All Forum Posts by: Robert LaPrelle

It sounds to me like that particular attorney is making some assumptions that may or may not be true. In my area, someone being foreclosed on can pay off the debt right up until the auction takes place and restore their title. On the other hand, if you are doing a short sale (not paying enough for the property for the seller to pay of the debt), then you would definitely need approval from the lender. I have never known the lender to care about my credit, unless I was trying to assume the mortgage.

My recommendation would be to call around (to real estate agents, mortgage companies, etc) asking for a referral to a lawyer who specializes in this type of situation. I definitely recommend having a GOOD lawyer for this transaction and following his advice meticulously.

The bad news is that no simple formula you could come up with would be at all accurate. Taxes vary wildly from region to region. Insurance can be startlingly different between two houses on the same street.

The good news is that tax information is (usually) publicly available (I use Zillow for that) and that there are lots of easy-to-find mortgage calculators out there for free. Insurance can be a little harder, but insurance agents are usually glad to get you a quote for free.

Probably not the answer you were hoping for, but I wouldn't trust any shortcuts.

In situations like this, I always recommend talking to a lawyer. I can talk about how things work in my town and state, but it can vary wildly.

That being said, my first step would be to notify your tenant that you have become aware that they are in violation of the terms of the lease and that they either need to comply or vacate.

I do have to say that, knowing only what you have mentioned above, I (personally) would not take action at this time. A good tenant is a valuable commodity and I would not want to risk losing them. I might step up inspections to make sure that my house is being taken care of, but I would work hard to keep my disagreement with a former employee from spoiling my relationship with a valued tenant. Of course, everything above might be simple ignorance since there's a lot I don't know (ie maybe your fired them for selling drugs). Just my two cents.

Well, if the deal is good, then I would look for partners. The down payment on my first several investments came from my father. I repaid his initial investment with interest on a 20 year amortization, and he had a 20% interest in the property. After about 5 years, I started to refinance, getting enough out to pay him back and fund my next deal.

Lots of other options  (hard money lenders, etc) that I won't try to talk about because I've never done them. Anyone else want to weigh in with their story?

I think that there is a lot of value to ending things on a good note. He will work harder to keep you happy when he moves out if you can keep things positive. I am particularly fond of the something along the lines of "Well, you know that by moving out in December, you're putting me in a position where I'm going to be losing money for a few months. What do you think would be a fair deal?" 

I am mostly in southwestern Virginia. My bread-and-butter used to be duplexes, but its getting harder and harder to find a good deal. The market is getting flooded with townhouses and people aren't that willing to pay extra for their own yard.

Good luck with your search!

It really depends. I would definitely recommend having a reserve, but I would NOT recommend having a separate reserve for each property. One of the advantages of scale, is that even though you need a bigger reserve in total, it can be smaller per unit. When I owned a single unit, I kept about $5,000 - $10,000 in reserve and I think that was a little risky. I have about 25 units now, and only keep about $25,000 in reserve that I never even use. When one unit is empty and needs repairs, the cashflow from the other units will usually make up the difference. I keep the reserve in case there is a bad storm and I end up needing 5 new roofs in a single month.

Also, I guess it should be said: always pay down high interest loans (like credit cards) first!

Those limitations vary between banks, but I expect that you're actually thinking of the rules that limit you to 10 simultaneous personal mortgages. (Note: simultaneous, not per lifetime.) My bank will only write me 10 personal loans at one time, but they have offered to write me as many business loans as I want, so long as the numbers make sense. I recommend talking to a few banks (especially small, local banks instead of the big chains) and a few mortgage brokers to get a sense of what your options are.

It all depends on the math. How much will it cost to build? What will your monthly payments be on the financing? What will your monthly/capital expenses be? BP has a lot of resources for estimating these and if the numbers work, then you should go for it. If the numbers don't work then skip it. 

Use whatever you believe you can currently sell it for. For all intents and purposes, that is what it is costing you to keep it as an investment.