House #2
I read over the credit report for the potential tenant, and I couldn't belive my eyes. This person had page after page of accounts that ALL went to collection. I even saw a couple of vehicle repossessions mixed in-between. Still, I tried to keep an open mind. However, the two things that I just couldn't ignore were (1) the collections/repossessions spanned a period of years (IOW, it wasn't a one-time thing), and (2) the most recent collection was from earlier this year. No thanks! So, I told my agent the person just wasn't a good candidate. Back to square-one.
House #1
My wife called me yesterday and told me we got a bill in the mail from the water company for this property. It was a notice of past due payment and they were going to shut the water off next week unless it is paid. Hmmmmm. My immediate thought was that the tenant knew he'd be outta the place this week and wouldn't pay the bill, but he also must know I still have his security deposit. I called him earlier, but got his VM and left a short message for him to call me back. If I get no answer, I'll call back again this afternoon. I swung by the place over the weekend to refill the flyer box, and everything looked okay.
Oh, and I got a letter from the HOA for that property saying they issued a warning because the grass was too high. The warning was for April 1st, but the tenant had mowed the place on April 2nd, so I'm sure it's safe to say the matter was dealt with. This HOA sends out three warnings, and if the problem is not dealt with after the 3rd warning, they'll slap a lein on the property.
8 comments:
Hey Steve,
you posted this over at rei club,
"This is what I'd do ...
1. Flip several homes to raise cash for a down payment.
2. Buy a home 20% (or more) below FMV and put 20% down.
3. Sell home with owner financing (wrap/AITD) with a decent spread in rates.
4. Repeat."
Have you gotten to the repeat part yet? Also you believe in owner financing so why do you mention putting down %20?
Have you gotten to the repeat part yet?
Actually, this was in regards to a question a poster asked. My comments were more about what I'd do in his situation. In fact, I would do the same thing, anyway, but I'm currently waiting for my two homes to sell first. Although, I plan to use the proceeds to either pay off some debt, put down on some commercial properties, or a little bit of both.
Also you believe in owner financing so why do you mention putting down %20?
For one it increases your equity position, but another advantage is that you can usually get better financing and/or more financing options with a lower LTV.
Also, as I alluded to (and point blank wrote about) on my blog before, time is my most precious and rarest comodity right now. If I had no family responsibilities, not only would my REI portfolio be larger, but so would my education in it. That's one reason why I preach to single people they have absolutely NO excuse for not becoming wealthy in REI.
Uh yea Steve, I know all about the benefits of putting down money, however as your screen name over there is,"no money down" you advicate owner financing correct?
Hey Steve.. Lost your email. Can you drop me a line?
your screen name over there is,"no money down"
My screen name was created before I even really got headway into REI - it was a monicker of a term I heard and it was not being used, so I took it. :-)
you advicate owner financing correct?
I advocate whatever works for your particular situation. I believe owner financing (OF) is a great tool in creating CF, but it may not be for everyone. I have spoken to three local attornies who promote OF to get their input, and I came away with three different, but all positive, viewpoints. I even had House #2 listed with OF until a couple of weeks ago as I realized cash was more my requirement at this time than CF.
Shaun - I sent you an email. Hopefully, you'll get it. If not, just do another posting here.
Starsky -
The 20% under FMV and 20% down idea actually came from Keller's The Millionaire Real Estate Investor, so I can't take credit for it.
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