All Forum Posts by: Mike Lynch

Well, that pretty much sums it up. We will have to sell it. It can't be used as a weekly rental. We have some really quite and picky neighbors. Loud renters showing up at 2:00 in the morning coming home from a dance club or local beach bar won't work. I have tried to figure out how to keep it, but the numbers never add up no matter what strategy or that I try to come up with.

Thanks Again,

Mike

As some of you know from my other posts, we bought a 3008 sq. ft. river front home in Sept. 2015 for $118,000 that was worth $650,000 in 2007. -- The home sat empty for several years. It had a failed sewer, had been vandalized, needed a lot of labor and materials. We are almost finished with it. We have now spent $80,000 in materials and labor. My wife and I have done about 90 percent of the labor in the evenings and on weekends. Several contractors and appraisers say that it is worth around $380,000 now. ( Brand new stainless appliances, new hardwood floors, retaining wall, new plumbing, new sewer, new driveway, new paint, new doors,new carpet, new lighting, etc. ) It is waterfront with a 4 mile water view of a coastal river in Shallotte, NC. It is one of the best views in the county.

We really hate to sell it since it is one of the only homes with a corner river length facing view. We are thinking about getting a home equity line on the home of as much as we can, then maybe renting it out. We could use the equity line, slow and generously, from it to purchase other properties to flip and rent more properties, and the monthly rent generated from the river home to pay back the equity line and to save up for cap ex, taxes, insurance, maintenance, etc.

Our question is, how much are people willing to pay for long term rent? The average rent around here is around $800.00 per month. Is this home too large or too expensive to rent? I bought some great real estate books from suggestions on this website. There are just so many strategies to choose from that it makes my head spin. The location of the home is very desirable and maybe people would pay top dollar? 

If you were in this position, what would you do? --- What are other strategies that might work?

Thanks,

Mike

Thanks!

Today, I will have a friend of my wife call the Realtor and ask her if the home is available to show, and / or what is the status on the home. I want to be sure that it isn't some sort of freak bad software glitch from the Realtor, Zillow, or whatever. Well, it really can't be, I don't think! --- Someone spent the time to upload 22 old photos and change the Zillow and Home Pads wording of the listing from when we actually purchased the home in 2015. They added in a special note about a possible bad septic tank. The fact that we need to install a new septic tank was never on the original listing on any website. So, someone did a little homework to find that part out.

I called the Real Estate Commission. They said that I need to be 100% sure that there is no glitch with a website or listing because the listing agent will also get a copy of the report and that could be a huge legal mess, if I am wrong! -- -So, I must not get it wrong. --- Yikes! --- Gotta get my ducks in a row, big time!

I got a call from a Realtor about a year ago. She wanted my plumbing company to go out and install a toilet and faucet in one of her listed homes. I went to look at the plumbing so I could match up the colors ( brushed nickel, stainless, white, or chrome, whatever ) That was an hour. I went to Lowes and started looking for fixtures. Nothing really matched. I went to Home Depot and finally found a toilet and faucet that would be great, purchased them, went back to the home, took everything out of their boxes, started installing the toilet, and found that the water had almost no pressure. I called the office to ask her what she wanted me to do and spent at least 30 minutes trying to reach her again. I told her that it could take a little while to find out why there is no water pressure, since the home has been sitting and had old plumbing. She said "I can't get up with the owners, so disregard. I then asked, "So what about the over 2.5 hours of labor so far?" -- She said, "You will need to talk to the owners about that, I won't pay you anything" -- Well, the owners would not pay me either. Each one blamed the other, he said, she said. So, due to the blame game, I walked away with zero dollars, and it wouldn't do any good to try and take any action. I had to spend another additional hour taking everything back to Home Depot, then went on to the next job.

Back in early April of this year, the same lady Realtor called me again and wanted me to go out to another one of her homes. I asked "Hey, you don't remember me do you?" -- Then I said "You have already pulled that crap on me one time." "You are nothing but a low down crook, and I don't work for crooks!" "Don't you ever call my business again, and I mean never!"

Well guess what? --- I was checking for a few homes for sale tonight in my area at 10:30 pm North Carolina time. On Zillow and Hot Pads, my home came up for sale. It was listed this April, about the same time that I called the Realtor a crook and to never call me again. -- Imagine that! -- It was listed by none other that that crazy lady Realtor and her logo is at the bottom of the listing page right now, with her phone number and website. She priced it at $80,000 dollars less that what we will list it for in a few months. She had no idea where I live, where my plumbing shop is, or anything about me, since I never told her anything personal. She just gave me a cold call that day, probably out of the yellow pages or smart phone. She had to get online, maybe GIS, who knows, and research my personal information and found out that we had just bought a home in August of 2015. --- Really!!!!!!!!!!!!! ---- Now I'm mad! -- What a complete nut! --- Oh, I printed out the listing just in case it gets deleted.

So people, what to do, what to do? -- What is my next step? -- She needs to pay for this crap!

Karen O,

The $90,000 is cash that we are spending not credit.

Our home that we owe the $75,000 has not really appreciated. Pretty much all Real Estate around here has dropped by 30 or 40%. We live near Holden Beach, NC. Actually, at the river house, I can see Holden Beach from the top balcony, 4 miles away.

Eric,

We could do that I suppose, but It will be give and take. We have no HOA at the home that we live in now. There's nobody to tell us what trees to cut, what colors are acceptable to paint the home, when to mow our lawn, what kind of vehicles can be parked in the driveway, where to place our garden hose and trash can, etc. We have 100% freedom, pretty much.

At the river house, there are quite a few rules, and we are not really used to having such a tight grip on our every move. The homeowners president swings by our house when we are working on it to snoop around on what we are doing. The law is, do not cut trees larger than 6" in diameter. We had a tree company to clear out some old dead trees and vegetation. As soon as the HOA heard the chain saws, the came a running and banging on our door to ask all kinds of questions. I felt like I was in kindergarten again. A person really has change their way of living, if living in that neighborhood, for sure. The HOA law says that they can come over and do an inspection of our entire property anytime that they feel like it, to see what we are doing in our back yard. I have never liked people snooping around my home or cars.

Hi,

I have been visiting this site now for months and have purchased "The Book On House Flipping" and "Estimating Rehab Costs" by J Scott along with "The Book On Rental Property Investing" by Brandon Turner, plus several other books. I have read them and they are great. Wow! - There are just so many ideas on how a person an do things in this business.

My wife and I purchased a foreclosure with cash for $118,000 that needed a ton of work. We will have invested around $90,000 in it on rehab when finished, so that brings it to $208,000. ( New sewer, new windows, new HVAC, retaining wall, hardwood floors, carpet, driveway, etc. ) According to an appraiser, a contractor / home builder friend of mine, and a realtor, the home will be worth $360,000, give or take, when we get it finished in a few months. All of the homes in the neighborhood are $300,000 to $500,000 and ours is the third largest one in the neighborhood at 3008 sq., on a saltwater river, waterfront community. Currently, we owe $75,000 on the 1988 small ranch 3/2 home that we live in now.

After plugging in the numbers like on page 116 of "Rental Property Investing", by Brandon Turner, our Capex will be $437.00 per month to keep the home. Within the next 15 years, this home has $50,000 of vinyl siding to be replaced, $15,000 worth of HVAC units, $12,000 of Balcony Decks, $18,000 hurricane roof, $7000 appliances, and more!

My wife fell in love with the view and all of the sea birds and has been dying to live in it. Heck! --- We can't afford or want to save up $437.00 Capex per month. That's like a total house payment from now on. We just don't have that kind of income now! Also, short term rentals are now out of the question, after I made a few calls and asked some neighbors about it. All of our neighbors are just way too quiet and I have been warned that they will not tolerate it at all. It is like Retirementville USA. Not gonna work in this neighborhood, I can tell you!

My goal: -- Get out of my current situation of owning and operating a small plumbing company. Why? -- Getting too old to Army Crawl under houses all day long for a living with never ending aching bones and muscles. I am sick of it. I want or need to go in to Real Estate Investing full time.

What to do, what to do?

What am I going to do with the river house? ( Sell it, rent to own it, lease option it )

Do I first need to sell it and pay off the home that I am currently living in for $75,000 and get that out of the way or are there much better options? Would there be any good reason to try and keep the big river home? -- I can't think of any right now. It looks like it will eat us alive!

Please give me some ideas of some strategies that you would do if you were in this situation today of the safest way / smartest way to be on the road to full time investing so maybe I can quit my hard manual labor job that I have been doing for over 25 years. I am all ears and totally open minded to your suggestions! :)

Thanks so much!

Mike

Thanks Everyone!

Hi,

I have watched some videos and have read a few Real Estate books. It seems like the more I learn, the more I find out that there's a ton of critical things that I do not know. I feel more comfortable reading and highlighting books than reading an entire book or e-books from a computer or pad.

Here's what I need?

Books that teaches the correct information about taxes and / or the government part about investing in real estate. For example: when I purchased my first property this past August, people started telling me that I need to pay this tax, and that tax, and your gain could be tax free if you live there for 2 years, up to 500k. Some people had it right and some dead wrong. I seem to hear a different set of rules or state laws from various people when I ask them about it.

I know that you buy a home below market value, fix it up, rent it, or just sell it to another person at a higher price, and make money. Everyone knows that part. I need to know all of the legal stuff. I am not trying to become an accountant. I need to know the super important parts about the deal before going into it, or what to expect after the deal. Many people dive into things without seeing the whole picture. I don't want to be that guy!

If you know of any new / current books that explains things correctly in great detail, please let me know. I have found some properties that look like great deals, but I want to be sure that I am not overlooking the fine print of the deal, so to speak, and make huge mistakes. I want to learn all about the different ways of obtaining funds, purchasing real estate, estimating flipping costs, REO's, HUD's, or any other useful information.

For example, sometimes I watch one of the thousands of "Total Real Estate Experts" on youtube . In the comments section, half of the people say "what a crook, or what and idiot" "he doesn't know anything and will land you in jail". For this reason, of course, I need to start out on the right foot with the correct information, not by having some scam artist telling me what to do on youtube, or how to get rich in 30 days.

Please point me in the right direction!

Thanks,

Mike

Thanks Everyone!

I called an Attorney this morning, the one who wrote the article posted above. He said unless it states that the home can't be rented, nobody can tell you who can be in your home at any given time, what kind of clothes to wear, or what to eat for breakfast. He also said that if the HOA doesn't specify "no short term rentals" at the time of purchase that I am good to go with it. If they change the amendments to the law, just don't ever sign it.

I called the HOA also. They said that they prefer long term renters, and they think that short term people will cause a lot of problems, but they said that for now, they do not know what more to say about it. I hated to call them but I would be a fool to book up a bunch of dates, with deposits, and then have to cancel them all. That would be a huge mess!

Hum? 

Hi,

My wife and I bought a foreclosed waterfront property on a saltwater river, great for kayaking and fishing. It is the perfect weekly rental located 6 miles from Holden Beach and 10 miles from Ocean Isle Beach, NC, and tons of Golf Courses. We have been working on it since late 2015. It is in a HOA community. I realize that we must follow the HOA rules. Nobody in that neighborhood does weekly rentals, as far as I know, but we really don't want to sell the home right now.

Are there laws as to what goes on inside of my home or whom I can let stay there as long as they follow the HOA rules that I post for them?

Can the HOA prevent us or change their laws after we have purchased a home so that we can't rent it anymore on a weekly basis? Flipping or renting it was always my intentions when I purchased it and the by-laws says that I can rent or lease it. It does not specify weekly, monthly, or yearly.

I wanted to pass it by you guys before contacting them about it, so that I might know what to say and / or how to say it.

Any feedback will be great.

Below, is an article that I found on a NC Law Website tonight.

There is a common and widespread misconception about a property owner's ability to rent the owner's property. All too often, that ability is considered a mere "privilege," similar to the privilege of an owner to use the community pool or clubhouse, or to park a specific number of cars in a driveway. In fact, the ability of a property owner to use the owner's property as the owner sees fit, including renting its use to someone else, is one of our nation's most fundamental and legally protected rights, jealously guarded by the courts. This means that serious and demonstrable reasons for restricting the right must be proven by the party attempting to enforce restrictions on rentals, and that all ambiguities and questions of enforce-ability will be resolved by the courts in favor of the free use of the property.

Additionally, courts are very reluctant to enforce rental restrictions imposed on an owner after the owner has purchased property because such restrictions can strike at an owner's reasonable expectations for investing in the restricted property. Understanding these basic premises allows a homeowners' association and its members to accurately begin evaluating any proposed restriction on rentals.

http://www.wardandsmith.com/articles/nc-rental-restrictions-in-hoas