All Forum Posts by: Tim Winter

As has been mentioned previously, the 2.75% loan is like a free line of credit. It would be in your best financial interest to keep that loan as long as possible and deploy that equity elsewhere. Just about anything you invest in will have a higher than 3% return if done right, so you'll make money on the spread. 

Your friend is right, diversifying is your best bet against future risk. If something bad happens with one of your rentals, and you only own one, that can set you back. If its only 1 out of 4-5, then the income of the others can usually carry you through that bad spot.

As for refinancing it, just be careful if they try and increase the rate on you now that rates have spiked. You might be better off getting a HELOC or line of credit if you can on that property, as has been mentioned before.

What I didn't see mentioned before is the possibility of lease option or wrapping that loan. Since your rental income is not exceeding your monthly expenses, it might be time to rethink how you're cash flowing on that property. A lease option you should be able to make above market rent and bake in increases over time. I would focus on getting the cash flow right before doing anything further on that property. 

Then when its stable and you can show income on it, then get some credit to access that equity and redeploy that capital into something that makes you even more money.

Also, if you're waiting for a market reset in Arizona, you might be waiting well into 2022 or 2023. I wouldn't wait that long to sit on your capital without deploying it as there are plenty of opportunities out there. We're chasing many different avenues here in AZ, during one of the hottest recorded markets. 

Both routes you mention are legitimate and best routes. The only party that has the power to sell is the PR, so best to start there, and try and get them engaged is some form of communication about the property. 

Failing that, you can try and bid at the tax auction if someone else hasn't already jumped on it yet. It's a much slower process, as you have to be in areers for a few years typically before you can foreclose that way, but you still might strike gold. Even if someone else has bought before you, if you win subsequent years, you can offer to buy out their position. 

Failing both of those, you're left with pleading with the attorney (if there is one) or any other heirs (that may or may not exist) to convince the PR to make a move on it. That's probably the most difficult path with the least chance for success. 

Good hunting!

Rebecca, the estate should cover all expenses until it is settled not yourself; and if you are the PR, they should give you something for your time as well as its a lot of work. If you get an attorney or legal doc prep service to help you with the legal side, then you can seek the advice or assistance with someone that knows probate in your area if you find the rest overwhelming. 

If you're not sure who to contact in your area, PM me and I can refer someone to you.

It's on my asana task list to do just this as well. With pandemic going it, unfortunately the in person networking is mostly out, but there are some good meetups and the like going on virtually for probate and where probate attorneys maybe attending.

If you have a track record or reputation of closing out properties fast and do what you say, that's what they look for. 

Every probate deal you work, if there's an attorney involved, make sure you reach out and talk over how you might be able to help them with all the non-legal items for their client. They'll appreciate offloading these questions and tasks to you. 

@Justin Phillips said it right; I would recommend sticking to the outlying areas as they are a more target rich environment. 

Why I say that is, remember the Gold Rush of 1848 in California and 1858 in Colorado? Well everybody and their cousin has been trying to cash in on the STR gold rush in Old town scottsdale for the last 3-4 years, so you are trying to strike gold in areas that have already been very over worked. There are few properties that are HOA friendly, much less STR friendly to investors. PV has for the past 2 years been pleading with their local mayor and anyone else that will listen that they're tired and done with what the short-term rental industry has done to their neighborhoods. Then investors went hunting in areas that attracted big crowds or events, and then the same thing happened to the small towns like Jerome, Cottonwood, Flagstaff (well it's not a small town, but you get what I mean :) and Pinetop. In Jerome they got so upset with one local resident that they tried to bring criminal charges against him for doing STR and "ruining" their community.

That being said, there are plenty of outlying areas that are target rich for STR and vacation rentals. Anywhere that business travelers, local attractions, travelers for medical reasons or for higher learning will want to stay anytime of the year are great locations. Learn from those that tried to hit the "event" driven or touristy areas, and then had to face next to no bookings during a downturn in travel (i.e. pandemic.) Some of those investors were friends of mine, and they had to suck up thousands of dollars of lost revenue every month, and most became motivated sellers.

Stick with the areas that have year round traffic; locations near business travelers, attractions, hospitals, universities and airports.   

Good hunting!

@Zach Heim if the owner is deceased and there is no will, then you'll have to await until a PR gets assigned in probate before any actions are taken. The good news is, if you can get ahold any of the heirs, if you convince them to save X's home and keep it from going to foreclosure, they need to work with the probate court quickly to get the home into forebearance(with it being a gov. backed loan) so it doesn't get seized from their legal inheritance. Reverse mortgage or not, they're going to have to plead their case soon so they can buy time to get it through the legal processes. 

Be the problem solver for this gentleman to become the hero. Reach out to the out of state brother and any other likely heir(s) to bring to their attention how much money is at stake, and present how you'll do all the grunt work "being boots on the ground". If you're the hero in this scenario to the likely heir(s), it's more likely they'll want to work with you to make a deal happen.

Good hunting!

@Chase Leavitt it's only gotten more compressed with the increased demand coming to the Greater Phoenix area. MF actives in Maricopa county are currently as of today at just 100. A few years ago this number was triple that. 

We were looking at a portfolio collection of some run down triplexes near downtown Phoenix that they were wanting 3-4% cap. We offered what we thought it was worth, but they were not even interested in countering an offer 15-20% off list or to offer seller financing. 

We are still pursuing SFH + guest houses or ability to make a GH as an alternative.

@Denise Ortiz tax liens take precedence over almost all other liens, even IRS, and it would be difficult for the medical liens to take priority over your claim, even if they were "first in time, first in line". I know in CO, AZ and CA that is still the case, and why every lender requires taxes be kept current. The creditor will have to present their claim to the probate judge and that may delay your foreclosure. Typically you only have to worry about another tax lien holder being in front of you, or an unknown title holder coming back during redemption period.

Definitely check with your local laws, as every state is different. 

Your lender will be asking many questions and one of those is if you have any other deal or outstanding debt obligations current or future that they do not know about. Most lenders recommend not buying anything of $200 or more on credit before closing, what do you think their reaction is going to be if you mention a large looming purchase in your near future?

You can get the probate property under contract with a long close or lease purchase, but it would be better to tie it up with an option with an expiration date after your duplex deal closes. That might be your safest route. 

Is this property in Flagstaff? Have you looked into what it would cost you to have someone else manage the short term rental for the 1/1, or even the 3/2? It might make more sense to do it that way, depending on how close you are to any military, college, hospital or events nearby that would drive short term traffic. What we typically like to do with multi units like these is rent out one long term, and the other short, and see if the long term renter wants to get some rent credits by managing the STR. Then you have someone on-site that can help out with the heavy lifting, and would free up some of that management time you experienced.

Also depends on what kind of leverage you have on the property. If its the current rock bottom rates, it might make more sense to hold it even if you are barely breaking even, as it's going to be a gold mine in about 3-5 years. Even properties acquired 3-5 years ago can still have low enough rates or amounts of leverage that doing a long term hold makes good sense if your hold term is longer than 5 or more years. Some investors are kicking themselves for selling in the past couple years because a refi at todays rates would have increased their income over most things they can pick up currently.