All Forum Posts by: Ryan Detig

@Rich Hupper  You definitely don't want to do anything illegal.  I would be patient.  If they really want to sell they will talk to other people and will probably get the same "well that's illegal" response.  Hopefully after a couple other "no way" responses from buyers, they will look to you because the whole sale idea is the second best (and best legal) bet for them.  

On a side note, if they own the property outright or close to outright, would owner financing it to you help legally get around whatever medicare issue they have?  I have no idea what their situation is but if they need to avoid a large lump sum at sale then owner financing it could be an option.   I would definitely run everything past your attorneys on this one as it sounds like Greg is just trying to avoid paying extra taxes on the sale.  

@Mary P. Man, this is a tricky one. I love the 20 years of never paying late but the 20k price point is a concern. On paper this looks like a no brainer and with getting a loan your looking at around 30-40% ROI (I assumed your taxes and insurance). I don't think your "the bad" is really that bad. The guy has been there 20 years and paid on time. That far outweighs "the bad" in my opinion.

I personally think that the bigger issue here is if you have 20k to invest, why invest in something that brings in 410 a month. Why not use the 20k or 25K as a 25% down payment on a rental that brings in a larger monthly rent? I don't know your market so I don't know what a 100K property can rent out for but, I know if all things were the same in my market I would try to use that 20-25K to buy a property that was renting at 1.2 to 1.7%. To clarify that last sentence I would rather have a 100k property that rents at $1200-$1700 per month than a 20k property that rents for $410 even if the ROI is less. HVAC and hot water heaters etc going bad really cut into the profits of the 20k property and can jeopardize that really nice ROI . I would lean towards using the current cheap leverage (bank loans) to find a property that has higher rents even if the ROI is lower on paper assuming your market has those opportunities.

@Jay Dean Wow, thanks for posting. There is a lot of information here. My simple answer is "it depends" haha. You have given lots of facts about the property but not too much info on you personal goals and financial standing. This info would be helpful to know to give a more educated answer. I say the following not knowing your area but in my area I would not be happy with 65k invested making $875 per month. I might consider researching your area and talking with your REIA contacts to see how much rent 65K in cash (un-leveraged) would get them. If $875 is great for 65K invested for your market then I would probably rent it out for a couple years and maybe you will end up getting a renter who is interested in a rent to own situation. If you find out that 65k could get you 1000 to 1200 in rent a month (my situation here) with a different property, I might consider trying to sell it at market value outright and search for a more profitable rental. I know I did not directly answer your question but knowing your goals and financial situation is important when determining a 30yr commitment such as owner finance.

@Rich Hupper  So this is a very interesting situation you have come across.  It seems like for sure you will be paying taxes on an extra $80k.  I would negotiate a cheaper purchase price to compensate that large cost but that is just me.  While I am not 100% sure on the legality of this type of situation it seems to me that as long as Greg was not the power of attorney at the time of sale, Greg could wholesale you the property for 150k with an 80K assignment fee.  I would have to check with my CPA but it seems like purchasing the property this way would also increase your basis to the desired 230K as the 80k assignment fee is an acquisition fee and would count towards the basis.  Disclaimer, I am not very familiar with Mass' wholesaling laws but from what I do know about wholesaling in TX, I don't see why that would not solve the problem.  

@Andrey V.  Obviously it is always better to pay less property tax, but I am wondering what grounds you have to take with you to the tax assessors office to prove that the property is worth less when they can just easily look up that it was purchased for $40k over assessment value.  I have done this in the past with property I have purchased when the purchase price was significantly lower than the assessment value but I would be afraid I would be opening a can of worms if I wanted to appeal my assessment when I know the property was purchased for more than it was assessed. 

@Felipe Munoz  I will say up front that I don't have much experience regarding the pool so I will refrain from commenting on that part.  Regarding question #1, I have a couple of suggestions.  First I would use the serial number on the unit to look at how old the unit is.  This can be a good indicator whether it is working or not.  I personally have been burned when buying a foreclosure with no power on and both HVAC units had to be replaced.  Granted it was my first flip and I did not know anything.  Worse case I would assume the HVAC need replaced to cover yourself.  

@Janeen Archer  I currently use www.tenantcloud.com.  I use their $9 per month service which gets me electronic signing (yet to use actually) and online payment through dwolla.com.  It has worked great for me so far.  It costs the tenant a 1 time fee of $2.35.  All my tenants (7) have loved it except for 1 who told me "I don't even have a computer" when I asked if she was interested in online payments.  

@Marc Maser  Congrats on getting you first flip.  Is this your first deal?  My first flip was recently completed and in contract.  Below is a list of "Quick tips" (plug Biggerpockets Podcast) since you are just getting started on your flip.  These are some things I have learned since my first flip that I wished I would have known about earlier.  PM if you want more details.

1. Get a home inspection before buying.  Ask your realtor for the most picky home inspector's contact info and use them.  This does not really apply to your property since you got this at auction but for others reading this it is a great learning opportunity.  I am not really sure how much wiggle room you have in your budget but it might be worth spending $400ish to get an home inspection before doing any work.  Walking properties with a home inspector has be by far the most valuable thing for me and I wish I would have done it before starting my flip.

2. Take a specific set of "before construction" pictures and when completed take those same photos from the same angle.  Example This will be good for keeping track of your deals as you grow, showing off to friends, and is good to have to show to banks and future investors.  People are more willing to loan you money and take you seriously in the future if they can "see" your experience.  

3. Create a very very very specific scope of work (SOW).  This document (simple excel) is a lifesaver (and money saver) when it comes to bidding out your work.  The SOW I used for my first flip is here.  It is basic but every single contractor that came to bid was very impressed and loved it.  It really helps get bids apples to apples.   After choosing a contractor I just added this 6-7 page document to our contract.  

4. Once under construction, visit your property 2-4 times weekly.  I personally did my flip while working 48 hrs a week and I made sure to stop by the house often on the way home from work to make sure the contractor was doing what he was telling me he was doing on the phone.  

5. Look for opportunities to increase "livable" (heated and cooled) square footage. During my flip my realtor suggested we add a "hotel" style AC/heating unit in the breezeway between the house and the garage to bump the sqft from 1755 to 1935. We listed the house at $92/ft. That suggestion to bump the sqft increased the asking price from $161K to $178K. It cost me $1400 for labor and material. It was a pretty good ROI?

6. Get a pre-home inspection.  Schedule a home inspection (from the very picky person) after construction is done and before you put it on the market.  This will look good to any buyers, in the disclosures, and your realtor should be able use this as a selling point to buyers.  

7. Walk the property with the pre-inspector.  I just started implementing this into my policy on flipping and I have learned a lot on what to look for and what current buyers are looking for regarding what should be fixed.

8. Finally, use BiggerPockets during the flip.  If anything comes up that you are not sure of, don't automatically believe your contractor (if your relationship is not built yet)  and ask the BiggerPockets people for advice. 

Well this went much longer than expected.  Feel free to ask me any questions you have.  I am more than willing to help.  

I recently had a contractor tell me that he stopped going to bid walks with local wholesalers because he was never awarded work. I think if you don't have a great relationships with a contractor who will price things for free be willing to offer them $30-50 for their hr of time especially if you know for sure you are "using them" to come up with an offer price. That will increase your credibility, reduce your guilt and most likely not break your bank.

@ Mike B. Well done. Your remodel looks great. I think you stole ideas from my designer. :):) My current flip photos https://drive.google.com/open?id=0B37ni9oaQqZQRDhFZGJHVG5KYkk