All Forum Posts by: Zachary C.

From what I hear IRBSearch is another one to consider. I don't know what the requirements are for signup on these programs (some require certain company licensing info and such, possibly depending on the search quality level). If you can find a collection agency whos fee is collection based this might be an alternative to coming out of pocket on the front end. Some people buy the debt judgements if you just want to offload it for a percentage of the judgement value and then they have to worry about actually collecting is (not sure large the debt has to be for this to work, aggregate or otherwise). Private investigators generally have an account with one of those premium services like LexisNexis' Accurint or IRB search; if they have the unlimited search version their entire cost is sunk. You could compile a database of the people you are trying to track down and the type of info you will pay for and then call around to a bunch of different ones and see what you can workout, whether it is running the list monthly for a fee, or some fee that is results based; point is if their software is sunk costs they should be able to negotiate a decent deal where their time is covered (it could be something to fill in periods of slow work for them with little time and effort). Between those three options its just finding the right one in terms of time you are will to hold the debt and the fee you will pay to get it collected (of the fee you will get for assigning it to someone else to collect it).

I'm a fan of the program too. Here is an important note and common misconception: they do not place tenants they just approve the process and pay full or partial payment of rent based on the tenants voucher; the landlord (or their PM) still screens and places tenants. The program, in my opinion, does not place any real extra burden on the landlord, they can be a little picky with certain inspection items (but those are usually very cheap, ie having a cap on the bolts at the base of a toilet) anything else on their inspection should just be common practice for a landlord (if you take care of your investment with basic repairs and maintenance there shouldn't be issues). Getting in touch with the office can be an issue, especially since covid hit, if you're trying to call try emailing too.

I would be interested in hearing justifications for #3. Things I can think of are that they allow you a lower monthly rate if you are willing to gamble that the irregularity of repairs and maintenance @10% will average out less. But I would think that's pretty close to playing the lottery for a payout. Point 3 by @Nathan Gesner is a good place to start to determine if this is a pricing strategy that is in your favor or is a form of marketing bait. Say 10% PM fee based on rent rate is the mode in your market; then you are saving 3% every month based on rent rate with the risk of a 10% payment on any repairs and maintenance. With rent at $1000 monthly savings are $30, what pattern of repairs and maintenance allows you to break even? Can you come out ahead? You can easily play scenarios, like with one of my units, which had to have old cast iron pipes replaced between the street and the house. The estimates came back between $2-4000, so $200-400 or 6.7-13.3 months breakeven for that one issue. Then you can think about incentives; which vendor would the PM rather you choose, then one that will make them 200 or 400 dollars? Of course you can scenario this to death. So a simpler method might be to go back to your original numbers, what did you allot for repairs and maintenance and what about capex (depending on what the PM plays a role in and applies this fee to) where you've already averaged out these cost as best you can on an annualized basis. If you take 10% of that and it's greater than the annual PM fee savings compared to a company with R&M markups then you can be fairly confident that, on the average, you will loose money every year (again, only looking at this one issue is not a wholistic approach to comparing options but will highlight the costs aspect). You can even calculate the actual PM cost through this approach because just plugging in 7% into your numbers would be wrong, as Nathan pointed out. Is their total fee actually higher than the market, or is it only slightly lower (say 1%, which would only be an estimate) then would that potential 1% savings be worth the risk of it moving from the estimate compared to a guaranteed flat and predictable rate? I would then go back and think about incentives and the pros and cons, what other advantages might you gain from this arrangement: flexibility, more or less hands on involvement, etc.?

Another Local, Roll Tide!

Well flip, like BRRRR, depends on being able to get the properties at a low enough price that you can put in the needed work and then sell above to make whatever margin your strategy targets. As markets heat up it can be harder to find that lower price but great to unload at the higher price and then vice versa in the opposite market. All this applies to Flips more so because of the tight time lines necessitated by holding costs. If you can find a route to better purchase prices (off market strategies generally) then a market heating up, which is what I've been seeing (opinion), is a great time to flip. You have to be on top of you numbers (realistic/achievable) and on top of your process (moving through the stages efficiently). I would think flipping is best done in person due to the time line, but I thought the same thing about BRRRR because of the intensity on the front end and I still see out of state investors doing it successfully; so that's probably just a personal preference related to risk tolerances. Overall, if this a process/strategy you like and are comfortable with it can be a very good strategy and with the quick turns our market is making I don't see unloading being the friction point as long as all the earlier steps were done well.

Hey @Michael Balducci always glad to meet more active investors in the area.

@Einat Menashe welcome to the club. There are a few REI meetups/groups in town if you want to go that route and plenty of helpful people here on BP, local or otherwise, that you can reach out to.

Best,

@Jevon Smith There are two ways to owner finance in Alabama. One is the typical version you'd expect, where the owner fully owns the house and then holds your mortgage. In this situation that transfer, as @Geordy Rostad mentioned, and that could trigger the due on sale because she does not own the house fully. If this version was used (forget the current circumstance of due on sale) the she would have to foreclose on you if you stopped paying just like a regular bank owned mortgage. The other version treats it more like a note where official transfer doesn't take place until the note is paid, here she could evict you instead of foreclose, since you do not own the property yet you are legally treated more like tenant than an owner, but I think this prevents the due on sale clause since a sell hasn't fully taken place. Now, this isn't a type of deal I have done and it's been a while since I reviewed these two methods so I am a little fuzzy on the specifics including some key terms so please go research this information as a starting point, I could have some stuff mixed up or things could have changed since I studied this particular issue. There are some fairly obvious risks in a scenario like this (if she stops paying the mtg the bank is going to foreclose and you'll probably loose) but if you think dealing with family cuts these down it may be one of your better options. I also think there might be some serious legal issues with the idea you started with where you buy it at once price for closing and then pay her an additional sum later.

Hope this helps,

@Muthiah Nachiappan, I am located here with a PM company and multiple agents, perhaps I can get you lined up with the right person. Shoot me a message.

I'm local. Look forward to meeting at some point. Shoot me a message any time.