All Forum Posts by: Travis Sperr

Opportunity cost comes in to play, no doubt about it. But also you have to consider risk tolerance. Based on the description you provided, you will get a better return buying more real estate, if you are not comfortable owning investment property, evicting tenants, carrying debt, etc then the opportunity cost is negated. Alternatively if you are prepared to take it on then you might get a few deals that cash-flow a few hundred dollars a month. use the cash flow to pay down the rentals and find a few paid for properties in 15 years rather than just 1. Further more there are tax advantages, the appreciation, principal pay down. I think it was T. Harv Eker that said "don't wait to buy real estate buy real estate and wait" 

You pay the HOA fees as a part of your cost of ownership. If the HOA offers amenities that the tenant would enjoy then use it as marketing - pool, trash, etc. You are renting the property at what the market will allow (not the market rent plus HOA fees) and pay the HOA payment out of the rent you collect.

I wouldn't put that responsibility into the hands of the tenant, the late fees and challenges with no payment is too much risk. 

@Bill R. hit this one on the head - I would record the contract. But being able and ready to close on it, even with hard money or transnational funding and reselling would be a good way to keep most of ht profit.  Not much to lose but a lot to gain so don't get bullied. 

I would take a banker to lunch or coffee (they love getting out of the bank) and just be up front. You have rentals, you are no dummy, this is your first time in this arena and don't want to waste anyone's time, pick their brain on what they like to see on a deal and build the package accordingly.

You will find that bankers are willing to spend some time up front to save a lot of time down the road.

Fake it until you make it.

Don't be afraid because of your lack of experience, but at the same time be humble and learn what you can. You will find that if you network most people are willing to help you get going or connect you to the right people. You likely will not put a deal together on your first night so take it all in.

And most important @Chetan Patel dont buy anything that requires you to pay with your credit card in the back of the room.

If buyers are difficult to work with find a new buyer. The price is the price, regardless of what the seller owes or your fee is. If it is a good deal someone will buy it from you. If no takers the deal inst strong enough.

You could just let them know that the seller has enough room to sell the house and pay your fee, assuming that is correct, to remove the fear of a short sale that could drag on.

Very interesting. You likely run into an issue if they are using FHA, conventional or bank financing because the lender may not want to pay your fee. I would have an in depth conversation with their lender to find the best way to close the transaction, whether it be double close, assignment, etc. There could be title seasoning issues in some cases. Furthermore a potential representation issue?

Collect your fee upfront and treat them as any other buyer. If they cant close will they create issues for your buyer?

@Manny Cirino

This scenario is possible but not likely. It is possible to get a seller to carry part of the deal, this has to do with how good of negotiator the buyer is, private seller with an off market deal - might work. Anything on the MLS is very unlikely.

Most HML's will not allow a second lien position. This is really based on your area and market for lending practices. Much easier to get this done with a private money lender that you may have a relationship with rather than a HML that is more savvy and cynical :). The reason for me is that with a second lien holder if the deal goes bad I have to go through a full foreclosure and there is no opportunity for a deed in lieu, this slows down and mucks up the process of getting the money back to work. I don't have a down payment requirement, so a second in our business would mean the deal isn't strong enough.

When you ask about running the calculations, it is the same as any other deal. you need to look at all expenses vs income.

Most people selling a house are selling it to use the money for something else, in a high equity position, what would a seller want in lieu of the cash now? a return on their money? a piece of the profit? a pretty risky position for the seller carrying the second.

@Mike Lisenby

I started with a HUD triplex owner occupied 203k loan. Fixed it up, lived in one unit while renting the other two out. After a couple years I moved on and kept the property as a rental. This worked will because it was only 3.5% down and created favorable cash flow. In the meantime I continued to buy distressed properties using hard money, fixing them up and refinancing into conventional loans. Nothing too sexy about it, just slow and steady until I had ten rentals. Using hard money is a great tool so long as you can find great deals. The 20-25% down option is great, except that you would only be able to buy one property every couple years based on your comment. For most people buying one property every two - three years would dramatically change their retirement, especially at your age.

Good Luck to you.

I always have the contractor/handyman/etc contact the tenant directly for access. If the two of them cant find a time for it to work - it either isn't important enough to the tenant to be there/have someone there or your relationship with said contractor isn't strong enough, meaning that all of the people I use will make it happen - after hours, weekends, etc.

Furthermore - if the schedules just don't jive tell the tenant you can put a lock box on the property and/or give the contractor a key.

I would highly recommend that you do not get in the habit of meeting contractors at your property as a chaperon every time something needs fixed. Your time is too valuable and you wont be able to scale your business.