can tell you about it. You might want to post on thumbtack.com in your area to see what kind of response you might get from contractors.

Anyone can ask for anything they wish....and sometimes they get it. Here, this contractor is a pure subcontractor. May sure you enter into a written contract with him spelling that out. He's a 1099...and not an employee so you couldn't get worker's compensation on him anyway. However, if you get a comp policy then you will need to make sure everyone who get's 1099 by you has provided you with an insurance certificate naming you and your company as an additional insured. Check the certificates to make sure they are actually valid. In today's market, a ton of contractors are running around with forged certificates. If you get a comp policy and get audited...which you certainly will.....you will be liable for the insurance costs of any subs who do not have proof of valid comp insurance...it can get pretty expensive.

While it might not stand up in court if there ever was a problem, I'd suggest getting individual waivers from the sub and everyone who works on his crew. Legally it would prob have little effect if a loss occurred but it might deter the injured party from proceeding against you. Whenever there is a loss, the lawyers go for the deepest pockets. I usually only concern myself with comp for high-risk subs like roofing & electrical. In the end, you should check to see what the requirements are for your local state....they are all different and most states do not have comp requirements for individual trade contractors.

Looks like a great deal...and distance from city of Detroit is important. You can make money just about anywhere if you have the right plan and buy it right...which you did here. I had a 2/2 in a rougher condo/townhouse project. No one wanted it so I picked it up for $15k......put another $15k in and cut the living room in half to create a 3rd bedroom. Rented it as shared housing and got $1,700 a month for it....which included all utils. I sold it for $55k in about 5 months for a pretty sweet return. My investor partner on the deal made 48% on his cash in a pretty short period of time.

The key to this stuff is knowing in advance what you can do with the property. I don't really buy and 1 baths...just doesn't fit my model....but sounds like you got a great deal and handled it well. I'd suggest you sell it off to a passive investor and roll into the next deal. Happy Investing!

Part of your problem maybe the irrational behaviors of some of the hedge funds and venture capital backed buyers groups in the markets. If you have a billion dollars that you HAVE to spend, you tend to overpay. Some of these groups look at CA..or any market really and think whatever the value was 5 years ago, will be the value again soon. I would think that MLS or FMLS isn't going to be the best place for most investors to hunt & buy anyway. Almost everything I buy is off-market and through wholesalers.

You have to crunch your numbers according to your own methods and formulas. Mine will be different than most of you....especially is you are flipping retail and tied to appraisals which I am not. I can pay more than most of my competitors but I tend to operate on the lower end of the market. The best thing you can ever do in the current market is to present close to your best CASH offer from the get-go and hold to that. I can't tell you how many times my offer has been rejected and then the seller comes back in a month (usually after the "buyer" failed to assign the contract or flip to another buyer for a simultaneous closing) to ask me if my offer is still good. Depending on the numbers or what else I have purchased, if I have room in the stable, I make the deal.

You have to avoid bidding wars. Stick to whatever you plan is and, if you get beat out...guess what? There are plenty more where that one came from. I'd venture to bet that in 5 years the bulks of what the funds are all scooping up will all find there way back to the market.

Let's say you buy this and both tenants tank after several months of not paying? Do you have say 6 months of payments plus fix up costs to carry & repair the property? You need reserves for the "what-ifs." How far is this out of Cleveland or shaker heights? I'm familiar a bit with those markets. It's always best to be prepared for worst case scenario. Have you shadowed any deals in your market? I don't see a lot of risk in this deal if you know the area well and can handle the mortgage when the place is empty....if the place is empty.

How did you come up with $5k in fix-up costs...and why? only spend money on a rental if it creates more income or higher rents. I scoped your market a little and only saw some cheap townhouse deals in your area...one was under $10k and it looked like they were renting for $750 to $850. Really study your market and know it well before taking the plunge. I know metro atlanta really well...like the back of my hand and know what I can and can't do with a property before I even go look at it. That's why I don't venture too far from areas I am familiar with.

The financial pro-forma on a deal is only part of your due diligence....what's on paper may not be reality. When you hunt these...try to take the time to talk to the neighbors a bit and get a real feel for the area. If it's not safe enough, take someone else with you. I do this on every house I go after....i always talk to the neighbors to get history plus make some friends. I almost always go out in one of my contractor trucks so people assume that I am there to work on the house or make a bid...makes it easier to approach & talk to people.

Let's not worry about the numbers too much for a minute. What do you know about the tenants? I'd try to speak with them if possible and get the really skinny in terms of them both staying, maintenance issues and repairs. If they are both solid and staying....why would you spend anything fixing it up? That's number one. Unless you want to clean it up a little and flip it. We generally budget $100/mo per unit for repairs and are typically covered with that. Go look at the property before you waste time crunching numbers anyway!

Do you have approved financing for this? How? Not much but hard money folks are going to lend on this especially at this purchase price. If you have long term tenants, I wouldn't be interested in the 50% rule...I never use it anyway. You might want to use a 10% vacancy rate just to play if safe. If the tenants are solid, one rent pays for everything so it's a pretty good deal.

I'm assuming this is a pretty small market or other investors would be all over this for cash...which would knock you out of the game anyway. Maybe try to split this deal with another cash investor? Just a thought. If you do buy it, try to convert the units to shared housing if you can as they come vacant....it will maximize your rental income and minimize costs & vacancy.

When it comes to mold, there actually aren't a ton of ways to skin the cat. First step, identify your source of moisture. It is usually an even split between gutters, drainage and vapor barriers. Remove any debris or scrap wood from the space or any other food source for mold. While many are well intentioned, bleach absolutely doesn't kill the spores that cause mold & mildew. It will knock it down some but that's about it. Many make this mistake of cleaning with bleach or detergent and then paint the surface only to wonder why it is graying underneath. Mold is anaerobic so once you paint over it, you've given it a motel 6....perfect place to thrive.

Microban is the industry standard for treating, killing and cleaning mold. It is usually available at JonDon supply stores but you will need a commercial account. Treat the area thoroughly with Microban....then add adequate venting....a thick vapor barrier which we usually bring about 1' up the sides and seal off the edges. Mold spores can live dormant for millions of years...cleaning it with a brush & something like borax runs the risk of mold spores getting into the air and relocating elsewhere. I've heard of others using borax but I never have. Microban is more expensive but it kills on contact...no scrubbing just spray and you're done.

My favorite house to buy is the one with black mold....scares everyone else away and it's usually an easy fix. Happy Investing!

The key is establishing a mixed network of agents, wholesalers and investors. I usually buy off market from sources I have known for years. Some are specialists at tying up HUD properties and I'd rather pay them their $5k mark-up then deal with the process myself. I avoid making low-ball offers and agents dealing with me know that I have seen the property and that my offer is based on the repairs. Networking is key to your success in any market.

Sounds like a slick tenant....if she's always been timely and there has never been a problem, give her the benefit of the doubt this time and waive the late fee. You can certainly amend the lease if both parties are agreeable to it and you may wish to do an amendment with this particular tenant. I believe a local magistrate would interpret the day-3 postmark as also meaning she'd have til the 3rd to get the payment in the bank. We have late fees in all of our leases but rarely apply them.