All Forum Posts by: Randy E.

 Jennifer, after contemplating RE investing for way too many years, I finally decided to get serious and start saving money.  With no money, I had nothing to invest.  If I wanted to be a RE investor, I needed money to invest.  So I started saving.  I cut all the frills from my life from buying xmas gifts, to going out to the bar with friends, to going out to eat, to even buying beer and soda.  Even so, it took me nearly three years to save enough to put me in position to buy my first cheap (super cheap) rental house.

Yes, if you don't earn six figures, it might take you years to save enough to put down on a rental property.  When confronted with that reality, we have two choices.  1) use it as one of many excuses to give up and quit before even getting started. 2) buckle down and do the hard work necessary to achieve a very rewarding goal.  

It's your choice.

Me?  I'm glad I did it.  My life and my children's lives are very much the better for the saving and planning I started over a decade ago.  If I had given up and quit, my life would be much more unsatisfying right now.

LOL.   I've had that happen.  And I didn't hardly remember the earlier "favor".  

I might accept the one-time offer, and make sure the tenant understood it was needed only for one time.  If you don't own a lawnmower, and if the tenant would like to keep cutting the entire lawn, I would create an agreement that paid him for his efforts.  Pay him $20/month with a check.  Or do it yourself.

But, if he cuts the entire lawn for free for an indefinite amount of time, at some point he's going to expect reciprocal "special" treatment from you.  No late fee.  Ceiling fans.  Allow him to paint the living room neon chartreuse.  At move-out, overlook "minor" damage.  And honestly, he wouldn't really be wrong in expecting it.  If I cut your grass for free for two years, then you charged me a $50 late fee one month, it would strike me as ... not a neighborly thing to do.  

Either be a landlord, or a neighbor.  You can be kind and respectful without crossing the line.

 When it comes to "to do, or not to do" I'm okay with your financial situation.  I agree that it would be nicer to have more money, because, well it's always nicer to have more money.  I disagree with the sentiment that it is crucial to have a lot more money.  Sometimes, new investors with less-than-bigger pockets have to start where they can.

I'm mostly okay with the condition as it looks in the pictures.  It's going to take a lot of cleaning, plus the windows and such that you mentioned.  I'd pay special attention to the roof -- if your funds are going to be tight, you don't want to have to deal with getting a new roof too soon in this investment endeavor.  Make sure that roof has some more mileage in it.  What's the heating/cooling situation?  You can get by for now with having the tenants supply their own window units, but the municipalities in NC where my rentals are stipulate landlords must provide a heat source.  Make sure the heater works or is in a repairable condition.  Also, unless you can do plumbing work yourself, it will almost be a given for a rental like that one that some plumbing work needs to be done, so you should account for that in your repair estimates.

If you feel confident you have the requisite life experience to manage low-income tenants, I'm okay with the neighborhood.  The biggest problem with low-income rentals isn't necessarily the tenants, it's the ineptitude of the landlord in screening and effectively communicating with the tenant base.  If you KNOW you can do that adequately, the neighborhood is not a red flag.  If you are not CONFIDENT you can screen and communicate with that tenant base, you should not buy this property, or any other property in a low-income neighborhood.

For me, the biggest red flag is the rental being over an hour from you.  I know from experience that for a landlord+parent, a 2-hour roundtrip commute is not as easy as you might assume.  A few months ago, I bought a rental about an hour from me, thinking it would be only a minor inconvenience.  Now that it is rented, yes, it is an acceptable commute for me as a self-managing landlord.  However, during the rehab process, I have to admit it proved to be very difficult for me at times.  I'm not saying you can't do it.  Indeed, now that I've gone through the crucible of the process, I'm more than willing to do it again.  In fact, I plan to buy another property 1 hour away in the next few weeks.  But you cannot underestimate how much that commute is going to alter your schedule and life until the rehab is complete and the unit is rented.  And if you happen to screen poorly and install unfit tenants, that commute will continue to disrupt your life and your kids' lives.  For my local rentals, this is almost never an issue.  For that one-hour rental, it was a big difference.  If you have a full-time job, that will be another hindrance to being a commuting landlord.  

If possible, I strongly suggest you look a little closer to home.  If you were childless and single, I'd urge you to jump in.  But you're not, and you have to take that into account.

 I am not a lawyer and have nothing useful to say about the legal aspects of your situation.

From a personal standpoint, I would assume there may have been a financial and/or time reason for her failure to complete the quit claim deed.  Assuming she knows very little about RE, she will probably use a lawyer to handle the details of the quit claim deed.  That entails both money and time, and she may not have had the opportunity to expend either within 5 days of the divorce.

Were I in your shoes, I'd engage an attorney to draft the quit claim deed, inform the ex to contact the attorney's office and arrange a time for her to go sign, and that would be that.  Make it easy for her to help you by setting up and paying for the attorney yourself.

If, after you set things up, she refuses to sign, then I would take the step stipulated in your agreement.  But before going that route, I'd try for the peaceful solution.  If you do as teh agreement stipulates, you'll still end up paying a lawyer to try to remove her name from the deed.  Allowing her the opportunity to sign on her own with an attorney you paid for might help keep the peace.

Good luck!

 Avoiding the "should I?" portion and assuming this is a decision you have already made ...

The idea has its pros.  

1) You will be "retired" from your previous job.  Your time will be your own.  

2) You will be "creating" increased cash flow to enable a more comfortable "retirement."

3) Your "retirement" will not be a true retirement, but an opportunity to create the time (day-to-day, as well as time over months and years) necessary for you to support yourself indefinitely at a certain financial level, while you try to increase your income through further REI.

I like the idea and applaud you for taking the chance.  Sure, you could slug it out at your job for another 10 years and try to pick up a property here and there, stealing time from your day job and from sleep while you try to create the life you really want.  But, why wait for that life you really want if you have figured out how to jump into it now?  If you have truly calculated your financial responsibilities correctly and you know you can meet your current needs, I vote "go for it."

One thing I would do, perhaps a little different.  I would suggest retaining a portion of your cash for an emergency fund, a quick-acquisition fund, or whatever you would call it.  I would also do all I could before your job ended to create a LoC using the rentals as collateral, while you still have a w2 income.

Good luck!

 Thuy, this is a segment that can work for investors with the proper skillset.  For those who don't know and don't have what it takes, it will likely be a failure.

IMO, one huge factor is the investor/landlord must be comfortable with the intended customer base.  If the thought of walking around the neighborhood at dusk strikes you as preposterous, you should not invest there.  If you can envision yourself knocking on a random door on the street and talking to whoever opens it, that's a good start.  

I don't say this to indicate the neighborhood in question is not a quote-unquote "high crime area."  I say this to say that whatever the socio-economic make-up of the neighborhood, an investor must feel comfortable interacting with the residents of that neighborhood.  If you don't understand your customer base, it's going to be hard to effectively communicate with your customer base.  It's going to be difficult to "read" each applicant.  For instance, if you have never lived in such a neighborhood, if you have never had friends/classmates/co-workers that you were close to who were from such neighborhoods, then you probably don't have the experience necessary to invest in such neighborhoods.

You must know yourself well enough and be honest enough to know that you can feel comfortable interacting with the people who will be turning your investments into money.  If the answer is you can't, then you should pass and invest in a different segment.

 Yes.  Here is the Greensboro NC forum: 

https://www.biggerpockets.com/forums/727-greensbor...

 The biggest challenge these days with tax auction sales in NC is the upset bid period.  Once the auction is over, there is a 10-day period where the county holds up the sale waiting for anyone to bid more than the winning bid.  Once an upset bid is made, a new 10-day period begins and the county holds up the sale waiting for more upset bids.  It's not unusual in hot markets for some houses to spend months in the upset bid process.  Winning the original auction is only the beginning of the process.  

And from what I saw the last time I checked, most of the end winning prices are that far off from what it would be if the house had been on the open market.  4 years ago, there were great deals to be found at tax auctions in NC.  These days, not so much.  At least, not in the larger cities.

 I've used the Glacier Bay before.  I've also used American Standard.  For a name-brand conscious landlord, there is even a Kohler for $150, but I wouldn't pay that much for a rental toilet.  It's a wasted $60 for me.

 Philip, there will definitely be bumps in the road.  And you will definitely overpay from time to time.  The key is to learn from past mistakes and not make the exact same mistake again in the future.

Trust the landlords who have responded that paying $600 for a new toilet+labor was highway robbery.

Go to Lowes.com and look up toilets.  You will see over a dozen.  Like the other response, I have a $90 toilet in my personal home and a more expensive one.  They work the same.  I would never install a $200+ toilet in my rentals, because you never know when a tenant is going to break it.  Besides, tenants don't pay more rent because I paid for a high-end toilet.  It's a waste landlord money.

Good luck to you!