Bill Cook
Active 5 days, 22 hours agoForum Replies Created
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Larry, I’m unsure what you mean when you say, “Provide my own insurance.”
Remember, to insure a property, you have to have an insurable interest. In this case, as lender I can pay the BORROWER’S premium to keep policy valid. However, because I don’t OWN the property, then I can’t get a policy on the property. Well, I can, but it’s an invalid policy.
Bill Cook
770-815-8727Jay,
Not sure in which state the property in question is located. Foreclosure laws are unique in each state.
Couple of thoughts:
First, looking backward, this closing should never have occurred. If your instructions said proof of a one-year policy, but there wasn’t one, then no closing, and current problem is avoided.
Second, begin an immediate foreclosure. Your mortgage or deed of trust should have language included that allows you to foreclose if the borrower does not maintain insurance.
Third, until the default is cleared, or until foreclosure is final, pay the insurance policy.
Bill Cook
770-815-8727Bryon, guess we will agree to disagree.
Many of my investor friends have implemented Section 8 with their rentals due to the “guaranteed” rent payments.
Most have run into a variety of problems during Section 8’s inspection process. If the inspector finds one thing not right with the property, a passing inspection is not given. This means the house cannot be rented to a Section 8 tenant. Instead, a new inspection must be scheduled. Most inspectors won’t let you – the property owner/manager – resolve the problem their on the spot. Often times it takes days/weeks to schedule a new inspection. When it’s time for the new inspection, often is the case a different inspector shows up. If this new inspector again finds something wrong with the property, the investor must again schedule a new inspection, which again can take days/weeks. Meanwhile the investor’s property is sitting vacant…often times for more than 30 days…which means no rent plus the investor must switch from a Landlord insurance policy to a Vacant Dwelling policy on the property, which is much more expensive.
Another common problem is when a landlord is having an issue with his/her Section 8 tenant. Maybe the tenant is not taking good care of the property, maybe the tenant is paying late, maybe the tenant is not being a good neighbor, maybe the tenant is not being easy to work with, no matter the problem, if the landlord decides enough is enough and seeks eviction, the chances the Section 8 tenant will turn to a government agency for assistance is much higher than if the landlord is dealing with a non-Section 8 tenant.
Bryon, I’m not telling you to not do Section 8 housing. You’re a grown man, do whatever you want. That said, I want anyone reading this thread to understand that I disagree with you when you say, “They dont have any more say than any other local or federal law that landlords have to deal with.” This is flat wrong.
Bill Cook
Bryon,
Our approach to landlording differs quite a bit. That said, I’m a firm believer that my way is not “the” way, it’s just “a” way.
I put great value in learning from great teachers, landlording and otherwise.
When it comes 8 housing, because government has a significant say-so concerning what you (the landlord/property owner) can and can’t do, it’s more of a partnership than a subsidizer.
Experience has taught me that owning rental property in rough neighborhoods comes with many more challenges than does a rental in a nice, owner-occupied neighborhood. I learn this from David Tilney, one of my landlording teachers.
Your original question is which would I prefer and why? My answer: Neither one. That said, I’m obviously the wrong person to answer your question.
Bill Cook
Bryon,
A number of questions for you before your questions can be answered.
First, how much experience do you have as a landlord?
How many landlording courses have you taken, and from whom have you taken these courses?
How much experience do you have with Section 8 housing? Do you understand that with Section 8 housing your partner is the government?
It sounds like the neighbors you’re looking to own investment property is a bit rough; is this a the case?
Bill Cook
Michelle,
You are welcome to give me a call to discuss your situation.
I’m concerned when any investor is pulling money out of their investment properties (increasing their debt responsibility), especially when the financial portion of the real estate market is beginning to look a bit shaky.
Bill Cook
770-815-8727Danny, frankly I don’t care how you get to seller’s kitchen tables, I do care that you get to seller’s kitchen tables.
I’m a door knocker. Have made my living knocking on owners’ doors and getting invited in since I was 12 years old (1972). It’s all I’ve ever done.
I have a door knocking manual on my website – BillandKimCook.com. it also shows you how to make T-bar and Tetter Totter written offers.
Go to my YouTube channel; you’ll find videos there. Bill and Kim Cook
Better still, get out there and knock on sellers’ doors. Ask why they are selling. See what happens.
Bill Cook
770-815-8727Welcome, Danny. Good to have you aboard. You’ll find tons of how-to-do-it knowledge on Cash Flow Depot.
That said, implementation is everything. By this I mean: You’ve got to make a lot of WRITTEN offers. This is the alpha and omega of real estate investing. Not as successful as you want to be? Find more people to help. Find more problems to solve. If the method you are using doesn’t accomplish this, find a new method.
Jack Miller was a door knocker. Pete Fortunato is a door knocker. I’m a door knocker. I’m not saying you must turn into a door knocker, but I am saying you must find a method that gets you to sellers’ kitchen tables regularly.
When an investor calls, and that investor is not making it, I ask two questions and it cuts right to the heart of the matter. Question 1: How many written offers have you made in the last 30 day? Question 2: How many written offers have you made in the last 12 months?
So I ask you these two questions and will wait for your reply.
Bill Cook
770-815-8727Conor,
When giving the seller’s situation, you’re not giving enough detail; too broad brush.
Q: Can the owner get a loan?
Q: Is the owner willing to sell an Option to the property?
Q: How much of a short fall is the owner having? Is this a $5,000/month problem or a $500.
Q: What is the age and condition of the owner? Elderly and failing health or young and in good health?
Q: Why is a broke person living in an $850,000 house? $850,000 homes are expensive to live in (uts, taxes, insurance, upkeep, landscaping).
Q: Does the owner live there by him/her self for is other family in the home?
Q: Is the owner willing to trade this expensive house for a much more affordable house. Maybe take back a note on his/her expensive house so he/she receives monthly payments.
I can think of 50 more questions to ask this owner. You need to dig. Be curious. Get to the heart of the problem. Can’t structure a solution until you FULLY understand the owner’s situation.
Bill Cook
770-815-8727Tim,
I’m getting a fair number of people who hopped on the VRBO bandwagon within the past four years. They bought with only VRBO income in mind. Then the government stepped in making it more than a little difficult for investors. At the same time, everybody and their mother started buying short-term rentals, which meant rent rates began falling due to increased competition. Combine this with the fact that many folks who got into VRBOs for the “easy” money quickly learned running a hotel is anything but easy. Then came the fun step of the property not cash flowing. You can guess what comes next.
Bill Cook
770-815-8727Tim,
I don’t like any of this.
First problem: Seller paid too much for the property. Then paid to furnish it.
Second problem: Interest rate is 5.49%? Sell bought it in 2022 when interest rates were 3%. Why did he/she pay 5+%?
It’s OK to help someone out of the quicksand. It is NOT OK to take their place IN the quicksand.
Buying S2 and then selling via a wrap is a BAD idea. What if the seller’s lender calls the note due? What will you do then?
I would have this begin with the borrower getting a loan modification. If this happens, MAYBE then do a S2. If you do a S2, don’t seller wrapping a S2. Instead, do a lease with option out the back end. If you do this, I would NOT get a big consideration fee.
You’re welcome to call me.
Bill Cook
770-815-8727
