All Forum Posts by: Nathan McBride

I also invest in small multifamily properties in Baton Rouge and have done a couple of live-in flips.  The housing market in BR can be maddeningly expensive in certain areas for a city this size, though it has cooled somewhat over the past 12-months or so.

In the right areas BR tends to be a fairly stable market with moderate growth potential (the big employers/tenant draws are petrochem and supporting industries, LA state goverment and LSU).  You aren't likely to see massive amounts of appreciation, but you are also less likely to see spectacular bust cycles like in other markets, as those three tenant sources aren't going anywhere anytime soon.

Off market is often where the money is made, especially in today's market.

If you don't already have a network in place, there are ways to get creative if you are willing to put in the time and effort.

For example, I found a pretty decent deal by calling a "for rent by owner" sign and asking if the owner considered selling.  Craigslist is another potential source for "leads" like that.

I personally would not recommend knocking on doors in this day and age, but I do look up ownership information in property records and call on owners of properties I would be interested in.

There are countless ways to go about it.  Just be sure you have a team together to support you when you find a deal (title attorney, lender, inspector, manager, etc.) so you can approach owners with confidence in your ability to close.

No way would I pay a contractor anything just to put together a quote.  Any legit contractor knows they will likely bid on 10 jobs with the hopes of winning one of them.  That's just the nature of the business.

Something to consider, a lot of contractors (especially small ones) are reluctant to work with loan programs like that because of all of the hoops the banks make them jump through to recieve payment.  They often don't carry enough cash to cover the float between paying subs and recieving payment from the bank.

If it's a major rehab, you might consider making the purchase with a construction loan from a local commercial bank and then refinancing to a 30-year loan product once construction is complete.  

That would likely open up the contractor market some and likely get you better pricing on the rehab estimates.

 That's exactly what my employee proposed.  Thanks for the recommendation.

While I would like to have the opportunity to ask screening questions of the previous LL, at the end of the day ontime rent payments are priority #1.

@Brandon Vukelich I second that! That $11 eBook netted me six figures in equity on the very next deal I did.

My advice would be to consider the criteria that you can directly influence in underwriting and consider criteria based on external factors as secondary.

Cash flow and amortization should 100% be in there.

You really can't control appreciation outside of forced appreciation brought about through capital improvements.  This uncertainty is compounded by today's inflationary and interest rate pressures.  

As a qualitative criteria, yes, you want your properties to appreciate on some level, but I just don't think you can quantify it well enough to consider during underwriting/ROI analysis.

Similar situation with tax benefits - we don't ultimately know what tax brackets will look like long term, and "tax reform" is a campaign talking point every election cycle.  Plus, I don't consider it a good idea to spend for the sole pupose of "saving money on taxes."  

Sure, the tax benefits of RE ownership are abundant, but the deal should stand on its own in my mind.

Ethical concerns aside, OP now has written record by way of this thread that they were aware of the issue prior to closing so...

My advice would be to seek legal counsel asap.  I am not an attorney, but my additional $.02 would be to refrain from any more discussion of what may or may not have happened before speaking with counsel.

@Patricia Steiner yes it's definitely an interesting business.  We recently had someone photoshop paystubs that my employee only caught because they had a discrepancy on a date (they were in fact employed there so passed the initial employment verification check).  Wild how sneaky and blatantly dishonest folks can be.

Goes to show how important systems and processes are and the value of a quality property manager.  Honestly, I probably would not have caught that in my previous life as an investor on the side managing my own properties.

We always go a couple of levels deep in checking tenant information (social media, Google searches of addresses for employers, residences, etc.) but this was a new issue that came up.  Sounds like it isn't going away anytime soon.

Recently, several apartment complexes have responded to residency verification requests saying they no longer do them, even at the request of the tenant.

My questions are:

1. Has something recently changed at the top, like national trade association guidance, etc.?

2. What are other managers doing to verify applicants' previous residency if no luck with previous landlord?

If the property is listed, I don't really understand the reasoning for not using a buyer's agent.  Their commission is covered by the seller, and a good agent will bring benefits to the table that will protect you from liability and ease the transaction process by leveraging their personal network.

If the property is not listed, it depends on your relationship with your agent.

Personally, I would be open to calling on unlisted properties for clients in certain circumstances, but we would need to work out commissions, etc. ahead of time in the event a seller is unwilling.  I'm basically calling owners anyway for my personal portfolio and as an agent to generate listing activity.