All Forum Posts by: Tyler Rowland

If that is the only information that you have on the property, then no.  Definitely stay away.  If the seller is able to offer an engineers report, and give a little more history on the settling, then you can entertain taking the next step.  

Settling is tricky, because it can affect so much of the house.  Pipes, framing, electrical, etc...  It can really cost a lot of money to truly fix it.  Even with an engineer report and history, you have got to go into it taking into account what could go wrong.  The regular numbers you might collect for Cap ex and Maintenance might need more of a contribution than a home without settling issues. 

Lender's do like to see a minimum of 2 years commission history in order to count that income towards qualifying. I have seen it done with 12-24 months worth of commission history, If there are positive contributing factors like large reserves, and good credit scores.  But that does not mean that they cannot count that base income that you have.  As long as that is set in stone as salary pay, then that can be considered.  Again the 2 year work history in a similar field is going to make a huge difference in what is counted. 

They will stay at that same assessed value when you bought it until the taxes are reassessed.  If your taxes are going into escrow, they servicing company may up what they collect for taxes and insurance if the taxes are reassessed higher.  So always keep that in mind.  

Beginning of this week, there was a police notice that went out on our local Facebook page.  It said that if anyone had their storage unit burglarized in the last few weeks, to contact the police, stating they had caught the culprit, and had found some of the recently reported stolen goods.  

Didn't think much of it.  They mentioned in the noticed which Storage units were broke into, which were plenty far away from my storage unit's location.

Fast forward a few days; My friend (an RE investor)  asked me if I had heard about the recent storage unit break ins.  I told her "yes, I remember something about that happening."  She said "The thieves were her tenants."  

I had been talking to her about her rental property in the previous month, as her property was a lot like mine.  So I was really taken aback when she said they were her tenants.  I was able to get the scoop, and the situation is almost verbatim for the warnings that are talked about on the Podcasts and written about by RE investors.  

Turns out the Tenants were from California, they found the property for rent on Craigslist, and offered 6 months of rent up front; on top of the Security Deposit.  My friend, who has been courageously battling cancer off and on for years now, and relatively newer to RE investing jumped at the opportunity.  She did a quick background check (typed their names into google), and signed the lease.  

After getting the phone call from police that her duplex was the one where they were storing the stolen goods at(among other substances) she got with a lawyer to see what she how she could mitigate losses.  Luckily she was able to get them legally evicted very quickly to gain access to the property, which is a lot easier to do when the tenants are behind bars.  The way she described the state of the property, is as follows.  "I cannot see what damage they have done to the duplex, because there is so much junk and tons presumably stolen goods. "  

She has quite the road ahead of her, and she did the right thing to lawyer up and see if she can recoup her losses.  Luckily, they were caught about 3 months into their lease so she has some room to work and good people to help her in this crazy event.  But this could have been so much worse.

I just wanted to share this story on BP, to show that the advice given by David Green and Brandon Turner, as well as the many experienced investors on this platform, is not without cause.  Read the books, listen to the podcasts, ask questions on the forums!  They will save you from having to go through situations like these. 

Anyone ever been offered 6+ months rent up front and taken it?  How did it work out for you?  

Its crazy how similar your situation is to what mine was.  I put the offer in on the duplex I bought because they had paperwork and an engineer report on file for what they did to remedy the issue.  Like Christopher mentioned in his comment, they had put in Helical Piers to lift the duplex, and the structural engineer signed off on the repairs.  That gave me enough confidence to put an offer in so that I could do my own investigation into the repairs.  Long story short, there was an additional $8K of cement work that needed to happen, and they knocked that off an already low sales price.  So it worked out for me...

When I saw the pictures that you posted, the first thing that came to my mind was "it looks like it has been patched up once before; is there a paper trail from the seller on what they paid for, or a professionals opinion on the damages?"  I would ask the seller agent if anything can be provided by the seller.  Definitely talk to a pro to figure the estimated cost to repair and then see if the seller will come down any on the sales price.

HELOC's are a great way to go if you need a good chunk of money for a short period of time. I can see them being great for cash offers and auctions. But there needs to be a plan in place before you use it to pay it off ASAP. Whether that is refinancing or making lump payments. When people use them as long term loans that can hurt them because there is a fluctuating rate and the interest only payments. Those are nice low payments in the beginning, but they don't pay down the principle, and that payment will go up with rates.

They violated the lease agreement by having pets, so you have the right to evict.  But since they are leaving anyway, I would tally up the damage done in the final inspection and charge them for that.  Talk to a lawyer, but I don't think you can retroactively collect for a pet deposit, that seems like it could get messy.  This is a good learning experience

That one to the door doesn't worry me as much as the one in the basement, although it would be smart to patch that one up, to keep water from doing further damage to the property.  The plants and grass right up against the house is an issue, there is almost always going to be some sort of water damage.  Especially if it is slopping towards the house.  It will be well worth it to have a structural engineer get out there and have them give you an opinion.  They may tell you the same thing they told me, on a similar issue.  Take the grass and sprinklers(if present) away from the house.  The engineer can also tell you how that basement crack is going to effect the home long term.

Glad your alright David, what a crazy experience!  Thanks for the solid advice and reminder to stay safe.  There are too many stories out there about people getting hurt while alone. Whether it is collecting rent, or doing inspections on your units;  getting programs in place to avoid sketchy situations is worth every effort.  

HELOCS do have stricter standards because they are open lines of credit and have adjustable rates. Most that I know of require at least a 680 Credit score minimum, not to mention no late payments in the last 12 months. Take some time to build some good credit and let that late payment work itself out. Keeping credit cards at or below 25% of the credit limit will help keep that credit score up to its optimal level the next time you apply for a HELOC.