All Forum Posts by: Mike Cartmell

Thanks guys. Thats why I came here first.

Forgot to mention I have 26k in reserves. She is a full time flipper so does not qualify without a steady income. The money partner I don't know much about. But I would definitely find out before doing the deal.

So I found somebody who is an experienced real estate investor who needs somebody with some credit. She has a short sale under contract for 79k and another investor to fund 10% down and rehab costs. My role would be to use my credit to get the property in my name. I would not be required to put down any cash. She wants a 2k assignment fee and will partner on the deal. Here is how it breaks down.

1425SF house, 3/2/1
79k+2k(assignment fee) + 12k(rehab) = 93k
Quick sale price of 118k; comps at 125k
Potential Profit of 25k (Not including holding costs, if any)

Money Partner gets 20% = 5k
Flipper gets 40% = 10k
I get 40% = 10k

Does this sound like something I should do? What are the risks involved for me?

Thanks,
Mike

This is a realtor service for investors that guides you to purchase homes with 5-10k equity and market it as a rent-to-own home. Does this sound smart? Doesn't give you much equity if the market continues to drop.
Thoughts?

Thanks,

Mike

Thanks Mike I appreciate the response. Glad to see that I was reading this correctly.

This is a deal I came across. I know the cash flow is pretty thin but look at the back end.

The Tenant is Already in Place! He's just waiting for an Investor to Buy the House. He has $5,000 to pay you as a down payment. He'll pay $1,200 per month rent, generating total cash flow of approximately $3,500 over the two year tenancy. He has agreed to buy the house for $209,000 in two years while the purchase price is $185,500. Total Profit Potential = $27,529 from your investment of $18,550! ROI = 148%

4 Bedrooms, 3 Baths, 2 Car Garage 2,019 total sq. ft.

What do you think of this deal?

I live in Colorado and I found this on the Colorado Bar Association's website.

The Landlord’s Obligation to Repair

[i]The terms of the lease determine the landlord’s obligation to repair the property. Otherwise, the landlord is obligated to repair the property only when:

• Gas burning equipment causes a hazard. A tenant is allowed to move out if repairs to defective and hazardous gas equipment are not made within 72 hours after notice to the landlord. (In such a situation, a tenant is entitled to a full refund of the deposit and a rent rebate)

• The landlord has made a binding agreement to repair the premises

• The landlord’s failure to repair the premises violates the covenant of quiet enjoyment of the premises (see explanation below)

• The repairs are for the common areas

• The repairs are necessary to correct a dangerous or hidden defect

Express Promise

If the tenant can show an express promise to repair by the landlord and a failure to fulfill that promise, the tenant has some options. In theory, he or she can move out without liability. However the tenant is encouraged to consult with an attorney before doing so, because the tenant who takes this approach should be prepared to defend his/her actions in a lawsuit commenced by the landlord. If the tenant has given the landlord money for advance rent and a security deposit, he or she is entitled to rescind the agreement and get the return of all the money paid to the landlord.

The tenant may also use the remedy of "repair and deduct," which means that the tenant can pay for the repair and then deduct the cost from the next month’s rent. This remedy should be used only in situations where the landlord has clearly promised to make repairs and has failed to do so, after a written demand from the tenants. The tenants should notify the landlord, again in writing, that the cost of the repairs will be withheld from the next payment of rent. The tenant should keep receipts and other necessary records to prove the amount deducted was necessary to perform the repairs.

Tenants who invoke this remedy should be prepared to defend their rent deductions in the event of an eviction based on non-payment of rent. The record of notices to the landlord and receipts or work orders for repairs made is essential to show the court that the repair and deduct remedy has been used correctly. [/i]

From this I gather that as long as it is written and agreed to in the lease, it is legal. Is that what you read?

Mike

If I purchase a house with intent of finding a tenant buyer to sell with a lease option, do I need to apply the 50% rule with this property. I am not planning on renting it, the term would be 1-3 years. The potential profit would be made applying the appreciation (3-5%) to the current market value over the term.

I am looking at finding a nice property with around 10-20k in equity and then selling by lease option. There is no way this would work if I applied the 50% rule. Is this doable or have I been wrongly guided by one of the gurus?

Thanks,
Mike

Well do I have enough funds (25k) in reserves to purchase an investment property to rehab. Every lender I have been referred to thru other investors have required 10% down and closing costs. I would like to have at least 10k left in reserves after I buy the house.

I have thought of refinancing to a IO to reduce my payments and create cash flow but then I take on the risk of the market dropping further and no principal paydown. In your rehab/lease opton sales, do you finance with IO's?

To finance a house at 103k would require a ton of money down. I want to save my 25k in the bank for vacancies and emergencies when I can not find a tenant buyer. The whole purpose of the tenant buyer is to fix there credit and to eventually purchase the house. I do not plan on renting it. Please keep the input coming. It is nice to hear constructive criticism that I can learn from. Thanks