All Forum Posts by: Tim Johnson

@Mike Montanye

You might want to consider requiring (or at least encouraging) tenants to purchase "renter insurance" as well. These policies can cost as little as $15-$20 a month and insure the tenant's possessions as well as liability coverage for their guests should there be an accident of some kind. (It's not in place of your own landlord policy but in addition to....)

@Martin Guerrero - just so there is no confusion here...... for most MLS listed props, you won't be able to actually have a professional or licensed inspector do an inspection until you're under contract....until your offer has already been accepted and signed around. But as long as you've included an "inspection contingency" in the contract, you have nothing to worry about. You usually have a designated number of days for the inspection and if you don't like something you can walk away from the contract by simply filing the correct form. You don't need anything more "robust" than that. Sure.....in a hot market, having this inspection contingency in the contract MAY be a disadvantage.....but it offers you complete coverage and an easy "out".

In Russell's case above he is most likely indicating that he has enough experience....and trusts his own knowledge when looking at a property that he feels fine making his offer (after viewing the property) with no contingencies included. That makes his offer clean and very streamlined. That's great, but not all investors feel as confident in the "inspection" part of the due diligence and will therefore want to include that inspection contingency in their offer. 

If you know the pros and cons of each.....then I suspect that you know the answer to your own question. The issue is not a handy calculator, but instead..... what is your own long term plan? 

While there is no correct answer, the general rule of thumb would be to use leverage when you're in your "acquisition stage" of investing - when you're trying to purchase multiple properties - using your cash sparingly, financing with as long a term....and with as little downpayment as possible. This allows you to scale more quickly and potentially get far higher ROI. Once you've reached the number of properties or doors that your satisfied with.....it becomes far easier to aggregate your cash flows and quickly pay off loans in a sort of "snow ball" approach.

Does your plan include the purchase of multiple properties?

Deals can be structured in a number of ways.

In a standard real estate purchase and sale..... the buyer and seller (or their representing entities) are the actual parties to the agreement. Other parties that help with the closing process are usually a lender (if not a cash deal), title, and an escrow team. In my environment the title and escrow often function together as one team. So in communications for closing.....I always consider buyer, seller, lender, and title/escrow as the main players. And of course as a realtor, I play an important part in moving the process along by representing buyer, seller, (and sometimes....but rarely, both). Other accessory "helpers" would be a home inspector (hired by the buyer), and the appraiser (contracted through the lender....again, when a loan is involved).

In states where attorneys are required the process plays out somewhat differently.

Couldn't sell their own home?

Inspections turned up issues?

Why not call the listing agent and ask? 

We can't really see the numbers.....but assuming there were no other bidders..... and assuming that your offer was reasonable and not just a low-ball, I would do as you did. They were basically saying "no" to your offer, but not serious enough to counteroffer - which in this case evidently would have gotten them a higher number. Yeah, keep an eye on it and if and when it's still sitting there try making another offer - this time lower.

 Just make sure that you have that inspection contingency - with enough time - as part of your purchase and sale agreement.

@Lorenzo Sannibale Just a thought on the actual lease...... since you're a PRO here at BP, you have free access to a completely lawyer-vetted lease form that will comply with MN laws. At least check that one out before you pay a lawyer....

@Cheryl J McGrath

I know this may sound harsh....not meant that way - but if you are not in a position to save some of your own money and raise your own credit score, you do NOT want to be in a position to be repaying hard money loans. Don't believe the story that you can just easily get rich with other peoples' money. Set a goal to live "brutally frugally" for a period of time. Clean up the credit issues. Get some margin. Then it will make sense to jump in with both feet.

@Brian Schroeder - thank you. You clearly are considering how to network.....and my comments were not meant as a dig - just an encouragement to be very specific about what you can bring to the table in any kind of cooperation. Everyone can articulate goals and their desire to succeed. However, the specifics of the benefits that you can offer (e.g., you have time to commit to a project, capital, carpenter expertise, you would be willing to do research, run errands, bird dog, etc.)....these will be attractive to other like-minded investors who may have knowledge and expertise - but limited time.

Anyway, best wishes. As I'm on the opposite coast I may not be your best partner :-) ....but thanks for connecting...