All Forum Posts by: Rick Albert

Bring in an attorney and pay them the hourly rate to handle the transaction. Will still be less than Realtor fees and you are protected. 

Here are a couple of thoughts:

1. What time in the morning? Are we talking 7:30A or 3:30A? It makes a huge difference.

2. It is a judgement call and obviously I'm not there, but one could argue that it is a reasonable assumption that it is going to be loud when kids are present. Kids can be loud, whether intentionally or not. But there might be an expectation of a loud household when a family is present. That's likely why the other tenants haven't said anything.

3. I'm not an attorney but I would not kick them out. Leave them month to month. You don't have to renew. The last thing you need is a disgruntled tenant saying that you kicked them out because they are a family. You can attempt to say it's because of the noise, not because of the family status, but then a judge MIGHT go to my above point and you are screwed.  

4. Whatever you do for one tenant, do for all. I like the idea of quiet hours and it applies to everyone. 

5. Future tenants may not like it. It is what it is until the family leaves. 

Every market is different, but generally speaking from a California perspective is having the license does absolutely nothing to help you with investing. It also does not help you with negotiations, deal calculations, etc. These aren't investment licenses, they are salespeople's licenses. 

There are also costs to having the license each year and you have to hang your license with a broker. 

It will ultimately depend on how many properties you plan on buying each year. If you were buying 10 properties a year, then it might be worth it. If you are buying one every few years, don't waste your time.

Plus there are other advantages to having separate representation like they schedule the showings, do the paperwork, deal with inspectors, etc. Your dollar per hour matters.

If you are doing business based on a Zestimate, you have a big problem. Zillow is notorious for being inaccurate. It doesn't account for condition, views, or really any amenities that could affect the value.

Basically what I'm saying is who cares what Zillow says? Plus if I'm reading your post correctly, if you did it without permits, depending on your market it may not have much value anyways.

I've never seen a tenant come in with a tape measure. With that said, it is often times about the feeling a space gives. Countertop space is a nice commodity when it comes to bathrooms. But if you put in a 42 in will it be awkward. 

You can also do a cost analysis. The cost of moving things around to accommodate the 42 inches versus just having a slightly lower price might make more sense.

The third piece of advice is look at the comps. See what they are doing and that's really your best answer.

 Every state has different laws. Georgia might be a buyer beware state like most where it is up to you to do your due diligence. 

For example, in California, if you found out about the unpermitted bathroom and the Seller had knowledge of that fact, then you might have grounds. But you have to prove it.

In GA, it MAY be that a Seller has to disclose material facts and then you have to argue if that is in fact material. 

I highly recommend you consult an attorney. I think the biggest issue is you went in with a full contingency release so you basically waived your right to inspect all of this anyways.

Where is this? Chances are you are SOL. In most cases it is a buyer beware situation and you should have done your due diligence. I had a similar situation in Nashville where the Seller/Agent misrepresented the separate meters. We consulted an attorney and he said that we could have counted the meters during the due diligence period. 

The square footage in the MLS is for marketing purposes. Agents put whatever they feel is necessary. You could have looked in public records prior to submitting.

For example for a while in Los Angeles new construction was counting the garages in the total square footage. 

The challenge is you have to prove that the seller misrepresented. For example, if they said that the basement was not part of the square footage but you find out it is. 

I understand that submitting non contingent offers makes you competitive, but it is never a good idea. Take this as an unfortunate lesson. I never recommend my clients do non-contingent offers, even if they want to. The only exception MIGHT be if they are going to tear down the house anyways and paying cash where everything is straightforward. 

Do you have the ability to create the ADU yourself by converting the garage? There is the FHA 203(k) loan that you could use. That's what I did. That might be your best bet. This way you can be in the best neighborhood that you want and you can get cashflow. Plus if you are in the good area, you should get better rents.

Hey Monica,

A couple of things to consider:

1. The less you put down, the higher the payments, which would make it difficult to cash flow. With that said, preserving cash gives you the advantage to scale. For example, you put less down, house hack for a while, then later on refinance if it makes sense. At that point not only will there hopefully be appreciation, but you are guaranteed loan buy down, which means if you truly needed to hit that 20%, you could invest less dollars to do it. If anything, you could use the difference to buy another property, where the cash flow there could offset the difference here.

2. You are partnering with your sister which is great. But going into business with family can be tricky. Have clear expectations on roles, business decisions, and what happens if you disagree on something. This kind of answers your second question. 

You are on the right track. Good luck!

There is a couple of things to think about (I've house hacked two fixers here in LA and leveraged to build my portfolio):

1. James did this strategy over the years. He also benefited from mass appreciation, lower construction costs, and low interest rates. It was a very different climate. I'm not saying he isn't good at what he does (he continues to have a great track record), but it's almost like a different world today.

2. I agree with what others are saying. Two years isn't quite enough time anymore unless you get a stellar deal. Not to say they aren't out there, but if you don't have the resources or experience, it can be tricky.

3. Talk to your CPA. Just because you lived in the property two of the last five years, you will have to pay back depreciation, etc. when you sell if it was a rental. To be fair, it is a better strategy because you may make it up in loan buy down and appreciation.

4. You can likely make it work in any market. The advantage of higher priced markets is that you have bigger loan buy down and bigger dollar appreciation (3% on a $1M asset versus 3% on a $100K asset). 

5. If you are constantly selling properties to scale up, how does that benefit you? Wealth is built in passive, long term income, not "quick" flips. James also has rental properties, etc.