Buy & Hold Dilemma

Tie it up, don't put any money into it, just assign it for a few thousand bucks, that's better than just breaking even isn't it?

Best of luck,
Elena

I find the renter first then I find the house they want to rent. It works great and keeps vacancy to zero. It will get to the point after you start to look for renters that you simply can't help them all because there are so many of them. Find and qualify the best ones. Once you locate the top 10 houses they are interested in simply start making low offers. Try to buy ones that need next to no work or what I have done is let the couple know they will be resonsible for the rehab on the house. Then once you lock up a house you collect the deposit from the new tenants. Then at closing you collect first months rent. If you structured the deal right you would have bought the house with no money down and received cash at closing from the new tenants. I have done this 3 times and it saves you a lot of time, rehab, and vacancy. I highly recommend doing it this way.

In that situation I would try to locate financing that will possibly let you refi without seasoning (making payments for 6 to 12 months) and pull out the equity. To me this would probably by some time to find a tenant or tenants and be able to cover the mortgage!

How do you find tenants first?

D,

You go ahead and lock it up with your escape clauses. Put an ad in the paper for available rental unit, which is the property you're thinking about purchasing. You post an ad for say, 2 weeks, that puts you well before your escape clause for inspections, financing..whichever escape you want to use, if you don't find a renter, then you "escape".

Figure out the rent comps in your area, and buy something that you can afford to cover with the median rent range in your area. You should have NO trouble finding renters if it's like most places in the US right now. I have NEVER, EVER, EVER had trouble finding renters in 15 years for any of our places.
There are those here, however, that have gotten in a bind. But that's because they are trying to rent out high end properties and there are only so many jobs around that pay good enough for people to afford those places. Not to mention, most people that can afford those payments will just buy a home.

And you could always consider a lease option. I think if I decide to sell something in the future, I will try that route.

Rina

If you can pay cash for a property and then rehab it, when you are finished you can cash-out on the new value of the property. If you need to hold it for awhile to get back into an up market to make your big profit, you just use the extra equity you've extracted to make the payments for however long you have to hold. You can also rent it out, but sometimes if you've made it brand new and only need to hold for say 6 months, it's nice to leave it untouched.

I think this would work as well with an HELOC or lien against another property, use the cash to buy, rehab, and then cash-out.

When I refinance a property to buy another, I usually take the max I can get, typically 80-85%. I figure then I'm getting the most out of my transaction and giving myself more cash to invest with. It just keeps accumulating with each one you do.

Rina

Oh, goodness, it's midnight. I went to bed once already, but thought of this and just HAD to come back out to put it in. To any newbies with the dg addiction: It takes about a month before you see ANY sign of relief! lol

Can you be more specific about escape clauses? What are some escape clauses that I can put in an offer/contract?

Thanks everyone, another great learning experience. I like the creative ways cbr and Rina have come up with to handle D's dilema.

I have saved all these posts to my ever increasing log of information from this site.

al, here are some escape clauses, subject to my partners approval clause, subject to financing clause(ability to aquire financing), subject to pass inspection clause, etc. YOUR HERO, SULLY.

I have only bought and sold 2 properties but I have made many offers on houses
and the one clause that I found to be powerful is subject to inspection clause.
You can always find something wrong with any property but you don't even need to get an inspection or even give a reason why you feel your inspection failed.
I always would give a reason which I could easily justify but you don't have to.
Just make sure you give yourself enough time but most sellers don't like to put that clause to far out so they can work with other offers.

Phil

these clauses are in other words contingentcies.

the finance one and the inspection one are givens, and they are both built into the realtor contract in Delware anyway.

Other contingentcies you can use are:

upon approval of partner (like said above)
right to show property till closing date

but think of this...if both parties sign the contract, then you abviously want it so what are you escaping from "getting a good deal"?

ps...if you use inpection contingentcy and request the repairs by pre set date, and they fix them your still on the hook.

"ahhh but you cant find a renter..."

"and you obviously cant afford the investment house mortgage along with your personal mort, and bills."

Neither of these can EVER be true.. If they are, then you are 1 bad tenant away from foreclosure and possible BK.

You gotta KNOW that you can get it rented. If it's a SFR.. you probably can. Most SFRs are still OO. And a lot of people (eg families) prefer SFRs (privacy, size etc). But you MUST know your market- and this means the rental market as well as the resale market.

As for #2.. you better have a backup plan and a backup plan to teh backup plan. And one of those should be how will I carry this for a month or 2 if it doesn't rent. It might also mean selling it rent to own or with owner financing (maybe a wrap?).

But expecting (and NEEDING) that the property be rented from day 1 is a recipe for disaster.