All Forum Posts by: Pearce G.

My question is in the subject heading, but here's the hypothetical:

Let's say I buy 5 acres for $500,000 using conventional mortgage financing.  There's one house on the property.  I decide to live in the house with 1 acre and subdivide the rest into 4 additional 1-acre parcels that I will sell for $50,000 each.  Do I have to re-finance them as individual parcels before I can sell them?  Or do I re-finance at closing each time a parcel sells?  Or do I just keep the original mortgage until it is paid off, or the last parcel sells?  

It seems like I would have to get my lender's approval of each sale, since the value of the underlying security would change each time a parcel is sold.

I keep finding these buy/hold opportunities where the seller or my agent tells me something like this:  'The current tenants are only paying $650, because they have been there a long time, but in this neighborhood, you could get $800 or more!'  And the property is priced so that it cash flows at $800, but not necessarily at $650.

Okay, so what is a new owner supposed to do?  Jack up the rent and risk losing a good tenant (or turning them into a bad tenant), or continue to subsidize their rent?

That question has been asked before, but I was wondering what others have to say about putting in automatic annual increases even if its a fairly nominal amount, say $10 a month or 1% per year.  Just so the tenant doesn't get too accustomed to going multiple years without a rent increase, only to be socked with a sharp increase when the (new) owner has to play catch-up.

Closed yesterday.  No surprises...until I called my property manager afterward.

We have spoken on the phone many times, although we have never met in person.  Still, I feel very comfortable with her as the PM on my first property.  She came highly recommended, and she has already been inside the property.  We were going to meet for the first time immediately after closing to finalize our to-do list and schedule handymen, but something came up for me, so I called her to see if we could re-schedule for the next morning (today, as I write this).  She couldn't re-schedule, because she told me she got a new full-time job starting today.  

Uh-oh.  I was counting on her to organize the painter, electrician, plumber, etc. to get the property turned around quickly.  And I was hoping to learn from watching her.  If I have to find and hire those people myself, it will likely cost me another month and some additional stupid tax.

She explained that she intends to maintain her PM business on the side, but she needed the employment for health insurance.  I told her we would see how it works out, but I reserved the right to get somebody else.  She agreed.

So, instead of meeting her at the property this morning, I met her husband, and I feel a lot better now.  He handles the handyman and subcontracting part of their business anyway, which is my immediate need.  She handles the landlord and tenant relationships.  So, for now, we will stay the course.

As for the property, it should clean up nicely, and I hope to have it rented by mid-July.  Once the rehab is finished and I have a tenant, I will write another post about final cost and cash flow.

It's here!

I've got a turnkey buy-hold opportunity.  Just rehabbed by an experienced owner-builder. Looks to be low-maintenance and the seller just signed a 12-month lease with a new tenant.  Great, huh.

Unfortunately, the seller rented it below market...at about 0.9%.  And it's in a tight market, so I don't expect a lot of negotiating leverage.

Questions:

1.  Buy-hold is a long-term strategy.  Would you buy a buy-hold knowing it will not cash flow the first year?

2.  Even if she proves to be a great tenant, I will need to raise the rent 10% after the first year and maybe again after the second year.  How much lead time would you give a good tenant when you know you have to raise the rent by that much?

First deal.  One unit within a 1-story brick 4-plex.  3 bed/1 bath.  Owner-occupied for 10 years.  She is moving out of town to be near kids.  Neighborhood is about half owners, half renters.  Low income, but exteriors are well-kept and personalized.  List price was 70K.  Agent recommended 55K offer and seller took it.  I tried to negotiate down after inspection, but she wouldn't budge.  Turnaround is mostly cosmetic anyway.  Will need a new stove, fixtures, paint, minor floor repair.  3K and 30 days if no surprises.  Should rent for $900, maybe a little more.  Expected cash flow $200+.

Because I don't have 2-year income history, I'm financing this myself against a brokerage account. The good news is the rate is competitive, there are no points or mortgage insurance, and I can act quickly. The bad news is it ties up cash, lowers my ROI, and is not a sustainable financing strategy. With a couple of deals under my belt, however, I hope I can transition to OPM.

Bought it with the intent to hold for cash flow, but an ARV over 80K would be tempting to either flip or re-fi. Closing scheduled for 6/20/16.

Stay tuned.

Hi all,

I'm changing careers and planning for retirement income.  Kicking myself for not doing this sooner.  I hope I'm not too late to the party.

My first deal is under contract. 3 bed/1.5bath. 55K cash. Owner-occupant is moving out. 3K-5K rehab. $900-$1000 post-rehab rental. Bought it for long term buy/hold, but ARV may tempt me to flip.

I’d love to apprentice with somebody part- or full-time.  I have 2 masters degrees, I'm good with numbers, and have about 50 hours of BP podcasts under my belt.  Learning as fast as I possibly can.

Anyway, PM me if you’re interested or just want to get acquainted over coffee.

Pearce