All Forum Posts by: Tim Herman

@Antwaiyn Smalls What does the landlord tenants laws say about security deposit? What are your rental criteria? What is the most common place to find a rental in your area: zillow, facebook marketplace, craigslist, apartments.com, mls,etc. Make sure you watermark your pictures.You can buy a lease package from BP under the tools section. State specific, attorney vetted written by investors. Several places to run background checks, Zillow, transunion smart move,etc

@Jarret Durst How did you find the only house that never needs maintenance? Is it in a flood zone? How many units? SF of the property? 

@Ian G. You did ask why "Yeah I noticed that. That question I asked is not what did I see, but *why* it happened". Banks are owed the money so that is the opening bid or reserve, because most owner occupied loans cannot be pursued for deficiency judgements.

@Jason Carroll percentages have to be higher on sub 1k a month rentals. It is better to run budgets for capex and maintenance. Here would be an example of one item in a capex budget. Floors. Ask what the commercial warranty is: most are 10 years or less. That is your lifespan. Assume this property has 1000 sf of flooring. My area it is $6 sf to replace. $6000/120 month lifespan=$50 per month. You aren't saving enough to replace floors. Will come out of pocket for appliances, hot water heater, roof, hvac, remodels, etc.  You are not even putting 20% down so mortgage insurance will be added, even if you can find someone to loan at 31.5k mortgage.

Quote from @Ian G.:

Quote from @Tim Herman:

The bank gets to credit bid what is owed 

Yeah I noticed that. That question I asked is not what did I see, but *why* it happened, as in, where is this controlled. What language should I be looking for in the judgement, or is it a statute, etc? Where is the controlling language for this action?

 Why, because they didn't make their payments as agreed in the mortgage documents. Different states have to follow different procedures on the foreclosure process. After a certain period of time with no payments the bank gets to accelerate the note and demand complete payment of all fees, interest and balance. That is the foreclosure that the sheriff conducted. Certain investment loans the banks set the reserve lower to stimulate bidding. If it doesn't reach what the bank is owed then they can proceed with a deficiency  judgement against the borrower. No different than borrowing money to buy a car and they repossess the car for no payment.

Quote from @Ian G.:

There was a sheriff's sale recently where the bank bid the price it was owed. I don't understand that, but anyway I assume that they'll want to sell it now, right?

How can I contact them to make a deal to take this thing off their hands before they make it more complicated and expensive, like a Foreclosure sale or going through Auction.com which are no-go's for me.

The bank gets to credit bid what is owed. This was the foreclosure. Usually on a owner occupied home there cannot be a deficiency judgement. Investment loans they can go after the guarantee for any monies that they don't recover. Most banks have an REO division that evaluates the properties and decides how to market them. A lot of them are put back on the MLS for sale. The banks may have a website for the properties it is willing to sell or go back to auction. 

@Bevin Bankston most banks underwrite vacancy at 5%.  Your 4% vacancy is your tenants staying 25 months. What happens when you have to evict and it takes you 3 months to evict. Your next tenant has to stay for 75 months to get back to 4% vacancy. Did you run budgets for capex and maintenance?  Percentages are okay to use before you do a deeper dive into the numbers.

@Bevin Bankston I tried to show you that you were missing a lot of expenses. Missing the soft cost numbers shows this as a better deal than it actually is.

@Bevin Bankston How did you arrive at your repair budget. If you have 4k worth of flooring, my area it would cost 24k to replace. Leaves only 1k for painting. How did you find this unicorn that never has a vacancy, never needs a repair, never has capex. Are you up to being an onsite manager? Otherwise add 10% for pm. Are all the utilities separated. Who provides exterior maintenance. Snow removal or grass cutting, etc. If you look at the 50% expenses ratio it shows you will make around $700 per month. Your results may be better. Have you had an inspection especially of the sewer line. Does it have knob and tube wiring? Galvanized pipes. 

@Kurt Martig Yes you can only refinance at 70-75% of ARV. You are correct that a 500k ARV will net 350k less mortgage amount. You have to be careful when projecting ARV. If you are trying to BRRR and the appraisal comes in low you will have money you can't get out. You need to define who your target audience for str. There is house in that area with 3/2 that is only $150 per night. The house you are looking has a lot better lot but if people are out exploring and only using it for sleeping they will not pay double the price.