All Forum Posts by: Michael S.

Hi, I am evaluating a flip and wanted to get thoughts from the community regarding a negotiation strategy.

There is a foreclosed townhouse with significant foundation problems (40-60k based on 2 estimates). It is an end unit on a slab, and the adjoining unit is also experiencing some foundation problems as it's being "pulled" by the empty house. Contractor believes either rotting plant debris or underground water source is causing the sinking.

Stats:

Built-2007

Arv- 115-130k

Foundation repair- 40-60k

REO list price- 60k

Foreclosed- dec 2013

In my mind, this deal only makes sense if I negotiate the price down below 40k, AND I get the neighbor on board for some amount of the foundation repairs, maybe 10k. Does anyone have experience with this type of strategy? Basically, the neighbor can't repair his house until the end unit is fixed. He has a vested interest in the end unit getting fixed, rather than just watching it get worse and worse as the foreclosure sits for years.

The neighbor tried to file a claim on the "structural guarantee" provided by the builder but it was denied because the structure didn't fail, but the earth below it did.

Thoughts? Maybe I try to get the HOA on board for some repairs? They remove some blight from the community and everyone's home values should improve once the "sinking house" is fixed.

Title change because the old one sounded like I was soliciting. Mods: can you please delete old post?

Hi folks,

I am active duty military, and I currently have 2 rentals and the house I live in. I would like to go into business with a military buddy of mine holding rentals for cash flow. We will probably want to finance these properties (conventional as co-signers with personal guarantees, nothing "creative" yet). My buddy used to live in the market where we will be buying, and his father is also a full-time landlord in the area. The current plan is to hire his father as a property manager since neither of us live in the target market. Oh by the way, we move on average about once every 2 years, and when we aren't getting ready to move we deploy overseas for 7 months or so at a time. We will be doing one deal at a time, but the goal is to have a decent sized portfolio of property. And, a nice benefit is that my buddy can write off a portion of travel expenses whenever he goes to visit family because he will be performing a business function.

In general, what is a good structure to use for a deal like this? I know we will have to work with an attorney at some point-- I just want to go in well prepared.

I have no desire to acquire anymore rentals where I currently work. The insurance costs are too high.

Thanks in advance!

Hi folks,

I searched the forums for the terms "registered agent for LLC" but couldn't really find anything that applied to my situation. I also plan on buying the NOLO book on LLC's. I am a fan of their books.

I am active duty military, and I currently have 2 rentals and the house I live in. I would like to go into business with a military buddy of mine holding rentals for cashflow. We will probably want to finance these properties (25-30% down). My buddy used to live in the market where we will be buying, and his father is also a full-time landlord in the area. The current plan is to hire his father as a property manager since neither of us live in the target market. Oh by the way, we move on average about once every 2 years, and when we aren't getting ready to move we deploy overseas for 7 months or so at a time. We will be doing one deal at a time, but the goal is to have a decent sized portfolio of property. And, a nice benefit is that my buddy can write off a portion of travel expenses whenever he goes to visit family because he will be performing a business function.

In general, what is a good structure to use for a deal like this? I know we will have to work with an attorney at some point-- I just want to go in well prepared.

I have no desire to acquire anymore rentals where I currently work. The insurance costs are too high.

Thanks in advance!

@Joe Delia

Do you think legalzoom.com is stealing business from lawyers, Kelly Blue Book is stealing business from car dealerships, and Lowes is stealing business from the mom-and-pop hardware store? If you said yes, you would be right-- but that doesn't make it wrong or preventable.

Does anyone use deposit slips, and have the tenant mail their check directly to your bank with one of your deposit slip? I like this idea because it saves a step and a stamp on your part. If you do, how exactly does it work? Do they need to put anything special on the back of the check or the deposit slip?

@Jessica S. I also have an older tenant who doesn't do the internet, and this idea is for her.

OK, it makes sense that the company would do whatever they could to exclude "pre-existing conditions," to use a medical insurance term.

I am inclined not to believe the agent's interpretation of how the home warranty works, and instead try to negotiate for closing costs.

Hello everyone,

I read the first 5 pages of results for the search term "home warranty" but didn't find anything that addressed this question.

I am buying a VA foreclosure, and the inspection determined that the air handler was faulty (heat only worked on "emergency"). One course of action is to negotiate for an extra $4k in closing costs or back out of the deal and make a new offer with those specifics. The other possibility is to request the seller pay for a home warranty. I haven't seen any specifics on the policy, but it seemed a little shady to get a home warranty to pay for something that I already know is broken. The agent said if the seller pays for it, then I will be fine filing a claim even though I knew about the defect prior to the execution of the policy. Likewise, she said if I pay for the policy, then I can't file a claim on that specific damage.

I will try to get my hands on the exact literature of one of these companies' policies, but I wanted to get your thoughts first.

Amplifying information: I like the price, and would have paid $5k more-- enough to cover the cost of the HVAC repairs. It is a townhouse built in 2007 with minimal damage besides the AC. It has been listed as an REO for 13 months, with the asking price dropping from $122k -> $65k (with our offer at $60k). This will be owner occupied for 1.5 years, then I will either rent of sell it.

Thanks!

This is only available if you are self-employed or your employer specifically allows you the option of a self-directed 401(k) correct?

The military TSP has got to be the worst 401(k) type plan out there: no matching and only about 5 funds to choose from. They just started a Roth option though, which is pretty nice.

I recommend you become a student of that homepath website and try to document their behavior, like you are Jane Goodall watching some gorillas.

In my area, they drop the price about 7.5% every 30 days the house is on the market for the most part, almost like clockwork. Also, in my experience they won't go above about 1.5% for closing costs. They seemed to care little whether you were a cash buyer or not, and therefore not give much of a discount. They also probably don't even have title to they property you are looking at right now, some bank does. They will wait until the property is under contract, then go through the process of getting clean title in their name in order to sell to you. So, you probably won't be able to close as quick as you would with a squared-away human seller.

All of the above was based on my experience. Yours may be different.

I closed on a Homepath property in November of 2013 using a homepath investor loan with 10% down. The rate was about 0.5% above the market fate for a conventional loan, but for me that was worth not having to put down the traditional 20%.

I did not have to get an appraisal.

Based on your use of the term ARV it sounds like you are thinking about flipping one of these Homepath houses. You will probably have a "no flipping" clause if you try to buy the house-- I know I did. I forget the specifics, but it says you can't sell the house for more than a 25% gain in less than about 4 months... or something like that.