All Forum Posts by: Steve Karp

Zach, I'll second the "don't change your numbers" mantra.  If a property doesn't fit your profit threshold, it doesn't fit the profile.  As far as actually crunching the numbers, Pro Formas are mostly fantasy land projections.  Do the math on current rents and conditions.  Use that as your basis.  If you expertly know the street or neighborhood and feel like you can get the rents up to market easily, then flex a little bit with your expectations.  Otherwise, its a garden variety property for sale by a seller who wants to Sell at a price As If rents are market when the reality is, rents are below market, property has deferred maintenance, etc.   Plus your leverage gets stronger if you know the underlying reason why they're selling.  My personal opinion is that So Cal properties Value tend to be more about the long term appreciation versus monthly revenue stream.  Look at the numbers through that perspective and see how it pencils out.   There's nothing odd or red flag about a seller asking for cash only.  With that in mind, generally cash does talk, so if you have the cash, make an offer that suits you (less than list price).   Or you can offer list price, with some financing involved.  The Seller may need X for something immediately and be open to carrying a chunk on an agreeable time frame.  Once you engage the Seller in a conversation about Their needs, you'll get to the heart of the matter and what it will take to get it done.  

It goes to character and integrity.  If I were the seller, I'd use your own questionable intent to get my price.   You: I'll offer you $81.  Me: I have other offers, submit your highest and best by 5 pm today.

You don't know if that phony offer is the only offer I have. But it is an offer none the less so my words are 100% true. You might submit an offer more than the $81, stick to the original offer or walk away. Doesn't matter to me. I called your bluff, you called mine. An experienced REI would look at the Multiple offer comment and expect that offers in hand were less than list or I would have accepted that other offer. Or the terms may not be to my liking, regardless of price. Yes, its a negotiation game. My personal opinion, No its not authentic to waste anyone's time with BS bids. There's a lot of Karma in this game and its a small world. What comes around go around. Shady tactics will be revealed and you'll cross paths with others at some point. If you want long term success and a reputation that's respected, do things as a professional would and you'll get professional results.

@khadijah    the BAC entity is likely Bank of America.  They bought Countrywide.   Could be the note was then purchased by the Residential Credit Solutions folks.   

Jackie, stick to your numbers.  If after the repairs (whoever bears the cost... although that should be the seller) the property is still a winner, go for it.  If not, walk.  There's a subtle maneuver in negotiations with Responding.  When you have 4 days to respond, you take the 4 days.  I wont write a lengthy story on that.  The reason is, anything can happen.  Don't take it personally when that occurs. The other party may otherwise be slow to respond but if you give them X days, you should expect that's when you'll get the answer.  As far as the disrepair, it doesn't matter when the seller had it certified or looked at.  What matters is Your inspector identified X items for repair, you've made the request of the seller to correct it.  Either they do, and close, or they don't and you say good bye.   Again, negotiation tactics.  Give em an inch, they'll take a mile.  Draw the line, show you're sincere, serious and the request is not negotiable.  Chances are the seller knows there's deferred maintenance and exactly what repairs are needed.  Plus, now that your inspector has identified issues, the seller is compelled to disclose them to any future buyers.  That's your leverage.  The cat's out of the bag.   You have the advantage.  If they truly want to sell, they'll acknowledge the issues and accept having to repair them.  Or you could possibly lower the price the equivalent amount and fix the items.

The cash buyer has a few options.  They can present the cash, bundled, at closing.  They could convert the cash to a certified instrument (Money Order, Cashiers Check etc).  If they have a banking relationship otherwise, they could present the cash to the bank and have the bank wire the money to the escrow entity.   I would guess depending on the amount, that bank may or may not raise an eyebrow as to the source per federal guidelines.

When in doubt, follow the law. :-) HUD essentially sets the bar. State laws if any would only refine the boundaries. While I would rather hold a Pet deposit since they're sure to make their mark one way or the other, if I had a vacancy and a prospective tenant otherwise met the criteria, I'd accept that this goes with the territory of ownership. In the end, yes, if there's damage, you're going to be able to charge the tenant on exit so I suppose you'll get covered. Bottom line is, before you accepted the tenant, you're entitled to, and should not accept them without something in writing from a licensed Doctor or professional that designates the dog or "animal" as a prescriptive necessity. I do accept pets in my properties with a deposit.

Joseph,   free with purchase!   That's a good deal.  :)    You can check with the DMV and or spend a few bucks and run a carfax.  You'll probably need to get a signature on an abandoned auto form\title replacement form to fully have rights to the vehicle.  What kind of car is it?

Julie, Awesome way of thinking!  Fortunately I have not had to experience the Eviction ride yet.  I'm the kind of person that loathes the idea of Cash for Keys though I understand the concept.  Using the leverage of the Eviction on their credit in my opinion is an excellent way to attempt to resolve the issue straight up. If it doesn't fly, it doesn't fly, but you wouldn't have had the opportunity had you not been creative.  I would go Cash for Keys to remove unsigned tenants in a purchase.   I don't really take the process of investment property personally.  For some reason, the idea of Eviction does rub me that way so resolving it while minimizing the loss is something I'm all for.

Bryan

I'm a big fan of DFW investing.  I live in LA so my perspective of prices and overheated markets is from living in it.  I lived in Dallas for 6 years so I have enough knowledge to be comfortable with neighborhoods, at least where I know.  I stick to that.  With Toyota and the other large firms coming in, yeah, Plano is way hot and the surrounding areas are also riding on that steam.  Its Very hard to find deals that work, but when you do, they're solid. The social factors that drive success are all in place there so its a solid market and worth it to grind out the search for the right properties.  I only have 1 at this point and I continue to look.  Its worth noting, all those Cali people that are relocating, many of them were commuting an hour or more.  I know traffic is becoming an issue there, but 30 - 45 minute commutes wont be an issue for these folks.  That brings in a wider geography of properties that they'll be candidates for.  For what it's worth, the underlying factors that make an investment property a winner are very much positive for DFW.  I'd look no further.

Gunnar

I'm on the side of... Not. Your. Problem.   That being said, there's merit to being sympathetic to some degree which you've done.  Bottom line is, if anyone other than your tenant has an issue, they need to pursue it with the proper authority.  If its dog noise, I believe that's Animal Control.  They would probably first cite the tenant if the dog does not have a proper license.  Anyway, I believe the dog owner gets one free pass but at some predetermined citation amount, it escalates the penalty.  If it's party noise, that's the Police.  If the complainer has not filed complaints with the proper agencies, then nothing and no one are to blame but them.   Even if the complainer finds a willing attorney to pursue it through you, you've demonstrated Good Faith by talking with them already.  A judge would likely favor you not only because of that, but because you're not the offending source of the issue.