All Forum Posts by: Kyle J.

@Blake Wehling Thanks for the share. That’s a great tip. That hardware looks like new. 

Just watched this fascinating and well-done story by CNBC on "What’s Driving California’s Mass Exodus?"

Now, I live and invest in California, so I'm definitely not a California hater.  However, I'm also no California fanboy.  I'm actually pretty open-minded and enjoy listening to something like this to perhaps get a different perspective.

There are certainly benefits to investing in California.  Like I said, I do it and I do quite well by doing so.  However, there's also no arguing there are downsides to doing business here.  

We have the #1 highest state income tax in the entire country!  It's also very business unfriendly here.  According to a CNBC study (mentioned in the story), we are ranked DEAD LAST in the country when it comes to the cost of doing business.

This is probably the reason we've actually been seeing a net migration LOSS of residents in this state to other states.  Not to mention the thousands of companies that have left (or are leaving) the state, including big name companies like Hewlett Packard (moving to Houston), Oracle (moving to Austin), and Tesla (Elon and the next Gigafactory will be in Austin).  

(Anyone see a theme there with Texas?)

Anyway, not trying to convince anyone of anything.  Except perhaps our state legislators better wake up if they want to stop this mass exodus.  Unfortunately, I'm not sure they get it yet.  At least the laws that continue to be proposed and passed in this state don't seem to signal (to me) that they do.

Thoughts?

@Dylan D.  Here's a few ideas:

1) Check other websites to see if maybe there are some active listings that maybe you just haven't found yet.  You didn't mention what site(s) you checked, but there are actually quite a lot out there (some just aren't as well known as the big name ones like Zillow, Rentometer, Trulia, etc).  There are some lesser known ones that can provide very comprehensive reports on local rental markets and help you estimate rent.  Perhaps try reading this blog post I wrote a couple years back and see if you get any ideas for sites/resources you haven't checked yet: How to Determine Fair Market Rent.

2) Check websites like Rentometer that search OLD rental listings (not just active ones) to see if you can get any data that way.  Some of these websites pull data from up to several years prior.  Surely there must have been some rental listings at some point. 

3) Lastly, consider contacting local property management companies and interviewing them to find out what their recommendations would be. After all, they should be the experts on the local area.

Good luck.

I'm not sure I'd be taking my recommendations from Clayton Morris:

Morris Invest and Clayton Morris Review

Clayton Morris / Morris Invest / Oceanpointe Investments lawsuit

Clayton Morris / Morris Invest House of Cards starting to fall

Morris Invest Scam | Clayton Morris Caught Lying on Camera

Clayton Morris fled the country!?!

Typically you would check with the applicant's landlord, AND their previous landlords.  You'll often get the best/most honest information from the previous landlords since they no longer have a relationship with the applicant.  (A current landlord COULD be tempted to lie and say that a bad tenant is a great tenant, so that you may be inclined to rent to them and take their problem off their hands.)

Anyway, when calling current/previous landlords, here's a list of questions you can ask:

Top 10 Questions to Ask a Past Landlord When Screening Applicants

Glad it worked out.  In the future, I would suggest you consider adding to your applicant screening criteria something along the lines of the following:

"Applicant should have favorable rental history with positive references from previous landlords."

A clearly stated screening criteria such as that, which is applied fairly and uniformly to all applicants, is totally acceptable/legal to use.  Of course, you still have to make sure the information you receive and base your decision on doesn't violate any protected Fair Housing categories.  For example, if one of the prior landlord references were to mention an applicant's family member was physically disabled and then, for that reason alone, you decided not to rent to them because you didn't want to potentially have modify your property to accommodate the disability.  That wouldn't be okay.

On the other hand, if the prior landlord told you the applicant was a nightmare tenant because they had loud/disruptive parties, destroyed the property, and paid rent late every month (or not at all).  Well, then you'd be well within your right to deny them because that's certainly not a "positive reference" and none of those things are protected categories.

Hope that helps.  And good luck with your tenant search!

@Christine Snyder  I'm not familiar with the tax deed sale laws in your state, but they sound similar to the laws in my state (i.e. you own the property after the sale but the owner has up to one year to challenge the validity of the sale).  

Also not sure what your plan was initially, but it's for this reason tax deed sale properties often don't make good flip properties (hard to get title insurance right away or without doing quiet title, though there is a company called Tax Title Services that specializes in getting title insurance on tax deed properties much faster than the quiet title process).

Anyway, to answer your question, rather than "just sit on the property", why not rent it out so you at least have rental income coming in?  Now, I guess depending on the condition of the house, this may not be a viable option.  Because if it's in REALLY poor condition, you may not want to dump a bunch of money into it since - I know in my state (and I'm guessing yours) - if the previous owner was to somehow successfully challenge the validity of the sale, any costs you incurred for IMPROVEMENTS would not be reimbursable.  (Other costs, like the purchase price and expenses you incurred that were necessary to MAINTAIN the home, generally would be.  At least in my state.)  

Lots of risk involved with these types of sales. 

Anyway, hope that at least gives you something to think about.

Perhaps @John Underwood will have some other suggestions.  I believe he does quiet a lot of these.

@Tammy Mason I’m assuming you’re referring to the refunding of the security deposit. If so, unless you intend to refund 100% of it, you really need their forwarding address.

In California, if we’re making any deductions from their security deposit, we (as landlords) have 21 days to mail them an itemized statement listing the reasons & amounts of any deductions (along with a refund of any amount not deducted). 

You’re not going to be able to send that statement through Venmo, and - if you don’t send it - you lose the right to make any deductions at all. 

Again, if (and only if) you plan to return 100% of their security deposit, then I suppose Venmo would be fine. However, I wouldn’t personally agree to that in advance because you’re not going to know if there are any deductions to be made until after they’re out and you’ve had a chance to go through and inspect the property. 

@Courtney Foster  Never heard of them before, but I took a look at their website for you and can tell you that you're not dealing with a real lender.  I post about this frequently to try to help people avoid being scammed.  

First, some general tips for you on red flags to watch out for:

- Asking for a large loan application fee or other fees upfront

- Unusually low interest rates for a hard money/private lender (real hard money/private lenders aren’t loaning money at 4-5% but fake ones usually advertise those rates)

- Email communications with really bad English/grammar indicating the sender might be from out of the country

- Claiming they loan nationwide in all 50 states (most non-bank, hard money/private lenders operate in only certain states and don’t lend nationwide)

- Claiming they can do loans from $5,000 to $50 million (most lenders that will loan you $5,000 can’t do a loan for $50 million, and most lenders that can do a loan for $50 million aren’t going to bother doing a loan for $5,000)

- Offering to send you a photo of their drivers license (fake lenders tend do this to convince you they’re legit but I guarantee you it’s not their license they’re showing you and a real lender would never do this)

- Not caring about your qualifications or the merits of the deal (basically willing to “approve” you no matter what you bring to them since they know they’ll never actually fund it)

- Terms that seem just way too good to be true

That’s just a few things to watch out for. None of them alone guarantee the person/company you’re dealing with are a scammer, but if you see one or more of these red flags you should start to get suspicious and make sure you do your due diligence on them before sending any money or personal information.

Lastly, here’s some more info from BP on how to avoid these scammers that may give you some additional red flags to watch out for:

Tips for Avoiding a Scam on BiggerPockets

Now, on to specific red flags with this lender that you asked about.

That mere fact that they reached out to you (a stranger) and offered to do a loan for you (apparently with 100% financing and at an interest rate as low as 5% according to their website) is a red flag.  They also claim to be a "private lender", and I assure you that real private lenders are not doing that.  And certainly not at 5%.  

Their website also claims they originate loans "throughout the 50 States of the United States of America and Canada and other Major Countries in Europe."  Sorry, but no private lender does that.  

I also thought this was pretty funny...they require a "minimum 300 FICO score".  That's as low as the FICO score range goes.  Lol.  Why even put a minimum?

I could pick apart their website/lending guidelines all day long, but I'll just leave you with this.  On their list of "Recently closed deals" right on their home page, take a look at this yellow home on the left that they claim to have funded in "Henderson, Nevada":

Well, I did a Google reverse image search of this image (I talk more about how to do that in my response to this post), and guess what?  That house isn't even in Henderson, Nevada.  It's in Memphis, TN and they just hijacked the photo from an old Zillow rental listing:

Anyway, I think you get the point.  If you want to know what the scam is here, you just have to read their website closely and they actually tell you what it is.  They're going to charge you an upfront fee of .5% to 3% of the loan amount, and it will be due IN ADVANCE of them funding the loan.  I'm willing to bet two things: 1) the fee will be towards the higher end of that range, and 2) once you pay it - you not only won't get the loan, you'll also never hear from them again.

Best advice I can give you is, don't do business with strangers on the internet that you've never met and know nothing about.  There's way too many scammers out there, especially in the "private lending" space.

Just trying to keep you (and others) from getting scammed.  Good luck.

Not raising rents on long-term tenants may work in a market where rents don’t appreciate much. It’ll certainly keep your turnover low. But at what cost?

In my market, rents go up every year. When I was a brand new landlord, I didn’t raise them on my tenants though either because I didn’t want the tenants to move. But then the market rents kept going up, and I realized...if all the rents are going up, why would they move from where they’re at? 

So I started studying what the fair market rents were and raising them a little bit each year to try to keep pace. They’re still a little under what I could be getting, because I do value having them as tenants and I want to reward their continued tenancy. But to not raise them at all is leaving a lot of money on the table.

Most of my tenants stay with me for 5 to 8+ years. I can’t even tell you how far under market I’d be if I never raised their rent at all.

(And now with statewide rent control in my state, that would really limit a landlord’s ability to ever catch up in some cases.)

Even if you don’t have rent control though, you’re leaving a lot of money on the table by not raising the rents at all. Especially if you end up with long-term tenants who stay with you for years.

Anyway, just something else to think about.