All Forum Posts by: Rodney Sums

@Account Closed certainly the issue with the HOA is of high concern as well as the taxes. I would certainly do my due diligence to ensure the HOA is paid, continues to be paid, and hasn't begun any foreclosure if I proceed with a master lease. The objective is to take over in the owner's place so things like this don't happen again and earn a return on my investment for satisfying these debts and managing the property. This friend has issues bigger than getting a job. Their situation is where the opportunity presents itself as an investor.

However I do see your point in the strategy of doing owner financing instead.  

A good friend of mine owns a condo free and clear. They are unfortunately way behind on HOA dues which resulted in a lien. They are also behind on property taxes. They don't have the credit or cash to do anything about it and aren't very interested in selling at a discount to an investor on the cheap. They have been living in it and had trouble selling it on the market. It has however been fully rehabbed already. The property sits at the end of a mesa with panoramic view of the city. I offered to step in and buy it real cheap to take care of the debts then turn around and sell retail recouping my part plus a share of the proceeds but thought that might get expensive with two transactions. I recommended a master lease idea where I'd come in and pay off the debts, then rent it out for a period of years. My friend and I could share the cash flow. I would of course want to be on the title to recoup my initial investment once they are ready to sell it.

Any tips or advice would be greatly appreciated.  I've read about this strategy but this would be my first time attempting it.  I do realize a real estate atty will be necessary.

@Terry Lao how did this story end, what did it sell for?

I was asked to be a part of the HOA board of a town house I own. I don't have any experience in that regard but felt it would be a great learning opportunity. I am very interested in this HOA budgeting for remodeling the exterior with all the development going on in the area. This HOA is a non profit and has no business credit. I considered investigating acquiring credit cards or other lines of credit to facilitate this. Any input is appreciated, thank you.

@Brent Coombs 

Let me update you a little more

Staying with friends was less tiresome than the reduced savings I had paying for that house.  BUT a year ago I bought a fixer condo.  I've rented the extra room to someone close to me.  Their contributions are enough to pay the monthly mortgage.  Add to that I increased my income by 50% (and as a result doubled savings) by taking a traveler position in my line of work, so I'm on the road 75% of the time.  

I said the house appraised at 188k, but an identical house sold not long before that time for 175k.  Another identical house sold for 205k back in July '17 (not October my mistake).  So maybe 30-35k in 18 months isn't better then what they got in Tempe, but certainly not horrible.

What do you mean "laugh it up while you can"? I'll laugh when I'm retired not while I"m still learning.  Is that your way of saying you think there would have been a better way to go about it?  

Well @Terry Lao in a last ditch effort to make you feel better, it'll be interesting to see what they get for that property. I'm no expert on the area and the rent you could get but That 600/mo HOA with the risk of an increase and/or special assessment has to be a (female dog). Just glancing over what they report as incoming rent I gotta ask....Would you buy it for 320k with the advertised facts n figures?

@David Faulkner

@Thomas S.

@Bob E.

So I held the property.  Updated figures:

House worth a good 205-215k (I feel comfortable saying so because a house with the exact same floor plan, sq ft, lot size, finishes on the exact same street a few houses down sold for 205k last October, smaller homes have sold for more than 200k same area in last 90 days)

Rent is now 1350, same tenant and rent paid on time every month

Balance about 140k

in the 18 months they've been there I've spent about 200 in repairs, and 80 bucks to have a/c guy do a routine check up.

HOA and property manager unchanged.

New Freeway to be build a mile to the west making the east valley and west valley more accessible.

  A couple of you were vehement about how bad an idea it was to hold this.  I may not for much longer since the tax advantage will disappear and I want to get a MF.  What are your thoughts given the new facts?  Others feel free to chime in, I thought it'd be fun to do an update and compare it to the speculation from over a year ago

@Ivan Barratt Please post the link to your investment life story.  If there isn't one, start one and share.  I, as well as many others here I'm sure would love to hear how you went from 0 to 2,000 (with facts and figures) while still being young enough to say "get it dawg"

True you would more likely attract investors as buyers although people do buy them as their primary residence to live in one unit.  However there are benefits to having future investors as buyers.

Imagine if you bought that multi family, and say ten years down the road your tenants have paid down your mortgage, you've been tucking away the cash flow, and the property has appreciated.  An investor comes along and wants to buy it...and they want to do a seller carry.  So you get a lump sum of cash via down payment, get to charge them interest while collecting payments like you did before but the beauty is:  Vacancies, evictions, repairs, marketing, property management etc.. are no longer your expense or problem.  And if the buyer defaults you get the property back plus keep the down payment and interest you've collected.  Otherwise, you have income coming for the next 30 years (or less if they pay you off).  There's your passive income.  Another thing is, an investor may come along in that same scenario and be interested in paying you for a master lease.  Now you still get that money every month without the hassle of managing the property but still own it for the future.  

The advantage I will say, and currently experience is the SFH has the best appreciation if you feel more interested in regularly buying and selling.

@Terry Lao if it helps to not burn as bad....MAYBE they did fix something that isn't visible from pics or the exterior...like plumbing, sewer, electrical, mold etc.  But if they bought, held n sold without any updates then I feel you.