All Forum Posts by: Tom C

Wells Fargo actually has a new program for rehab too. Although they will loan you the purchase price and repairs. They do not look at ARV.

Mike,

I guess I learned another thing today. I thought that was just a cost that you ate every time you changed tenants.

How do you do this when money won't be released from escrow until each stage of the project has been completed?

Cobra,

That could be one reason why you are not finding properties. How do you think you are going to get into the rental business looking at new properties? All of the rentals I look at were built between 1920 and 1950. This are the homes that you buy cheap and then rent the market. As long as they are sound homes and have been kept up, then you shouldn't see any major problems with the house. What's the worst that can happen? You missed a leak in a roof, need a new furnace, hot water heater? These are just operational expenses that come with owning a home. You need to look at old homes that have been maintained, if you want good rental cash flow. Like others say here, you are not living in the house. You are renting the house to people who cannot buy their own house.

" for repainting and carpet cleaning " This is standard pratice before a new tenant comes in anyway. I don't think you would ever get a court to support holding a security deposit because you have to repaint and clean a carpet. I would think this is normal wear and tear.

"His boss is always belittling him and threatening him". Sounds like the boss is creating a hostile work environment. Teach the boss a lesson and go speak to an attorney based on harassment.

Keep in mind that the price you see listed is what they would like to get out of the house, not what you feel its worth. I looked at one 4 months ago. The home owner needed to dumped it quick due to relocating and it was listed since 07/06. The house was completely finished and would have made a perfect rental. The market in his area certainly didn't support their asking price. He paid 22k for it 7 years ago and dumped a lot of money into it and was simply trying to recoup. I told my agent that the offer was going to be embarassly low. I offered based on comps of the area, which was 24K. The guy was oftened, even after my agent explained why the offer was so low. He came back with his orginal price of 34,9K. Due to the area, the best rent I could have gotten out of the house was $450 a month, which there would have been no cash flow. The house is still sitting on the market. Don't be afraid to offer what you feel the property is worth. Just do your home work by basing your price off real facts, not gut instinct.

I am looking at a duplex where tenants share one furnace and one hot water heater, thereby the owner pays for the gas. I am thinking about buying it, but I don't want to get stuck with the gas bill. So I am thinking about purchasing electric baseboard heaters for one of the apartments and disconnecting the heating ducts to that apartment. I will then need to get another hot water heater for that apartment and make that electric too. That way one tenant pays the gas bill. While the other has been completely converted over to electric.

Has anyone else ever been in this spot and if so how did you handle it?

Thanks

If you want a full brain dump, do yourself a favor and buy MikeOH's book. Its only 160 pages and its well worth the money. Just the forms and template of his business plan are more then well worth the cost of it. In the mean time, check out his blog and this will give you some idea of what you can expect to find in the book.

Welcome bro..

Keep in mind that we are also talking 5 units. What are the chances of going conventional with 5 units? Most likely have to go commerical, which means the interest rate will be much higher and terms shorter. IMO