All Forum Posts by: Robert Smith

If taking the homes Sub2 your parents would be the ones who must qualify for the refi. Since it is your parents they may be open to doing more then the traditional seller, but it could work for any seller you have that is open to Sub2. Work with them to do a refi, and once everything is signed over redo your sub 2 paperwork with the new terms and such. This is a common strategy for creative investors to create cash flow in homes or to get financing for rehabs and other deals. I used this several times a few years back with the harp program to reduce interest rate and often receive a forgiveness on a portion of the principle when the homes are under water. Depending on the property and the company you use, sometimes the cash out refi option for rental homes can vary from 65% to 85% so be mindful of this.

A lot of people get started this way, and actually my first rental property was my personal home I moved out of and bought a townhouse to fix up and live in for a year. Once that year was over and my tenant lease was up I moved back into my house and rented out the town house. If you are able to purchase another home and can rent your home quickly I would say go for it if the numbers work. Many investors, like myself, move into a new home that you can purchase at a discount and upgrade and remodel as you live there then sell or rent that home out after a certain amount of time. Sometimes with the right property you can purchase and work on while you rent out a certain portion of that same house, the term for this has been "house hacking". One thing to remember is that a remodel is easier said then done when starting out and it will take longer usually then you plan unless you are experienced. Focus on bathrooms and kitchen first, since you need those to live there, then start on the other rooms as budget and time allows. This strategy is not for everyone, but sweat equity is a nice tool in the belt to use. 

The tax record can be wrong many times. Talk with the neighbors and see if they have any information. Is anyone maintaining the home, grass and such? Watch the home and talk with them or leave a letter on the door and see if anyone picks it up. Last I would send the letter to that address and hope they have set up their forwarding. Many times I will google their name and address and see if I can find a phone number in the white pages or find a relative with a good number and call them. If the home is a deal, or potential deal, it is worth the time and effort. The more you track people down the better you get at it. You can also do a skip trace search, there are many sites out there, peoplesmart and findtheseller are two you can think about. Crazy as it sounds, everyone has social media now, look them up on facebook or google and see how that goes, I have actually bought a home off someone on facebook after searching them out and talking with them once they moved out of state. 

Have you asked him to finance the property for you so that you can get someone in the 4th property and do any repairs needed? If your current goal is to refi in 6 months you would pay financing fees and closing cost now just to turn around and pay financing fees now. Pitch to him that you would take care of the management and worries and all he would do is collect 1 check for all the property directly from you. This would give you time to shop around for the next few months while collecting rents from the tenants. If he is an investor he would be more open to this then a traditional home seller, especially if he has no loan or would allow you to take the loan subject 2. 

For your list, is this in the correct order you plan to do things or just a list as these things came to you? If in the order you plan to work your plan I would personally put the home under contract pending inspections so that you are not spending money on a deal that may get swept out from under you, this is the reason you have a due diligence period built into your contract. I have renegotiated deals after the inspection if you find out there are major issues with the home. Offer a low earnest money or due diligence fee until inspections are over then bump that up if he requires more down. 

Current leases are a must have when doing your due diligence, and I would talk with each tenant to see if they would be willing to sign a new lease and application so that you can view the most recent information on them, some of the worst issues I have had has been taking over problem tenants, I would almost rather homes be vacant so that I can screen and fill as I see fit. Maintenance records and profit and loss statements would go a long way for your lender package as well as your peace of mind when formulating your numbers. 

You mentioned this is your client, I would be talking with your attorney for sure. Disclose, disclose, disclose, as they say. I have done this myself and it worked out well. Check your local board and state rules, but you would have a vested interest in the property so you would need to let other agents know this when calling on and showing the homes more then likely. For the drawing up the paperwork, the one option you would have is to essentially be the bank and write up a deed of trust and promissory note and put a lien on the property payable with a due on sale clause or however you structure the payments. You would be in a second position so make sure the bank in the first position is getting paid or you could be out of money. I have seen many investors work out much harder deals then this one. If you are new at this it is worth the cost of paperwork rather then the expensive cost of a hard lesson learned and getting burned. For the terms and conditions these would be up to you and the owner of the property, talk with an attorney about your lender laws for your state as there could be limits on what you could charge. If the work does not get done or you financing this fix does not work out you could always inform any agents showing the home that cash or a 203K loan may be the only option to be able to purchase a home. Government financing can be very difficult when repairs are needed but not impossible when repairs are needed.

Easiest way to assign the deal is craigslist and bandit signs (if they are allowed in your area). Finding a buyer is easy if the numbers are right, your hard part is over (finding the home). Make sure you have your contract right and assigning contract ready to go. If you are comfortable with this, you could even let agents in the area know about the deal and see if they have buyers. Unless your profit is really good I would make sure the investor purchasing the home understands they will need to pay their agents fees. You could also purchase a pro membership through bigger pockets where you would have access to post deals in the marketplace. 

Depending on how much information they give you I would look at other sources. In my area they only give me what I can pull for free on the property viewer website. I am a licensed real estate broker so I have access to the court house retrieval system (CRS) system and the Realtor Property Resource (RPR) system and like them both a lot. You can team up with an agent to pull information for you or send the addresses in excel to a virtual assistant and let them do some leg work for you at a minimal cost. The first place I search for data if no access to CRS would be to google the state or county property viewer, county GIS, or find the county tax records and see what they record online for deed registers. Not sure if I can post a link here or not, but I looked up your profile and your county has a public record site much like most other areas. Unless someone else is gathering the data for you, you should not need to pay for any public records such as tax info or parcel ownership.

I am in the Knoxville area, connect with me if you would like and I can share what I know. I am an investor, licensed broker, and an investor, and happy to help. 

We are a hot market and growing very quickly here, we have some turn key stuff as well as multi fam, foreclosures, and motivated sellers, an overall good mix of homes for sale. 

Welcome!

Knoxville will probably never be as big and as hot as Nashville but it is growing like crazy and the market is very hot. With the I-40/75 split we have here there is a lot of manufacturing and shipping in and out of the area, with Oak Ridge we have a lot of technology in the area, and of course being the base for UT we have a lot of students and family moving to the area. We have a good mix in Knoxville and the surrounding areas of young and old, and a lot of retirees that we get here bring their family to the Smokey's (Pigeon Forge and Gatlinburg) over the holidays and summer then decide this is the place they would like to live. There is a lot of stuff to do here and we are halfway back for everyone moving from the North down to Florida and realize it is too hot there. There has been additional schools and plants built here, we have 4 seasons, and for the most part our weather is not extreme. A lot of things draw a lot of people to the Knoxville area. Multi family is great right now as well as residential real estate. 

I am actively investing in Knoxville and surrounding areas as well as work as a property manager, if you have any questions I would be happy to help or send you some info on properties in the area if you would like. I have worked with investors out of state and overseas and always make sure I get pictures and video if needed, I have also done repairs myself and paid for them so know what things cost and know what should be charged to do the repairs.