All Forum Posts by: Ryan D.

What we've discovered is that although the eviction moratoriums are in place, this seems to only cover when tenants are not paying rent under the terms of a current lease - tenants who are not under current leases are considered trespassers & can be removed from the premises. So the tactic to which we have switched is letting all leases revert to MTM when they expire, & new tenants are being placed into MTM leases - no more 12m leases at all.

What this means in practical terms is that for responsible/paying tenants, nothing changes and life goes on as usual, but for tenants who decide to stop paying, their MTM agreement is not renewed at the end of the month, at which point they become trespassers & can be evicted. 

@Jay Hinrichs - I thought Lake O was a very affluent/exclusive town? Doesn't the local gvmt/police make it a priority to keep vagrants & squatters out?

@Scott Lennon

If you’ve got tenants that are taking advantage of Covid/eviction-moratoriums, trashing your property, & stealing your appliances, then your problem is the quality of tenants living in the property.

How are you screening your tenants?

Are you only renting to people with good credit, steady jobs & payment history, or are you just placing the first person who responds to tour adds?

Are you using professional management, or are you DIY?

Perhaps its more fear based, but I really feel supper exposed at the moment. Every single one of our tenants can just stop paying rent, and there's nothing we can do about it - its a risk management thing....the risk of this actually happening is very low, but the damage caused if it actually did is very high. 

@Dick Rosen - yes, I'm still seeing strong competition from buyers in my markets, which just seems completely disconnected from the reality of the current economic situation. 

The main reason it is so expensive to live in California, and why lower income Californians cant build wealth, is glaringly simple - HOUSING, HOUSING, HOUSING. Governments (and residents) across the state are extremely anti-development, artificially limiting the supply of housing, keeping prices the highest in the country, and preventing anyone but the wealthy from buying a home. Remember, home ownership is the most significant way that Americans build wealth. Californians would be FAR better served by focusing on removing obstacles to building more housing (LOTS more), than on thinking up new ways to take peoples money. 

Historically, my model has been to buy properties that have been mismanaged, and where there is value to add by bringing competent business/management skills to the asset to get it producing more efficiently. Almost always this involves eviction of some of the inherited tenants, typically b/c the previous owner didn't screen well (or at all).

With all the eviction moratoriums due to the pandemic (and it seems like its going to be this way for the foreseeable future), I feel like this model now carries unmanageable risk - it feels like there is no way to manage the risk of buying any property with tenants that you didn't screen (unless you hold the property debt free) but cant evict if they don't pay. 

How are you all managing the financial risks of buying during the pandemic? Maybe I've got my binders on & am not seeing a way around this wall. 

Note: I'm not interesting in debating the eviction moratoriums. At this point, its just part of the landscape - what I want to hear are strategies people are using to adapt & overcome. 

@Wayne Brooks - maybe I'm using the wrong terminology, but the wholesaler plans to purchase the property with their own funds, and then immediately sell it to me.

Yes, we will get title insurance. We also spoke with the title/escrow company, got partial wiring instructions via secure email, and then the remaining part of the instructions verbally over a phone call. 

I guess my main concern is protecting myself against any fraudulent deal (i.e the wholesaler never actually had the rights to the property, etc).  

I'm under contract on a pair of 4-plex buildings in Florida with a wholesaler. The wholesaler has the buildings under contract with the current owner, and wants to close using a duel escrow. What do I need to do to project myself in such a closing? What are the risks to me (fraud, etc) that I should look out for? I'm extra concerned here b/c my deal is all cash for a good chunk of money - I don't want to sent out a big wire and then realize I've been defrauded. 

@John Perrings

Be careful about any loans against policies like this. If the policy is a Modified Endowment Contract (or if it becomes a MEC, even without your knowing it) any loans against the policy will be taxed exactly the same as if it were a cash-out distribution (plus a 10% penalty if you are under 60), AND you will still owe the full loan + interest back to the insurance company.

Loans on these types of policies are a terrible financial move.

@Cody Godfrey

Since you live in the property, it is your primary residence, and (generally) laws are much more landlord-favorable when you are renting out part of your own home vs just renting out an income property. Often you can evict a tenant without cause in such a situation. Check your state laws to see if this is the case in your state.