Personal Finance Resources

Hey guys, I didn’t get the time to produce the first wave of the “Make Money in Multi-Family” series, but I promise it is coming Monday. I just wanted to give you a state of the union on my current real estate activities. I have a mid-sized house in a good area of town that I have been marketing for a cousin of mine, and today we struck a deal for a lease option/purchase with a nice couple here. The deal is subject to the screening process, but I already have their credit report and application in hand, and what I have verified so far has checked out. Their credit is good, and the job history checks out. Monday I will follow up on their rental history and make sure they are good tenants.

The deal is a good one for the owner. It is a three year lease option, with good down money, and we also negotiated to allow $50 per month of the payment to be credited toward the purchase of the house. So really, this contract is going to be a hybrid between a residential lease option and a residential lease purchase, in that we are taking a substantial amount up front for an option payment, but then also allowing part of the rental payments to be credited toward the close.

So keep your heads up, ask questions of me as you need assistance, and go make some money!

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If you are in the market to buy a home today, and have the credit scores to be able to procure a home loan, then you are probably in the best possible time, place, and position to get a phenomenal deal on a house. As more and more people’s credit scores plunge due to foreclosure, then number of available buyers out there is rapidly decreasing. What this means for you is that you have less competition fighting you to buy that house.

Ok, so what does it mean, not having much competition fighting you to buy a house?

Well, what it means is that the seller is not looking at 3 different offers from other potential buyers besides you. Ultimately, this means that you have the opportunity to buy the house at a discount - if you so choose. But if realtors are involved, watch out, because they are trained to get the highest possible price, and they may try to make you believe that the seller won’t go for your low ball offer.

I had to learn this the hard way. The first investment deal I offered on was a 2,600 square foot house in a nice area of Temple, TX. Now, I had a real estate partner (he was a lousy business man) who took the seller’s agent’s swaying and pushed the price up more than I wanted to spend. The seller’s agent said things like “I don’t think she will go for that, but I will put the offer in front of her.” So we ended up spending more than we should have on this property. Well, needless to say, I have closed any dealings with that partner, and I don’t accept any pricing advise from any realtors that are outside of the realty I work for.

So the short of it is this, think about a number, make your offer, and don’t do a lot of negotiation. Set a highest number you are willing to give before you even send the first offer, and then don’t go over your highest number. Let the seller sweat, instead you doing the worrying about the house. You may really, really want the house, but I promise you there are other houses out there, and if the seller says no to your highest offer, there is another seller out there ready to make a deal. Trust me, I have worked several real estate deals in my neck of the woods, and sellers WILL negotiate. Many of the deals I have bought into are $10,000-$30,000 off the original purchase price. No baloney, the house I am living in now - the asking price was about $70,000, I bought it for $40,000, and had the seller pay $1,200 towards my closing costs. It can be done, but you have to focus. (see more on the key to real estate investing)…

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It has been tough, but the Lord is good. The two renters I mentioned in my post on Eviction Notices decided to pay their rent and fees. I got the full amount from both toward the end of the week last week, just before submitting the actual eviction notices. So getting an extra $300 or so in late fees really makes the picture look better when I look at the net effects for January.

As you may or may not know, eviction hurts everyone involved. There are no winners. The tenants lose their home, and the landlord loses rent, court fees (assuming they don’t move out when instructed) and advertising costs to find a new tenant — everybody loses. So it is safe to say that I was very relieved to see the money come in.

So now it is back to concentrating on getting 4 different properties that I am managing leased. I am getting many calls in on the different properties, just haven’t gotten anything closed. Most people I am running into have bad credit, and I really don’t want to work with people that can’t pay. The two renters that I have had problems with both had bad credit, however I do have another tenant with bad credit that has paid on time every month. Are there any tenants out there with good credit? Please step up, I have some quality properties to put you in to.

The latest 2 duplexes have really been a great investment. They are making far more than the 1% that the typical investor looks for. One duplex that we have, if the top rents for about as much as the bottom (they are identical so it should rent for about the same amount) then we will be making over 2% on the rent. So we will see what happens, I need to go now, I have a showing for that duplex at 10 AM. Please leave your feedback/questions at the bottom of the page.

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It has come to it. The last day for redemption. If my two renters in default do not come up with their required rent and late fees today, and eviction letter will come tomorrow. This is especially difficult for me as there are no winners in an eviction. The tenant loses their residence, and the landlord is left with no potential income. But letting them stay without paying is even worse for me as the landlord, so they will have to go.

Texas law says that I must give them 3 days notice to vacate the property (unless the lease contract specifically states otherwise), and even at the end of the three days, I still cannot force them out. If they refuse to move out, then I have to go to the Justice of the Peace, and file an eviction, as well as pay a $65 fee for the action. Just a side note, but where are my taxes going? I can’t think of anything that I don’t have to pay additional for, except for the public park that my wife and I take walks in.

On a better note, one of the duplexes we just bought has the new water meter installed. So now I will need to get with my plumber to do the switchover. At least this tenant is paying…

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In my latest acquisition, the investor that I represent as a property manager wanted to meet one of the tenants. So I said OK, and we have that scheduled for 11:00 AM this morning. This tenant is a good tenant, but is a little anxious, thinking that his rent may increase substantially with a new owner. This is very understandable, and is why I met with him myself last week just to calm his fears.

But, my investor wanted to meet him before I signed a new contract with the renter, so we will be going over there in a few minutes. I hope to get the lease contract completed and signed today, and get our first month’s rent in as the new landlord. From what I see and what I have been told, this renter is a good one. But as you may know, the old “Put your money where you mouth is” applies here. Once we get a couple of month’s rent on time from this renter, then I will become a believer.

The other new renters that we currently have are still in default. Friday I will be getting with them to collect the rent, and inform them of the contract penalties that will be applied next month if they are late again. I will report in tomorrow on what transpires today…

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