All Forum Posts by: Rick Bassett

@will - our market is actually condusive to flipping but not for the super-sized gains of the past. Generally our houses are worth about 15-25% more once we done with them. After expenses that translates into a before tax gain of about 10% if we sell. To me that return isn't worth effort involved. Instead we will wait 3-10 years for the market to bubble back up before we start selling.

@kristtine - rents are in the $1350-$1800 range

@joe - yes while the leverage is manageable it is a little bewildering at times. We have been keeping ample reserves on hand and plan to continue to do so.

I looked at a local house on Sunday that a flipper did, the asking price is $239k. Overall they did a pretty ok job with the house including putting in very nice mid-grade kitchen cabinets but what struck me was that they cut corners on the counter top by going with a the stock/low end Big Box Formica counter that was noticeably seamed (with a gap) right down the center of the sink.

They were asking top dollar for the house and upon seeing the counter it was an immediate turn off. You can't have it both ways. If you want top dollar you have to spend on nice counter tops.

As others have indicated it probably makes sense to clean house of all the tenants and the PM. Dump the PM first as they clearly forgot who they are working for and then move through the legal process of moving out all existing tenants. Get rid of that chronic complainer first. Clearly the tenants are all talking to each other and their favorite subject is "Screw the Landlord 101".

Clean the units up as each move out and put some lipstick on the curb appeal to attract a new round of tenants who all come in under the new rules/new lease.

Doctorate in Information Systems
Masters in Information Systems
BA in Computer Science

I am a tenured Professor teaching Project Management and Enterprise Computing while balancing this growing RE business. Many years of consulting experience in Accounting Information Systems (Small Businesses) and ERP Systems (Corp. Clients).

Even though the cash flow isn't anywhere as good in RE, it is much nicer and rewarding to call your own shots on the projects without the drama of corporate politics.

We have one of these and rented both sides to different parties for a few years but as you referenced the utilities were always an ongoing issue. It forced us to pay the utilities (complicated by the fact that the house was heated by oil) and then bill each tenant based on their square footage which was agreed to in the lease. It wasn't the fairest approach as it didn't take into account actual usage but it got us by for awhile.

Recently we decided to take less rent money and have rented the entire property to a family and they take care of their own utilities. Much cleaner and easier approach.

@Ben - find a local smaller community bank in your area. Bring them a solid business plan (I'm a flipper with a dream isn't going to pass as that), a good credit history and properties that they wouldn't mind taking if you miss your payments. Small community banks have loan committees who will want to have a good feeling that the loan isn't going to go south.

We put ours in LLC's backed by the properties but different banks have different requirements.

I will say that this approach is a bit more expensive than a traditional mortgage, as our rates are in the low 5's, but we are able to get nonconforming properties financed and we don't have to deal with the Freddy/Fanny nonsense.

We buy them for cash, fund the rehabs with cash and sweat and then bundle several properties into a single loan package.

If credit is good and appraisals come out right then banks are willing to go 70% LTV on cash out of pocket (but not the appraised) before the seasoning. We always have the option of refinancing on appraised value later after seasoning if we want to take the double transaction cost hit.

All's Well That Ends Well.

This morning I decided to call them and tell them thanks but no thanks and that I was going to return their deposit. Before I could call them they sent me a text saying that they changed their minds and were going to move in on Saturday and were demanding a refund. After going back and fourth all day we agreed that I would keep $1,100 of their deposit and refund the rest.

So no longer do I have to deal with a commune living in my house but I got paid $1,100 to move on.

sorry posted to wrong topic

Six plus a kid is pretty weird, we have never had this many people in one of our properties.

I checked with the zoning officer yesterday and we meet their compliance test as all but one of them are related. They suggested checking with the Fire Marshall on maximum occupancy limits.

I'm leaning towards returning their deposit and moving on. The vibes don't seem right.