All Forum Posts by: Raj Gandhi

Looks like a decent deal depending on the neighborhood.  (I'm originally from Ames but not very familiar with this part of Des Moines. Ask about any flooding issues as far back as 1993.)  Because this is probably for sale by owner, I'd suggest an offer with seller financing or owner takes back a 2nd mortgage.  One might be able to get into the property with as little as 5% down.

Give it to the bank, Deed in Lieu of Foreclosure?

1 application in 30 showings isn't a very good ratio.  The bankruptcy doesn't bother me too much.  Starting a new job isn't good.  3x over rent is mandatory.

Selling their house is the biggest issue.  Can they come up with 1st month's rent and 1 month rent deposit and set a move-in date?  If so, I'd have a conversation with them asking about their situation and make sure they'll be able to make your rent.

Otherwise, I'd do something with your property to improve the 1:30 ratio.  Paint, carpet or some other reason it doesn't show well?

Neat data site.  Too bad it only goes up-to but not including 2010.  I looked on the site at 2009-2010 data.  Minnesota is losing population to almost every state.  

Cap Rate = NOI / property value; your deal looks like 9.43%. Use that number as a benchmark for evaluating this and other deals. Cap Rate will vary by location and current economic conditions. Cap Rate seems good to me but insurance costs seems too low.

The ~ideal starting deal would be some kind of owner-occupied.  A duplex or 4-unit would be lower risk.

I'm in a similar boat.  I'm considering selling one rental with significant equity and they purchasing (1031 exchange) another.  With the new property, I'd get a loan up-front instead of cash-out refi.

Guess... $4k per bathroom, $10k for the kitchen (including SS used appliances), $1k per window, $3k interior paint, $5k for wood laminate flooring, $7k plumbing update, $4k electrical update, $3k asphalt driveway, $3k furnace

My guesses are based on rehabs at three properties in the last four years.  My numbers are high but about as good as I've been able to get.  I didn't guess at everything you'll need because I haven't done a complete gut.

Don't give away any of your rights in the lease, even verbally.

Make sure they know that anyone they find to take the lease will need to be acceptable to you.

Ask them to keep the place looking good so that you can show it.  List it and try to find new tenants.  With any luck, you can find new tenants with 0 days vacancy.  While you're at it, initially try listing it with a 5% boost in rent.

Without anything in the lease, I would pay for it.  It is a surprise maintenance issue; hopefully you've probably got something in the budget for those surprises.  Tell her next time she pays 100% or 75%.

Fair enough.  Local markets can be unique.  Also, having a partner to please is important.

For general research and knowledge of an area, I'd suggest Zillow. You should be able to set up an automated search that sends you email daily of listings. They won't be quite as recent as a fresh MLS listing but good data.

Craigslist is another good source of possible homes to purchase.  You might also be able to find a flipper or wholesaler on craigslist.  Try searching for "investor" in real estate and business.

If you have someone local, ask them to send you phone numbers from any bandit signs.  Those are the signs that say We Buy Ugly Houses for Cash, or something similar.

Finally, I Google search might help you find a wholesaler because sometimes they buy keywords to funnel traffic to their site.  Their keywords would probably pertain more to people with distressed homes/finances.  Pretend you're trying to sell your home in foreclosure.