All Forum Posts by: Todd Jones

I get it. The equity could be used for “other” things. But you may blow a chunk of the money received from the sell quickly and you may regret it. Once it’s gone, it’s gone.

Sell only if you don’t want the townhouse. Don’t include a month-to-month tenant in this decision.

I visit the STR sites often. Yes, there are a lot more people based on FOMO. However, it's not tanking.

Why?

Quality. Folks who just jumped in didn’t invest much into making their place look presentable. Some homes look cringe inducing. There are seasons of ups/downs depending on the area.
I listen to the Real Estate Rookies podcast. Guests don’t brag. They’re trying to teach others which is better than not trying to help people and communities. 

I’m in agreement with several replies but as you can see from everyone ‘s replies, more data would help. 
Is $900 20% or 40% more than the current? How does the current tenant’s rate compare to the market? You can find out via Zillow. Did you investigate this tenant?

I agree with @Kevin Sobilo and the others. They may stay a short while. That extra $900/mo may be eaten up quick once they leave early unless it’s not a month to month.

As with everyone, how did this person approach you about your property?

I know about Arrived and assumed they will eventually go out business like similar companies. Guess that’s not going to happen now.

It would be funny if the caveat is the homes have to be practically hard wired with Amazon stuff (i.e., Amazon thermostat, ring door bell, Amazon speakers on the ceiling, Amazon smart bulbs, etc). The meta data captured from the devices would pay for their investment plus more.

I just hope they don’t stage the homes with unreliable Amazon furniture made by company with a name taken from a cat thrown on the keyboard (fburgjekdbhdv furnishings).

Some are reacting negatively because “purchase price” is a very generic term that applies to anything you buy at the store like a smart phone, groceries, etc.

But based on your choices I can honestly understand the confusion. I also remember college professors asking extremely easy questions like this intentionally…and folks getting it wrong.

Let’s say a home is for sale for $100,000. You want to buy it.

The $100,000 is the purchase price. Now, your 3 items you list are the ways you can purchase it.

a) If you get a loan for the home for that much, you got a loan for 0% down, which is difficult to do. There are closing costs at 5% ($5000). You pay that up front…but the purchase price is still $100,000.

b & c) You put 15% down. With the other closing costs, you owe $15,000+$5000=$20,000 out of pocket at the table. You give them a check of $20,000. So what’s the purchase price recorded? Still the $100,000. What about the $80,000? If you’re putting $15,000 down, you need a loan from the bank for $85,000. After closing, the bank gives the seller $85,000. 
So what’s the purchase price now? Still $100,000.

If a car for sale is $10,000, regardless if it’s cash, partial loan and regardless of the tax, title, temp tags, registration, etc, the purchase for that car is $10,000.

Again, how you buy something can vary but it doesn’t change the purchase price.

@John Perry

Just curious, what’s the status on this?

I agree. I was nervous as it was my first big purchase. Back then, buyer’s remorse was my biggest fear. Now, my philosophy is it can be fixed with the right tools, resources, and knowledge and once it’s done, it’s done.

I though about it and my next purchase my be an auction as the MLS is silly now.

Also, as @Andrew Weiner mentioned, that individual may have been buying homes for someone else to increase their capital for tax purposes. I saw a Robert Kiyosaki interview where he told his team to buy 1.2M worth of property as it was approaching the EOY and he needed to be more in debt for tax purposes.

My tenant example isn’t near the level of the others. But I do have this :)

My first rental property was a new home in Cali. The area only had two property managers. The one I wanted didn’t respond. The 2nd choice was more unprofessional and lackadaisical but I had no choice. The home was not too far from an Air Force base so I thought I would have moderate vacancies here/there. First tenant was great (paid on time, kept the home clean) but in 4 months, they left.

Well, things went south from there. I asked the property manager:

 “hey, is the sprinkler system on? The grass will die out otherwise. 

“Yea, I think so”. 

“Please check and turn it on if it is not. Thanks.”.

I ask them via email and phone call to visit the place. They said “It was fine”.

Well, I visited the home. The carpet-like greenest of grass is now a 100% wasteland with a few 2 foot tall weeds growing here/there. I’m talking Mad Max. The entire lawn. Gone.

I make a surprise visit to their office.

“What happened?!”

“Yea, you got to water it more than once a day or it will die out.

“But…was the sprinkler system turned on”.

“It has a sprinkle system?”

Yea, I know that seems relatively minor. A more severe issue was it being vacant for over 9 months. I ask her repeatedly to advertise. She said she did but when I check the paper, it’s not there. I ended up advertising  She said I can do section 8 but didn’t recommend it. I had no choice. They came in, stayed for 2 months then the rent stopped. They left tons of trash,
giant holes in the walls, dented garage,  mailbox down, etc. The PM hired her daughter to clean up and yes, I paid. She did clean the big pieces including filling two trash bins of used diapers but it was still an extremely greasy mess. I stayed out there for x days and repaired (excluding the holes as I hired someone). It became almost spotless. Oh, they later called the PM asking if they can get their security deposit back. I said no. It stayed vacant for several more months. Finances were hurt bad.

Some of you are thinking “phhh. It’s still relatively minor/typical stuff. I go though that stuff all the time? So, where’s the “bad” stuff?”

That’s just it. Tenants horror stories aren’t the only downside.

I gave in and tried to sell it.

Well, that was in 2007. Yes. During the of the beginning of the 2008 housing market crash. In 2006, the home value when up 30% in just 4 months (hey, it’s Cali). In late 2007, I sold the home at 28% of what I bought the house. Had no choice. 
I learned a lot and it wasn’t all bad. I had fun staying out there while I fixed it. I moved on.