All Forum Posts by: Phillip Gainey

Warren,

Well, looks like you got bombarded with sales pitches. Goes with the turf when people think you have money. I was in your position once. I'll give you some advice, IGNORE THESE GUYS/GALS.

Why?

1. Owning rentals long distance, in your case intercontinentally, is a huge PITA!! Way too much trouble when you are overseas doing whatever you are doing.

2. Like someone mentioned above, low income areas touted by sales people are in rough areas. And you don't want to deal with tenants there. And you will end up "dealing with them", no matter who manages the property. The whole "key" to rentals is the tenants. When they don't pay, money dries up fast. Long after the wholesaler charlies, with their predictable sales pitches, have deposited YOUR money into THEIR account.

3. INSTEAD, you can make excellent cash flow buy purchasing the discounted mortgages of these properties likes these. Would you rather make 15% on your money collecting the mortgage payments backed by these properties, or by owning the properties and having to chase after property managers to chase after tenants to collect the rent?

4. You can make even more money by investing money directly with some of the sucessful real estate investors here who flip properties through joint ventures or direct loans. Though be careful. Gotta work with the right people.

Don't get stuck holding the bag with some low income properties in Atlanta, Detroit, Cleveland, Memphis, or whereever. Stuck at the mercy of some dim witted property manager they set you up with. Repair bills for this, and for that! Oh, sorry, Mrs. Eviction Queen didn't pay this month. We've started the eviction process. Need $1000 in legal fees. What? You're cash flow situation is bad now? Oh gee, sorry to hear that. Blah! Blah! Blah!

If you're wanting to own a rental from acrossed the pond, own it indirectly by holding the note financing the property.

That's my two cents. And NO, I don't sell discounted notes!

PG

Why not just tell the truth?

PG

So she's already got the government to pay 70% of her rent, and now wants you to subsidize the rest? Sounds like an entitlement baby to me.

Are you running a charity or a business?

Steve,

What kind of profit are you likely to make over what amount of time?

I am thinking of investing in some tax liens myself.

PG

Excellent advise on both points.

You can make at least 12% passive income making private loans, or 14-16% plus points making hard money loans without having to deal with property managers and eviction quieens! But be careful who you loan the money to.

I also agree on buying rentals only close to home, not out of state through a turnkey huckster trying to sell you a property for even more than it's inflated "zestimate" on zillow.

Want appreciation? Wait for signs of a turnaround and buy in an a market that appreciates. Like CA, Hawaii...etc., rather than in the rust or corn belts.

PG

I know of a property with a listing price of $87k and an estimated rent of $975. The seller claims such a rental could earn a positive cash flow of $250-350 a month and a cash ROI of 20%. Is that realistic?

It is an older home all brick built in 1959. Taxes are probably around 150 a month. I know because a own a similar 4/2 about two miles away.

PG

Ryan,

I think you scared Bill off. Well, at least someone is at the "graduate" level.

I think it was he who was claiming a ways back that you have to be licensed to make hard money loans. Which ain't true either.

PG

Hmmm. Ralph. Are you in the rental business, or are you a welfare counselor? I think they have government agencies, ministers, shrinks and probation officers to deal with this sort of stuff!

Did you check her rental history? Any prior eviction judgements? Did you talk to her prior TWO landlords?

Single moms with teenagers are tough. I read an article recently that minority single mothers have the highest eviction rates. Of course, you got to be careful not to discriminate. I just avoid low income minority neighborhoods to lower the odds of trouble.

PG

Here is an idea. Once you decide on a target area, avoid the wholesalers and turnkey vendors and join a local REI Club. Talk to fellow investors in that area. You will get the real scoop and not market hype. You'll find out what the tenants in that area are like, and who the good property managers are. They can even set you up with better rehabbers and other vendors.

Oh, and you won't end up overpaying. HINT: if you see an asking price listed someplace that is even higher than what you see on zillow.com, you know it's overpriced.

I agree with mark. Go with a manager, but only a good one. One that is good because other INVESTORS say is good, not some wholesaler or turnkey huckster.

That being said, the area you buy is the most important thing. Are the tenants in the area known for being hard to work with deadbeats living in an area where the "welfare" or "entitlement" culture predominates. Do you want to have rental customers who seem like the characters you see on "Judge Judy's Court"? :-) I don't!

The absolute weakest link in a rental biz is the tenant. Even more important than who manages. With a bad tent, no matter how good the manager is, your biz will suffer. With a bad manager it will be disasterous. I've had 8 tenants in one of my rental markets. Only 2 have been halfway decent. I'd like to shoot the others. I finally learned its pretty much the market (Memphis). Turns out that the tenants there don't have a very good reputation. And I'm not talking anything even remotely resembling a "war zone".

I plan to stick with middle income areas where the underlying demographics and culture pretty much reflect the national average. "Middle America" if you will.