All Forum Posts by: Wells Lange

I would buy a fourplex with an FHA loan, live in one of the apartments and rent the other three. Let them lay down your mortgage while you save the cash flow to buy another property. 1 leads to 2, 2 leads to 4, 4 leads to 8......snowball...snowball.....

Did you pay cash?? If so, that's a lot of money tied up for a small cash flow. Buying this thing all cash, doing a value add, and getting it rented makes you look like a flipper. If you leverage the condo, it probably won't cash flow anymore. I would sell it and invest in higher cash flowing properties using leverage. Or if you don't want rentals, do another flip.

If my father and I bought a foreclosure for $50k, with an ARV of $130k, and we needed $40k for the rehab--would be be able to do a cash out refi after paying cash for the property and use that money to primarily find the rehab?

I disagree with some of the people above.

Say you have a 12 month lease signed with a tenant for $1000 a month in rent and a $1000 security deposit. If they break the lease and decide to leave after 3 months, that means $9000 is still due to you. You could either sue them for that entire amount (usually not worth it because most tenants don't have surplus cash) or keep their deposit as damages and not sue them (basically allowing them to settle).

The deposit serves two purposes, to encourage them to keep the property in good shape and to not take off and abandon the agreement. Remember, the lease is a legally binding contract. The moment they sign, they are on the hook for $12,000 paid over 1 year and you are on the hook for giving up possession rights to your property. That's contractual.

The only way a tenant can break a lease early is if you agree to it. As long as you don't agree, then you can either sue them for the balance of the term or essentially keep their deposit as an agreement not to sue them for the remaining $9000.

When I have tenants break their lease early I keep their deposit and don't deal with the time or effort of pursuing the lease balance in court.

Good Luck.

Never make the first offer! You've got the upper hand, play to that advantage

I disagree with dawn. Unless the term is up, do not give them their security deposit back. That is your damages for them not paying. You could go after her for the entire lease term but that takes time and money in court and is usually not worth the effort. Keep the deposit which should cover the vacancy for a month while you try to fill it again

I would do 1 months rent. That way if they get up and bounce on the last day of the month their deposit covers you for 30 days of vacancy to try and fill the room again. Anything above 1 months rent is a little ridiculous

ok thanks!

thanks for the response--can you give an example? I'm having trouble picturing what you're saying

I'm in a similar boat-- would financing a rehab be possible with credit cards? I mean as in paying contractors? I would think they would want a personal check... Do credit cards have checks that you can buy for them??