All Forum Posts by: Adam Smith

I'm in the process of approving/rejecting an application for a rental. While I got a great recommendation from his current boss, where he's worked for over 15 years, I can't reach his current or previous landlords. I've left several messages and even asked the tenant to have his landlord call me. Nothing.

Reject, or have him go ahead and pay for his credit check and see what that shows?

Thanks!

Kevin,

Thank you for the response! I have a couple of questions. Firstly, what do you mean by current and future value calculations? Do you mean getting comps so I know what the property is worth? I suspect you mean something else.

Also, where do most of your purchases come from? Other investors? How do you get them to sell for less than retail at near market rates? Obviously you can remind them they'll be making X amount in interest over the years which would compensate for a lower sale price, but if I were an investor offering seller financing to say Joe Homeowner, I wouldn't budge on price, it would be retail or nothing, maybe higher because I'm offering something they can't get at a bank.

Thanks for the input!

I'm about to purchase my second rental using traditional means (20% down, bank, blah), but want to acquire my third property faster this time around. A very successful investor I met suggested going to my local REI meeting and telling everyone I'm looking to buy a seller financed home.

He stated that even if I paid full market value, as long as it cash flowed, it was worth it, since the return on zero down is infinite.

If you were looking to purchase a buy-and-hold rental in this manner, what sort of terms would you look for that would be fair to both parties involved? Using their rent roll, amusing it was a rental, how would you know the max price you would pay?

1) Purchase Price
2) Interest Rate
3) Down Payment
4) Amortization/Balloon Payment
5) Pre-Payment Penalty
6) Other??

Thanks!

Luis,

No, these are different. They are large sheets that can be cut to any size needed.

I stay in a lot of newer or remodeled hotels and have noticed a trend in the way the showers are done. They are made with these large sheets that are simply cut and glued in place with a caulk like in the corners, and a thicker edge piece running down the sides. It looks like real tile, but isn't. Does anyone know where to buy these, other than having the job done by Bath Fitter or the like?

J Scott, thanks again, great info. It is true that once you've worked on a few houses, you get a sense of what repairs will cost you and what to look for during an inspection. There are also books out there that teach you how to do an inspection.

I know you are a flipper, whereas I'm buying and holding, but getting back to making a "clean" offer, what is the formula that you use to do so?

On my last purchase I found the market value of my house using comps, subtracted about 25%, subtracted my estimated repair cost, subtracted my estimated holding costs to do repairs, and came up with a max offer. I offered below that and after a few counter offers, got them below my max and accepted the offer. Obviously your formula is different for a flip, but is this basically what you do to come up with what a "clean" offer is?

Adam

So that I understand correctly, your EMD is only "taken" if your offer is accepted, correct? So if I knew I wanted a property, and offered say double the minimum EMD, but my offer was rejected, I would not lose the EMD, correct?.

Chris, when you say make the EMD non refundable, you mean basically removing any contingencies that would allow you to back out AFTER your offer had been accepted, right? In other words, make sure your financing is iron-clad, and you know how to do your own inspections?

Thank you for clarifying.

Will, GREAT information! For someone just starting out, it's very helpful!

I would think the listing agent is submitting the offer, but the bank is simply refusing it.

I'm sure there are a few posts for this floating around, but I wanted to bring it up again and open up some ideas.

How do YOU get the banks to accept your offer, either short sale or REO?

My first (and only, to date) investment property was a 4 year-old house owned by the bank. I jumped at the opportunity to own a near-new house as a rental in an up and coming neighborhood. The list price was $119,000. I offered $101,000, and eventually accepted an offer for $107,100. The house was worth approximately $155,000, not too bad for my first time.

I did this all wrong. Knowing what I know now, I would have done some things different. As soon as you walked in this house, there were some obvious problems with the house, MOLD being the first one. I feel if I had taken pictures (lots of them), and had a mold inspection done on the spot with proof that the home had mold, and submitted all of that evidence to the bank with an offer of say $85,000, I just might have gotten it, or gotten a good counter offer way south of my actual accepted offer.

What do YOU do? Test for mold? Test for lead paint? Get several contractor estimates to fix it up, and submit the HIGHEST one, knowing it won't actually cost that much? What are the pros doing to consistently get the bank to become very, very motivated and accept an offer much lower than their asking price?

Chime in!

Adam