All Forum Posts by: Ed W.

@Tegan Lehman  While I concede my suggestion sounds a bit snarky, that wasn't my intent.  It was a serious suggestion that could have given you what you want (actually more) literally by this point in time.  I wish you much success.

@Tegan Lehman If time and money are important, do a google search and start calling the surveyors that pop up.  Within 30 minutes you'll have a reasonable overview of what's available, within an hour you'll have a definitive answer.

@Steven Foster Wilson and @Josiah Hrusch - you folks should hook up with Josiah assigning his contract interest to Steven for at least $1500.  Steven gets a property he is comfortable with and Josiah gets more education.  Josiah - it's still best that you have a REAL ESTATE attorney help with the assignment language.

Even if the neighborhood was one that would attract good tenants, this is a marginal deal at best.  Too lose only $1500 is a gift, a blessing.   Good tenants usually have choices in terms of housing and, at least based on what you've described, they would choose NOT to rent from you in this location.  That leaves only bad tenants and that you don't want.

A word of caution.  We haven't seen your contract and it is very conceivable that it permits you to cancel with your only liability being the loss of the $1500.  However, it's also conceivable that you could be liable for specific performance (exceedingly RARELY used against a defaulting buyer because it's usually not worth the effort) or other penalties.  Whether or not there is anything to be concerned about, you are foolish if you don't spend the time and money on a GOOD REAL ESTATE attorney (practice limited to real estate, good reputation, and works with a lot of buyers) to explain the contract to you.  

Not doing a bad deal is MUCH better than doing any deal just to get your feet wet or meet some arbitrary deadline (which is, at the very least, stupid and likely a prescription for disaster).  If there are no truly solid good deals (NOT what an agent tells you is a good deal), be patient and use the time to educate yourself.  Bad deals waste time, waste money and not only don't produce profits but can lead to bankruptcy.

@Keisha D Dobney-Boykin

What I don't believe anyone addressed is that the deadline for filing was March 31st.  Do a search for "Franklin County Ohio Board of Revision".  The deadline was NOT extended due to covid.  If the taxes are truly wrong, best to talk to an attorney about a plan for next year.

@Remington Lyman It's very difficult and within my group of acquaintances who account for numerous attempts (myself included), the success rate is low but there are genuine gross errors that sometimes get corrected.  A knowledgeable attorney and an appraisal (by an appraiser, not an agent) are usually necessary so it is not cheap and the adjustment sought must be large enough to cover those expenses.  Unfortunately, every 3 years those errors can recur requiring another challenge.

And, sadly, logic and common sense don't always matter.  Some years ago, one of my properties was the "twin" of the house next door (same builder, same year of construction, same floor plan and condition).  The neighboring house, by coincidence, sat on the market at very close to the valuation of my property without selling for almost a year before they took it off the market.  For at least 3 years prior to the assessment, there was not one other property within roughly a mile radius that could reasonably be called a true comparable that had sold for anymore than 60% of the assigned valuation. They wouldn't budge an inch. Absolute nonsense.  If we paid the public officials who made those decisions artificially low salaries based on the kind of whims they use for valuations, they'd squeal like stuck pigs. 

Contact me, I know a knowledgeable, Central Ohio attorney for this issue.

@Evan Hamamoto

Sound business logic requires that what you pay for a business or rental property be based not only on income, but on a good sense of the expenses of the business.  While real estate can sometimes escape that reality (for example, some rental properties can be sold to owner occupants - who don't care about costs in the same way investors do - instead of other business people - and in 2021 that is far more true than in any time that I can recall), if you pay full retail, you're in bad shape facing an uphill battle before you even get up from the closing table.  You make a lot of your money in this business and establish the constraints or flexibility you have when you buy (the price you pay, the terms you establish, etc.) and those decisions and constraints or freedoms can have a huge impact on your wallet and the quality of your business life.  

You are more inclined to pay higher dollars for property if you underestimate the expenses which will VERY rarely be under 40%. In blue collar areas, expenses approaching 50% was not uncommon in years past.  Even with rents being proportionally higher than expenses today, I'd still use 40% as the lowest percentage likely to be incurred (and that's not considering either the problems of covid rent moratoria or the general increased difficulty of evictions or the greater activism surrounding renter protections, all of which raises costs and/or lowers income).  Your newness will also make it more likely that your mistakes will raise your expenses somewhat.  And don't forget, the purchase price of the property will likely impact what your taxes will be going forward.  The current taxes are highly likely lower than your taxes will be in the future.

BTW, to say that you will be managing and, therefore you have no cost of management is not even remotely realistic unless you are worthless.  If you don't value your time, no one else will and, BTW2, if you get ill (or discover that you cannot manage effectively) you will likely be paying 8 - 10% for management and, in your lack of experience, you may end up paying considerably more than that with "hidden costs" that some management companies impose.  

Many (not all) real estate agents minimize costs to buyers.  The agents may do so out ignorance or greed to help promote a sale and often suggest overall costs will be around 30% or so.  Hogwash.  Get an APOD form (annual property operating data) and carefully complete it.  It will help open your eyes.  They are abundant on the internet.  Get several so you can be reasonably certain to get all the costs to consider.

I fully agree with @Drew Sygit.   

@Marco Padilla when you buy a property, particularly a small one (<= 6 units), your thorough due diligence has to include the complete due diligence of tenants (including interviews and estoppel agreements).  Interviews for larger properties, while possible, get pretty cumbersome but you can selectively interview based on unit condition, payment history, potential to renew for leases near their end, or other VALID reason for singling them out (race, national origin, etc. are never valid).  

Each tenant can cost you thousands of dollars and, sometimes, tens of thousands.  We always care about gross income, expenses, deposits, roofs, mechanicals, structural issues, survey, title, and all of the other things we should be investigating.  Bad tenants (any tenant with a high potential to cost you money) also have to be accounted for in the price.  Will the owner permit interviews?  Over the decades that I've used the process, I've never had a problem - the requirement is part of my contract.  I am unfailingly polite, usually take the tenants donuts or similar, and keep the process low key, factual, and cordial.  If I sense a problem developing, I excuse myself.  I always offer the owner to be present but I've only one take me up on the offer.  It's also a good time to build rapport with tenants and learn about property problems you've missed.   If both the owner and I agree that such a tenant meeting would be mistake for some odd reason, I assume the worst and my offer reflects that.  

@Zach Powell 

@Brandon Sturgill gave you an important "heads up".  Do not ignore it.  I'm NOT an attorney but I understand Ohio Land Installment Contracts pretty well and I have over 30 years of experience with them as both a buyer and seller.

There is a gray area that you'll need an attorney to sort out because if it "hits the fan", the following may matter.  Ohio law requires certain protective features for LIC's when the buyer is an owner occupant; i.e., when it is a consumer transaction.  Many of those features are not required for business to business (non-owner occupant transactions).  You've spoken in terms of a singular land contract which presumably was written based on the owner occupant standards for all 4 buildings which is a plus for you BUT you need an attorney for several reasons and the attorney can tell you if the document you have was done correctly.

As Mr. Sturgill has correctly suggested, you are now (very likely) at the mercy of the seller.  The fact that you imply he is still accepting payments is helpful to your case but he can change that in 10 minutes by sending you a letter requiring you to pay the full amount (I don't recall the law on this point and it may be that since he's accepted payments he has to give you 60 or 90 or some other number of days to get the money but he can demand it).

The fact is that you've got significant liability.  ALL THAT YOU'VE DONE IS AT RISK.  You say he doesn't want them back?  Maybe that's true but maybe he doesn't know what they are worth today.  Or, maybe he has a heart attack and he dies tomorrow and his heirs have a totally different way of looking at the situation.  At the risk of insulting you, you are a fool if you don't speak to an attorney who has a strong history with land contracts.   If you want to be an investor, you have to be ethical, honest and fair but you also have to be protective of your interests.  Oh, and by the way, you don't have the deed, only a promise that he will give it to you.  From day one you should have had that placed in escrow pending full payment (you can arrange for an escrow now with your land contract's new terms) or, even better, change the deal to you getting the deed now and you giving him a note and mortgage.  He's had years of you paying on time, he should be comfortable doing that.  That way you avoid banks altogether.  Even though you may be able to get a slightly better interest rate at a bank, by time you pay for the appraisals and costs you will almost certainly be in almost the same position financially and have a far more flexible mortgagee.  There's lots of ways the note can be written that will be beneficial to you and to him (he can get modest periodic balloons if needs them as an inducement, for example).

Bottom line - you are standing with your pants down around your ankles.  Whether you trip and fall and lose it all or stop, pull them up and get headed in the right direction is all up to you.