All Forum Posts by: Stuart Udis

@Jason Dillard Even if the EDM is refundable, point me to the title company/brokerage who serves as escrow agent and returns EDM's without mutual sign off from both parties to the sale contract. It is quite common for their to be a dispute over the validity of the contract termination leading to one parties unwillingness to sign the EDM release. Many contracts have a mediation clause and there are costs and time involved with reaching a resolution. In some instances it becomes costlier to litigate and sellers can squeeze the buyer over at least a portion of the EDM funds because they know the time and costs associated with pursuing the full return. This is the reality so no, just because the contract suggests the money is refundable does not mean its not at risk. 

It's my understanding the Gator Method consists of providing short term loans to cover other investor's earnest money deposits. I can't think of a worse investment strategy than lending unsecured loans to individuals who don't have funds to cover the deposits associated with real estate transactions. Actually, I take that back....investing in a course to learn how to make make these loans is an even worse investment.  This is probably where the Pace groupies come out of the woodwork to defend him.

Lower tier rental properties are a profit center, unfortunately rarely for the owner. Just look at  Alan's example which is an accurate depiction of how these properties often pan out when viewed through an extended time period. Regardless of whether the owner turns a profit, brokers are called up on to sell, lease and manage, lenders will finance, contractors (often affiliated with PM companies will be called upon to put out the constant fires). In fact, the more issues that arise, the more profitable theses properties become for the ancillary service providers....and you want to know why these investments are pushed aggressively by so many (besides of course requiring nothing more than a pulse to buy them). 

Can it be profitable? Certainly. However I am not sure its the best investment strategy for someone who is just getting started. Entitling land is capital intensive and presents a number of risks. 

Here are a few more truths: 

1. Very few who lease their properties to section 8 tenants or who invest in properties that  would be considered a good candidate for a subsidized tenant to alleviate rent collection risk perform well for a sustainable period of time.

2. Specific to Philadelphia, there's never been more landlords competing for the same voucher recipients. Between the increase in voucher valuations (which most fail to realize is best case scenario) and the enormous surplus of new housing that has some landlords turning to the section 8 program as a bridge solution until the market can absorb the new product, its never been more difficult to lease to a voucher recipient in the lower tier neighborhoods where most pursue this strategy. 

@Ryan Daulton No investments are guaranteed, some investments just happen to be less risky than others. Additionally, the rental arbitrage strategy is not investing, its operating a business.... an extremely risky business. I am guessing only you would be signing the 18 month lease and this individual who is there to "help" won't be voluntarily offering their signature as a co-signer? Seems to me there is only upside for them but no share in any downside if the unit is not leased to short term stay occupants. Meanwhile you are stuck footing the bills...

This is something I posted a while ago. If you ultimately decide to proceed with an LLC or any entity for that matter (particularly an entity that is a deed holder), the name you select can have unintended consequences:

The entity name matters for bank paperwork, claims that are brought, lien filings, deed recordings etc. Save yourself the hassle and avoid these common pitfalls no matter how much you like the name or "professional" you believe the entities may appear. Here's a few tips:

1. When selecting your name, don't include a Comma. No Comma's No Drama

2. Avoid ordering your LLC's sequentially or naming your LLC's similarly.

The existing lease will dictate acceptable or allowed rental collection methods. The lease will also dictate whether you have rights to the tenant's credit history. As others correctly noted, as a landlord you must look at the big picture and if this happens to be a good tenant who has occupied the unit for a while, has a history of timely payments and has expressed interest in remaining at the property the value in an extension (assuming that is advantageous to you as the landlord) should be placed above your desire to collect rent in a certain method if this particularly tenant has strong desires to make their payments in a different manner....especially if the lease they signed allowed a different payment method. Fortunately for you this is one of the better problems a new landlord can have. Much better than a tenant not willing to pay rent. 

I agree with Andrew’s comments particularly because this is a home you personally lived in and know intimately. Nobody knows the ins and outs of this home better than you which gives you an upper hand over any management company.  

My other advice is to make sure this is the best decision when balancing your family and finances. I understand moving out of your home and occupying a unit in a duplex may be the best financial decision but make sure it’s the best decision for your family because transitioning from a single family house to an apartment with a family of 4 is not always the easiest transition. Some become hyper focused on investing and wrongly prioritize their thirst for real estate investing to impact other areas of their life. Balance in life is import ant but only you know whether that can be accomplished. 

Requesting a ballpark price per square foot number  for a rehab is a useless ask. Far too many unknowns. Why not just get accurate pricing since its a property you already own?