All Forum Posts by: Jeff Rabinowitz

If you are not paid back on time the personal guarantees, if written properly, should allow you to take action to attempt to recover your investment. However, that action could cost you a large sum in comparison to your investment and even if you obtained a judgment you would still have the challenge of collecting. If you do not know what the loan is for (you should) and you do not know if the documents protect you (you should), are you prepared to walk away from the $10K? If not, have the docs reviewed or do not make the loan.

If the total amount being borrowed is $50K, are you in a position to lend the entire amount? That could allow you to be in a secured position and the proceeds of the loan should, at least, cover the expense of the legal review (your borrowers should pay for that). If you have the $50K and would not be comfortable lending that if it were secured, you should not lend the $10K unsecured.

Get a contractor out for an estimate on repairing the slab. Once you have a good idea of the cost, negotiate an appropriate discount. Problems with houses can be great opportunities but you should only accept a known problem on terms that benefit you. 

RE investing involves many decisions. You must decide on properties to offer on, decide what price to offer, decide the rental rate and terms, decide which tenants to accept, decisions , decisions, decisions. It seems like you have decided an online course would be most convenient but are agonizing over which to choose. Stop. There may be slight differences in price and slight differences in quality but that is trivial. You must take the course to take the licensing exam. It is not that difficult to pass a licensing exam. (If you doubt that, interview a few real estate agents. Did any of them strike you as geniuses?) If this decision seems so difficult it may be wise to evaluate why you want to do it, whether you are cut out to be an investor.

Congratulations. You appear to have many options to raise the funds you seek. A mortgage or equity line on your personal residence is likely to give you the best rates and terms. That would put that home at risk if you could not make payments. That risk seems small in your case but, if it concerns you, rates on non-owner occupied homes are still at historically low rates and you appear to have ample room to borrow what you seek from your rental property.

The time period for the construction will depend on when you start, how well connected to the trades you are (will you be the GC or are you hiring a GC?) the type of construction, availability of materials, the weather, and a hundred other factors. 10 months to a year should be doable. A bit quicker is possible if you are organized, don't waste time, and have good fortune. I was involved in a RO tear down/new build a couple years ago. We were held up at the beginning because the gas company was very slow disconnecting the gas before we could demo. The winter was bitter cold during our build. We had to pay a premium for kerosene to heat the basement and lost quite a few construction days because it was too cold to work.

Is it a good deal? Only you can determine that and you won't know for certain until you have sold the house. (We did well.) How much do you value your time? What are you paying for funding? RO has seen a considerable run up in prices over the last few years. How certain are you that prices will be strong in a year? What would a 10% retracement in prices cost you? Do you feel lucky?

If you have never done any deals it may be too soon for you to spend much time on this question. Look for properties, inspect them, analyze them, learn the neighborhoods. What returns are the properties that look like good fits for you returning? Is that enough for you to jump in the game? Is it higher than other investments available to you would be? Will it compensate for your time or allow you enough room to pay for a property manager? If so, buy something and begin. You will learn as you go and will better understand the true impact of vacancies (a major expense that can become a killer if you procrastinate completing repairs, turnovers, and placing tenants), maintenance, legal/court costs (poor tenant screening will increase those expenses). Once you establish a baseline with a couple properties you will be in a much better prepared to compare potential returns of different properties and target achievable return rates for new acquisitions. 

Look for @Account Closed. They know the City well and work it constantly. Jeremy is a Detroit resident.

If the prospects were highly motivated, needed to sell and wanted me to come by, and I was hungry and needed to make a deal, there was a time when I would let only life threatening weather hold me back. I am no longer that hungry but I would bet there are those in your area who are. Do you expect your strategy of complaining about the weather will improve your situation?

@Robert Gunby, I have posted over 100 pages on my BP blog detailing various deals and some are quite specific. When funding purchases the funds are usually sent to the escrow account at the title company that will close the deal. 

I don't understand why you would consider using a quit claim deed when doing a land contract sale. The deed does not change hands until the terms of the land contract have been satisfied. Quit claim deeds can easily cloud the chain of title and should usually be avoided. A land contract sale requires the contract to be drawn--if you are inexperienced it is probably wise to consult an attorney for this. The sale can be closed through a title company but it does not have to be--this will depend on the comfort level and experience of both parties. A memorandum of land contract (not the contract itself) should be recorded on the public record. This clouds the title and helps protect the buyer against the seller refinancing or selling the house to another party.