All Forum Posts by: Richard Balsam

Depends on what you are doing. For basic closings like converting a lease option into owner finance, or any financed purchase, almost any attorney will do. If you have a specific creative finance need like a double closing, or creating a seller financed note (if you are buyer) you can call Joshua Rand at Rand and Associates. If you want your own paperwork, or review of existing paperwork, Josh can do that, but so can many others. I've found that the more detail you need or the more creative, the higher the attorney fees. For example, my last double closing costs me almost $1300 in attorney fees + title insurance cost + misc fees that all closings have. Don't be surprised at closing when your side has $2500+ in fees or more. Many investors think closings are mostly paid by your buyer and you get to keep all profit. After 19 years doing this...I've learned!

As an agent myself, I would be careful with advise you receive from non-agents. I would recommend you contact GAR - since they know the details of their forms, laws, etc. If all contracts are assignable unless stated otherwise, then you have nothing to lose when you ask them. Either it's legal or it's not. I have never done one before, but I would think it's legal, but as you know, it's your license on the line if someone reports you. If you have proof from speaking with GAR, you're fine. If they don't feel it's in the "spirit of the contract" - then, it's a judgement call. I would shy away, but maybe try a different route, as long as your broker understands what you're trying to do. 

I would look into two scenarios to boost your monthly cash flow and lock in the high ARV:

1. Sell a turnkey rental with 20% down. The monthly cash flow is from the new investor. You can sell the home a little above ARV with a positive cash flowing property. You can then keep this down payment and sell off monthly payments from the investor. For example, investor pays you $20K down. Sell off the next 36 months of cash flow, and receive $40K-50K from a note investor. After these months, the cash flow is back to you. Rise and repeat.

2. Sell a stream of rental income to a note investor. For example: sell 36 monthly payments for a large dollar amount now. take the funds, buy another rental, rinse and repeat. In 36 months, the original property cash flow reverts back to you. Do it again, take the funds, buy another rental.

I would pay close attention to the proposed California new tax on property owned three years or less. This is more for flips than rentals, just be aware that you will need to hold any property you buy for at least this long- if it passes.

What you need is a Magistrate judge to sign off on the eviction - problem solved. If you didn't file an eviction yet- nobody will help you. If you did file, they had 7 days to answer. if not- you will win by default, If they show up, the judge will, in most cases, give them 7 days to vacate. Most will not vacate anyway. They enjoy getting their stuff tossed onto the driveway, and act surprised when it happens. The judge will sign the Dispossessary order. Take that signed order to either the Sheriff's office...or here's a "pro" tip: Hire an eviction company (yes- Google them). They have the necessary manpower to remove everything within 90 minutes ( the max allowed by most county rules). Some counties ( like Gwinnett) mandate 2 helpers per bedroom, no exceptions -  3 br house requires 6 helpers, etc).Eviction companies hire a Sherriff for the day, and perform as many evictions as they can in one day, per county. Sometimes you have to wait another week, depending on how busy they are. Once they are done, the sheriff watching them signs off on a finished eviction. When this happens, you are like teflon - the tenants cannot sue anyone for a county supervised eviction - even when the neighbors take from the pile of junk on the driveway. Toss their stuff out after 24 hours. Yes- hire a dumpster, or use the eviction company guys ( sometimes they will make you an offer to remove the stuff when the sheriff leaves...ask me how I know this). Remove all, change the locks, maybe install a camera or two just in case, and done. In one case, I've even had to tow the tenants car. He lost everything - only cared about his car ( a Cadillac, of course) - but didn't pay the rent. I usually evict annually - for 17 years now.

I read all the posts- good advice here. I've been renting homes since 2004 full time. My wife tells me I should write a book of all things that can go wrong. I will not scare you - don't worry! If you want to know things to watch for, while having a razor thin margin ( after all cap-ex, vacancy., etc. are removed):

1. Mandatory: If you are buying 4 properties at one time, do not purchase without an inspection, since they are occupied. If the homes were vacant, I most likely would not need an inspection, since I know what to look for. Here are major items overlooked by lots of new investors that will eat up any profits for the year: 

Termites: Look for dirt "trails" in the lower portion of each house. Termites are eaten by ants - are there any ant trails? Any ant mounds near the base of the home? Is there any evidence of termites -inside/outside? Any cement previously drilled through where a termite company injected their chemical and patched the concrete? Any termite plastic traps (with wood bait inside) around the perimeter of the home- that look "old"?

HVAC: Do they exist?...or only window AC? Does each house have both types? That screams that the main units do not work. Guess who's responsible for the $4K+ bill when you either sell them retail or try and get tenants? 

Water heater: not as big a deal as the above...but they tend to last 10-15 years max. They will usually start leaking before stop working. Maybe the burner needs replacing - you'll know when a tenant tells you no hot water. Figure on $1100 each to replace, $300-400 if the burner needs replacing and you call a handyman/plumber.

Roof: Are you sure the roof is in good shape right now? Just because it's not leaking doesn't mean there isn't hail or wind damage to the shingles (happens a lot here in GA- I've replaced more roofs than I care to remember). A roof inspection may save you $7K per house.

Mold/radon: A thorough inspection inside will reveal a lot. I've found mold behind the baseboards - due to the tenant not running the AC in the summer months. AC acts like a dehumidifier. Humidity built up behind each of the baseboards - found out when replacing the flooring and I pulled off a board- all green mold behind it. Had to remove every one and replace. Radon- can't smell it. You're legally responsible if any exists and tenant gets sick. Also- must prove when selling retail that it is below gov't standards.

The above are most of the larger items to inspect before buying. Remember- if you plan on operating at $90/door per month, that's $4300/year with four houses, gross income- not net. Your cap-ex of 7% will help - but may not cover a large expense...depends on when something needs replacing. Also-any of the above can wipe out any profits for the next year or more. The good news...usually only one thing happens at a time, and not to all properties. Just be aware that this stuff always exists. 

For the record, if you show $356/month to cover 4 individual houses - I would not consider this. if you are able to lower the price of the purchase - it may make it more palatable...maybe. Good luck!

There is so much to learn before you go out and try and buy raw land. Most investors stay away due to the complexities of it that aren't issues when dealing with existing properties. For example, the topography of the land will dictate costs to build the same 5 acre lot- is it flat or hilly? Does the county and/or city have restrictions on density? What about sewer vs septic - costs to hook up into a sewer system may be prohibitive on a 5 acre lot, but not on a 100 acre site. You ask about green space - on a 5 acre lot? That should be way down on your list of must-have's. It is mostly to create a desirable location for buyers to live- rather than something the county/city will require- on a five acre lot. Most likely, they will be more concerned about density, and exterior factors that blend into an "approved" design - if any. I recommend you contact a commercial land division of a major brokerage- I'm sure they can answer a lot of your questions or know who to contact, rather than just asking around. Also- they would know available inventory, and possible off market inventory.

Before you get your license- try and understand the mindset of an agent. Listen to podcasts specific to agents - and understand their challenges, annual costs, and the necessary tools needed to take a listing and what it takes to sell. It's not just fill out the paperwork and wait for a full price offer. I've been licensed for a long time ( since 1991)...I keep my license actibe mostly for myself- not to list other homes. Been there, done that as they say. I listen to podcasts all during the week - for investors, agents, and for generic ones for selling. For real estate - I highly recommend you listen to REDX Podcast ( among the best out there), and even Real Estate Uncensored ( put on by a few of the country's top agents - and funny too). Once you see what's at stake, and how it can help you, then decide if you want to commit the time necessary to pass the exam. It's a tough exam - depending on your state. I also got my Broker's license - which was harder than my GMAT test to get my MBA years ago! But- those that have their license will say it's definitely worth it. Those that don't have their license say you don't need one ( which is true - depending on your goals). So- it's specific to the individual and if they plan on using it going forward. If you flip a house- is it worth it to list your the house and save 3% ( $9-12K++) per deal? Is is worth it to get the most current MLS data? No...Zillow does not have the most current data - and it misses a ton of sales in all areas. Didn't Zillow just quit the house buying business, losing over $340 million in the process? So much for their Zestimate being accurate! Any agent will tell you this too. Good luck!

I've lived in Alpharetta for 22 years now. I have been lease optioning and owner financing since 2004. If you're asking for advice from others than have "been there done that", my advise is to sell. Here's why:

We are in unprecedented times regarding appreciation. You have earned more on appreciation than you ever will renting out at $350 profit/month. Let that sink in. When given the "gift" of appreciation, don't hold out for $4k/year in rental profits. Let me give you examples of why: I own mostly in Gwinnett, with only one in Johns Creek. I've had that house since 2007. Same tenant. He fell on hard times in 2009 ( the last recession) and still owes me a lot of money. I am thinking of terminating his lease when it's done mainly due to the appreciation on the home. His Option on the home has been increasing 3% per year since 2009. He will never be able to buy the home. It has on average, $2-3K in expenses every year. One year, a new subdivision starts- and they clear the land behind the house. Next, Norway rats occupy the roofs of my neighbors attics - and mine. $3,500 later, rats gone ( seal outside roof line of house, remove all insulation and replace in attic). Next year, limb from a large tree near the house drops and goes through the roof ($900) - only because my handyman helped me- not a roof company that wanted $2000. Next year, AC stops working. Next year, siding needed replacement on both sides of the house ($2700), This year- fence needs to be removed and replaced ($2100)  (literally falling down from the earth shifting from drainage of subdivision behind us. See the issue...it's never ending with problems. Think it's just this house? I can go on with examples of dozens of homes I owned over the years. Things happen. The older the home- the more things happen. They don't tell you this in the courses. If I sell this home now- I will reap $100K above the option price ( after the 3% increases annually). If I hold on, I collect a decent amount of rent profit ( beyond what I pay in expenses of course) - but "you can't eat equity" as the saying goes.

What could possibly go wrong with your townhome when renting it out? Probably nothing. Maybe something. Can you hold on if something were to happen? What if your tenant loses his/her job? What if he/she refuses the vaccine and gets fired from their employment? What if they destroy the place? What if the HOA decides to replace the roof, or pave the parking area and impose a separate fee on the owners? What if... you get the idea. Is this worth $350/month - when sitting on a huge tax free windfall of profits? Only you can decide. I know my answer from 17 years in the business.

I'd like to meet with everyone there. First time at your event. Looking forward to it.

I know a lot about the N. GA area since I've lived here for over 22 years. Just because there are homes elsewhere in the same town doesn't mean their value translates into a comparable value for this home. If a wholesaler lowered their price by half- that tells me a lot. You're saying the home is in very rough shape. That says a lot too. The seller may be unreasonable, as many feel their home is worth more than the market will provide. It's not just the physical condition you see that determines value. It's location, location, location...right? Then, subtract all the repairs needed. Not just the repairs though. Many folks forget about the hidden costs associated with a used house - that add a ton to the cost of repairs. For starters, how old are the sewer lines? If they are old, are they lead cast? If so, most codes require them to be replaced. Lead paint on the walls? Abspestos anywhere in the walls? Is the electrical panel up to code...or wiring made of aluminum - or not 15 amp service? Is the home on sewer on septic? If septic- when was it last inspected, or does it need to be replaced? That's easily $10K++. Is there HVAC service - with ductwork installed? Then, we can discuss the physical condition of the foundation, mold issues, termites, etc. Tons of things that aren't apparent with a walk through that have deep expenses to fix, before even getting to the layout and upgrade to make the house "pretty" enough for the market to agree on a price. Since this house is in an area without recent comps, I would be afraid of all the upgrades to have a home sit without a buyer in sight. Maybe she should take the $75K offer - assuming the wholesaler can find a cash buyer at their markup...I have my doubts from what you had described about the house. Most homes are relatively easy to comp and repairs are readily defined before a cash offer is made. This house sounds like it wouldn't fit easily into a standard cash buyer's portfolio - since other homes would be easier to upgrade and sell. I hope this helps.