All Forum Posts by: Edward Briley

@Taylor Chiu I am sorry I couldn't resist.  Click the link!!!

https://www.youtube.com/watch?v=WeYsTmIzjkw

@Riley F. What more do you care to know?  Do you want to know the comparables on what properties are selling for in the same neighborhood/area.  I see that you lean that what may be a hot location today, but maybe a Ghetto tomorrow.  Why don't you think the opposite? This is were the real money is made today. 

 Actually I am going to tell you about the home.   The home is assessed for $93,000, comparables in the area could be up to 200 to 300 thousand, even though the home is not valued for that.  The home sits across the street from a public housing community.  I offered less than $25,000 for the home, and it was accepted.  Oh, a little secret I may have forgot to mention, that the housing community is schelduled to be emptied by the end of the year, and demolition is scheduled to begin next spring.  New homes will be built on that property by a private investor group.   So am I betting on appreciation?  No, I just want my $1100 in rent, if the property does explode in price I will only be a bigger winner.  So the bottom line is that can anyone bet on the appreciation of a property?  I would be one that would bet on depreciation. 

I have a property to show you all that I doubt will sell for over $200,000, matter of fact I can show you properties that are better for much less.  However, at the same time, the expected rent on the properties will be $1000 a month, if you could get that much.

Location, Location, Location in real estate, is quickly becoming a fantasy.  Believe it or not. 

@Jay Hinrichs Not really Jay, I know of waterfront properties that are within a couple of miles from it that rent for less, some are located in well over million dollar homes.  Just because a property may sit on prime waterfront property, and are valued for millions of dollars, does not mean that you could rent them for that.  Matter of fact, I know of a property that was setting on a Peninsula  appraised,  for 1.2 million (assessed for 1.5 million) that sold for less than 1/3 of the appraised value, and the property was built in 2007, and was in new condition.  It is saddled between 2 main waterways.  And built on a hill that does not require flood insurance, with a private pier.  The home alone is about 4,000 SF.  I will assure you the buyer of the property will be lucky to get more than $1500 a month in rent for it. 

Wow, I can only set back and laugh at this post on this forum.  Everyone showing numbers in different ways on how to figure out if an area is right to invest in.  I see why someone would want to become a fortune teller, it has to be a booming business.  Increase in population does not mean property values increase in an area.  Actually it may be the exact opposite.  Look at the 50's and 60's.  Home values decreased in the inner cities, and increased in the suburbs. In the 70's and 80's values of real estate came back to the inner cities again, as many people fixed up, or tore down and built new properties.  

I have a little test for all of you to participate in.  There is a property for sale, that sits on a 500 year flood plain.  It backs up to a major interstate.  It is located within 1 mile of the areas largest employers, which the average salary is more than $100,000 a year and that employ more than half of the cities population that is well over 500,000.   To further the information it is also located within 5 miles or a major university. The home is a 3BR/1bath brick home built in 1983, that needs no more than $15,000 in renovations to make it better than the condition when it was originally built.  The home is nearly 1,200 SF and will basically bring in $1100 of guarnteed rent each month if not more.  The lot size is 60 by 150 feet.  Now with all of your figures and statistics, and the information you have shared here, that someone must know the value of the property.  I have contract on the property, what did I offer for the bank to accept it?  Basically most of you should be able to tell me how much the home is worth?

@mark 

@Mark Whittlesey Your are correct.  I read on one of the forums here a few days back that a property owner requires that a renter carries renter insurance in their lease, but not require proof they actually purchased it.  Also, I know of property owners will use funds out of one LLC account to have work performed on another.  Not long ago I hired a contractor to replace dishwashers in 3 of my rental properties.  He gave me a price to do the total job.  I divided the price by 3 and gave him a separate check from each property account.  Many investors will just write one check out of their private funds to do this, or from one of the LLC accounts.  This is alone to prove that the properties are not operated independently, and therefore opens up the person that is suing to attach all of the owners assets.  I am someone that is anal about making sure I show no connection to me or my other LLC properties.   I also, make sure that my lease holders do have renter insurance.   I was reading that many have installed CO/smoke detectors.  Now even to do this you need to be careful.  If the property did not require these, since the property was built, and has been inspected by a code agency and passed,  that actually it is difficult to prove that you have done anything wrong.  Do I have them?  Yes, but I made sure that a Licensed electrician installed them, and that they were code inspected.  Just using a maintenance mechanic to install them does not mean that your property is code compliant, or has been proven safe.  A few hundred bucks here and there, will absolutely protect you, providing you run your LLC is a single business.  Any and everything that is in a lease, has to be strongly enforced, also, rather you like to do it or not. 

 @Taylor Chiu,  

I wonder how long this has been going on in your property?  If the police already have the property under surveillance for the trafficking of drugs, you may have already lost your property for failing to report it.  All they need to prove is that you were told this was happening and you failed to report it, therefore you may find yourself in trouble for hiding or supporting an illegal enterprise.  I am not trying to scare you, but these things do happen. 

Well in this case you do not have a problem.  Call the police when you smell the pot smoke.  The tenants that are doing it will be arrested, and you will be able to evict them without a problem.  Matter of fact, if you know it is going on, and fail to do anything about it, your property is at risk.

@Taylor Chiu Sounds like you have a mess here.  Looks like that greed may have caused a major problem for you.  Best I can understand is that you have a duplex, in which you have rented out rooms in, to 4 separate tenants.   Now you have a problem?  Well first of all do you live on the property?  Is it legal to do this in the community that the property is sitting in?  Most cities it is not.  In the city I live in, that it is not.  It is legal for someone to rent a property and rent rooms in it providing they live on the property.  It is legal for the owner to live in the property and rent rooms in it.  It is not legal for someone to rent separate rooms in it, unless a responsible party lives on or occupies the property.  Now two or more tenants are allowed to rent a property under the same lease agreement of course.  Do you have a designated responsible party that lives on the property?  People used to call them "house mothers".  You do have a big problem, however, the problem you created yourself may cost you much more than rent.  Actually what I can figure out is that you are basically running an unlicensed motel without a manager.

My best advice for someone in your situation is to find a good real estate agent.  Buy them lunch or something and just talk to them.  If you are not a trades person, I would really think deeply about doing it.  Not saying you cannot, but many times you may run into situations that you believe will be inexpensive, and it will be exactly the opposite.   Repairing drywall, painting walls, replacing receptacles, repairing a leaky pipe, putting down carpet is not what a flipper does. To really make money flipping homes you have to be somewhat diverse in the knowledge of all trades, or you will find yourself upside down very quickly.  I normally use what I call the 5 schedule when I view a property.  I estimate the large jobs for $5,000 each. I use this for homes up to 2,000 Sqft, and it works for me. For instance, new HVAC, $5000,  replace plumbing $5000, fix, rewire or upgrade electrical $5000.  New roof $5000.  Drywall, painting, and carpet $5000.  Stripping down the property to the studs,  and preparing for drywall $5000.  Kitchen with cabinets, $5000.  Each bathroom $2500.  Window and door replacements $5000.  Siding upgrade or replacement $5000.   It is hard to say exactly the amount it will cost you in your area, and you may need to adjust for that.  Some things do not cost as much, and some may cost a little more, however, I make sure that I cover myself before I make an offer.  Don't forget exterior concrete either, that may be an additional $5000. You can see that I estimate $50,000 for a 4 or 3BR/2Bath home, and I know the trades that will do the work for pretty much at my estimate or less.  Now my wife and I do the ceramic tile work, and the connection of the plumbing to the sinks, install the appliances, interior doors and vanities.  We also install the towel racks, mirrors etc... The landscaping if feasible, if not I add that also.  I start at this number, and everything I save money on is more money in the bank.  I also put the building permits in my name, and is the homeowner, you are allowed to do this.  With HVAC they may not allow it, unless you are certified with refrigerants.   I have found that this alone will save at least $1000 if not more.  And it has many advantages as well.  You will be surprised on what you will learn from a code inspector.  I don't put lipstick on pigs, I make sure that everything is done correctly and to code or better.  Putting lipstick on pigs will assure that you will not succeed.  Many newbees will contract it all out to a single contractor to get the job done, but in my opinion, if you contract each out separately that you will end up with a better product with higher end finishes and accessories. I buy most of the material myself and furnish them.  I have found that it is less expensive for the electrician to furnish the wiring, and for the roofer to provide the roofing material, which is always 3 Dimensional 30 year asphalt shingle.  Everything is included in the estimate of the job.  If the property has foundation issues I normally stay away from it, however, you may get an engineering company to give you an estimate on the job.  Newer homes tend to cost much less to flip than older ones.  Most homes you flip should take no longer than 4 to 6 weeks, however, I make sure I allow 90 days.