All Forum Posts by: Wade G.

Sorry for the length but I appreciate all that read it. I currently have four rentals. While in the process of leasing one, a 69 year old lady completed an application for the house. After reviewing her application and background check (she has a clean background) I noticed that she currently resides in a house that she is buying and has lived in for 12 years. I asked her why she wants to rent when she has a house. She informs me that her husband passed away and she no longer wants the responsibility of home ownership. She says she just wants to walk away and let the bank have it plus the house will need a new roof in a few years and she does not want to put any money into the house. She is current on the payments. So after some talking I go over and look at her house. It is very well taken care of, and clean, and landscaped, and her pride of ownership shows. Its in a good strong neighborhood in a good area of town. It could use new carpet and the AC is on its last leg but for a few thousand the house could be ready to sell. The retail value would be 118k - 122k. She said her loan amount is 86k and some change. There is not a ton of room in the deal but I think it is enough to do something with. With that in mind I am asking anyone that reads this what strategy I could use to acquire the house and sell it, or keep it, or whatever. My position is I dont have enough in reserves to qualify for another mortgage since I currently have five mortgages (basically I need about 28k in reserves and a little more for a soft rehab and closing costs to buy it with financing, I have about 18k liquid.). The only strategy that I am familar with is buying houses at steep discounts, rehabbing and keeping as rentals. I have no experience with wholesaling, or subject-to, or really even doing fast flips. As stated earlier the immediate rehab costs would be less than 5k. So basically I wanted to get anyone's input on how to best handle this situation. She informed me that her bank told her that if she knows anyone that would want to take over the loan they should call and talk to the bank. I plan to call the bank tomorrow. All I can really think of is trying my hand at my first wholesale deal.

I have never been completely comfortable with the whole last months rent situation. My lease states that the security deposit cannot ever be applied towards rent. Well, it has finally happened and a tenant is trying to stay in the house and use the security deposit as the last months rent. She is to move out on Sept 16th. As of today I still have not recieved the prorated rent for this month and I know what she is trying to do. I did not begin the eviction process as I should have on the 5th because I figured there would not be enough time to deal with it anyway. In hind sight I know I should have started the process anyway. So, how does everyone else handle the last months rent situation? I have never had a problem until now. I'm thinking there is going to be enough damage to eat up the security deposit so she is atttempting to get ahead of the game and basically not have to pay for any repairs by using the deposit as rent.

I'll tell you how I did it but you are not going to like it based upon what you wrote about SFH. I graduated college making a whopping $1900 month gross income...dont get a biology degree. I needed money to start investing so I bought a small beat up house in a not so great area and lived in it while I did the repairs myself at nite and on weekends. I bought the house for 25k, did alot of sweat equity and it appraised a few years later for 70K. In those few years I busted my rear and worked and paid it off. Refi it, pulled out 45k and thus that was the beggining. I should have sold it and got the entire value tax free but I didnt. A smarter person could probably find a better way but that is what I did.

I was a member of LU a several years ago and I will say it was worth it. The group helped me with my mind set and steered me in the right direction. Now, I will say they are a little disingenuous at times. They tend to make RE investing sound so easy and that anyone can do it. To a certain degree that may be true but in my experience it is going to take work and some sacrifice. The thing is you dont know what you dont know and Del is a successful RE investor who has done it many many years so why would you not want to learn what you can from him. It was easy for me to decide to join since I had spent thousands upon thousands of dollars, and time, and effort to obtain a relatively useless college degree that earned me the right to make less than a teacher. A measly $500 was nothing to me.

I have thought about this alot too and came to the conclusion that I would not pay off rentals early. Reasons why:
- lower returns
- I buy for cash flow
- considering loan rates I do not care about paying off a 4.8% loan fixed for 30 years
- If you get sued by a tenant then 100% of the equity could be lost if the house is paid for, versus only 25% or so in a leveraged home
- I like to keep the extra money for reserves or acquiring other rentals

In Texas my primary residence is homesteaded. So if I ever had an itch to pay off a home it would be that one, not a rental. Then again my primary residence is 3.7% for 30 years so again I see no reason to pay off a 3.7% loan. I like the idea of using the money that I would have used to pay off the primary going towards other RE investments or some other kind of investment that pays 8% or 15% or 20% etc.

I also think that paying off a rental would cost you more than you think. Reason why is because you might have the tendency to get lazy. When a unit becomes vacant you may not have the urgency to get it back up and running with new tenants...thereby costing you money each day. Maybe not but I can see how that could happen since there is not that monthly note to deal with.

Really leverage is what makes RE such a good investment. I can see how paying off rentals may give piece of mind but in reality it makes for a poor investment. When I am older I may change my mind but not right now especially with the current loan rates.

I currently have four SF houses. One is becoming vacant next month and I am thinking about selling it. I am actually thinking about selling all the houses as the leases end this year. After paying taxes, recaptured depreciation, etc., I should have an excess of 100k. With that I am thinking is maybe I should partner up and buy into a MF investment. Then again there are so many good deals on SFH that perhaps now is not the time to jump into MF, especially since 100k is not exactly alot to play with anyway. How did you get into multifamily and has it been worth it? Are the returns really that much better in MF than SF?

I live in Houston and it has happened to me on every offer I submitted last year. As has been mentioned we are competing with owner occupants who may buy one or two houses in their life. They have a completly different thought process. I think they tend to buy based upon the price and just figure on making the repairs in the future with no regard for the cost of the repairs. It took me six months to find my last property. It gets very frustrating having to submit so many offers but eventually one comes through.

I also find it frustrating when realtors list a house for an unrealistic price. Many houses I look at are listed at a price, and once the repair costs are factored in the cost of the house exceeds the comps. It makes no sense. Heck I was at a RE meeting a few months ago and a realtor had a listing she was trting to sell to investors. She said the property was listed at 74k and it needed about 8k in repairs, then she said the ARV would be about 82k. She said the price was negotiable but I dont even want to try and negotiate such crazy listings.

All I can say is be persistent. Finding a good wholesaler may help but I emphasize the word "good", many of them tend to leave little room for the investor...no offense to any wholesalers in the discussion.