All Forum Posts by: Nuhan Demirkan

Paying 75% - 80% of ARV is very scary. You're going to have settlement charges when you buy (about 1.5%) plus sales cost of approx 10% (commission, closing help, and settlement fees) if you get a full price offer, that leaves you with roughly 10% for rehab and profit.

In order to wholesale this property you have to have some idea of the rehab cost so you can properly calculate the profit margin that is attractive to a buyer. Yes, get a locksmith to unlock the doors so you can walk thru and inspect the as-is condition.

Sellers usually want a "recent" pre-approval letter to make sure you are financially able to  perform on the contract. If you have one that is dated no more than 60 days they should accept it. You are correct, if all the hard pulls are done within a short period of time it won't hurt your credit. I wouldn't worry too much about the pre-approval letter. If you have one, the assumption is you can get approved again even if it expires. Rather focus on the deal. If you have a good deal you can always find the money. Good luck!

Is this a SFH? How are you able to get $42,000 in rent income from a $280,000 home? Where is it located?

First buy yourself a small reward, you worked hard - celebrate!

Build cash reserves, 

pay off credit card debt starting with the lowest balance, not the highest interest rate, 

save for your next purchase

When you advertise the property for rent you post photos, info about the house, the neighborhood, etc. When they contact you they have a pretty good idea about the home and are interested in renting. But you have no info on them. If you are willing to drive to the house without pre-screening and wait to see IF they show up and IF they qualify is certainly your prerogative. I've been doing the landlord thing for a little while now and speaking from experience.

Write a purchase contract that needs to be executed at a certain time in the future. Specify a non-refundable down payment that will be paid monthly over a period of time. The purchaser must exercise the purchase option at the end of that time period. You can put in reasonable annual purchase price accelerator. If the purchaser does not exercise the option they lose the deposit.

Write a lease for the same time period as the purchase option. They pay you rent plus the monthly down payment amount. None of the rent goes towards the purchase. Only the down payment amount does. If they miss the rent you can evict and they will lose the purchase option along with the down payment. If they can't buy the house at the end of the time period, you can extend, you can ask for more down payment or you can cancel the agreement. 

Mike this is a house you want to live in. So investment calculations and advice don't apply. Somebody once said "live where you want to, invest where the numbers make sense." The house you live in is never an investment. It is a lifestyle. People may disagree with me on this but I'm right... 

The monthly rent sounds too low to cash flow from either house. If you kept your cash in the house ($60K), I'm estimating your annual return on investment will be around 10-11% as a rental (after expenses). If you flipped the property your return is 43% after the sales cost (not accounting for taxes). If you refi the house for 60K what will your monthly payments be? I don't think you would have any significant cash flow. I would flip both properties and find a rental where the rental rates make more sense. 

Tenant screening is the most important part of being a successful landlord. I do a phone screening first to find out about income, credit history, number of occupants, why they are leaving the current residence, etc. If the applicant is not willing to share the info I move on to the next applicant. If they pass the phone screening then I make an appointment for viewing and tell them to bring the supporting documents (pay stubs, utility bills, application fee, copy of drivers license). They have to call me one hour before the scheduled viewing to confirm that they are coming otherwise I don't go to the property.