All Forum Posts by: Scott Pigman

If you've joined the RENC you should be on their yahoo groups mailing list which is pretty useful. People are posting deals or asking for and making contractor recommendations regularly.

FWIW, I've never seen either of the Groves answer a question on there.

Subject-to can definitely be done in Texas; there are several investors in the Austin area that specialize in it. Reselling houses with owner-financing that wraps the original subject-to mortgage is popular.

I haven't worked with them personally so I can't endorse them one way or the other, but take a look at Stepstone Realty, that's basically their business model in a nutshell.

http://www.StepStoneTexas.com

Regarding bringing a someone with you like a contractor or a realtor, some advice I just happened to hear at a presentation today was that it's better for men to arrive with their wives or some sort of female colleague. It's a lot less intimidating to open your house to a couple than to a strange man, or worse, two strange men, especially for female homeowners.

@William Jenkins

By my calculations, at 20% down, 5% interest, and 50% expenses you'll get 20% cash-on-cash return at a 1.2% rent/price ratio.

Don't get me wrong, @Bill Wallace , I'm not hung up on getting 2% and I agree completely about determining my personal goals. But I do see value in having a personal "x% rule" as a preliminary filter to decide if a deal bears deeper investigation. I'm working on establishing that. The rest is curiosity about history and what drives markets.

My first goal is that a property shouldn't cost me money. I not so concerned if it doesn't do much more than cover expenses initially because I'm looking for cash flow and equity further in the future -- I actually kind of like my day job. Now I know that at roughly 1% rent/price I'm in the right ballpark and I can work on establishing my additional criteria.

Thanks, @Bill Wallace  I understand these rules are really guidelines, but I think they're useful to understand. 

Part of where I'm going with this line of questioning is that I think that why 2% is so hard to achieve outside of class C/D neighborhoods in the rust belt is partly because people can get the same results for much less than 2%, and they usually underestimate expenses, so they're willing and able to pay more each dollar of rent.

I believe that it's in the BP charter that every member is required to start a thread about either the 2% rule or the 50% rule at some time. So here's mine.

Does anyone know when and where the 2% rule was first stated? Was it first posited here on BP? Did William Nickerson write about it back in 1959? Did some guru come up with it while hanging out with his supermodel girlfriends on his yacht in the 80s?

I'm curious partly just out of general historical curiosity, and partly because I'm wondering if it can be tied to particular point in time, what the prevailing interest rates were then.

If you accept the 50% rule as being an accurate* approximation of expenses and ask the question, "how much rent would I have to charge to cover my expenses and my mortgage at x% interest?" then it looks like your rent would have to be about 2% of the purchase price when interest rates are somewhere in the 11-12% range. I believe that was the rate back in the early to mid 80s, so I'm wondering if that was when people started talking about a "2% rule".

At 4% interest you can cover expenses and the mortgage at about 1% rent/price.

*insert disclaimers about it being a law of averages over sufficient time and properties

If BP were a game then @Ben Leybovich just unlocked some wizard-level achievement for humble-bragging about his REI address book.

It sounds like the bank is lining up it's plan-B REO exit strategy prior to the auction even taking place. It actually sounds like someone at the bank is on the ball trying to get this property off of their books as quickly as possible.

At the auction they'll get credited the amount they're owed and will probably bid that amount first, although sometimes they'll bid lower. If someone ups their bid, they unload the house. If no one bids they take the house back and then turn around and sell it to you right away. Either way they have it off their books.