whats your opinion on investing in not low income areas...it seems like these are the only places that have properties that cash flow (NJ)..but then you have to deal with crappy tenants...my goal is to build up a portfolio of cash flowing rental properties

i assume that investing out of state is a horrible idea

It has happened - one of my tenants haven't paid their rent in 2 months now.

Long story short, they supposedly need to pay legals fees - but that is B.S. becase they are working and make good money - enough to pay their rent. They told me all last month that they'd pay me next week, all throughout the month, so I know they are jerking me around. They wont pay.

I filled a case with the Landlord and Tenant board and have hearing on the 10th of November. I put in an application just to "collect rent that is owing" where I should have put one in to also evict the tenant after...

Is there any other way to try and get my money? I called a collections agency and they told me the tenant has to be out of the house, after they get evicted they kick in. Iam not sure to familiar with liens, could I apply for one of those also??

What are some of your experiences and what is my best bet here?

Thanks

I'd probably find something else to invest in.

Because as a property is in worse condition and worse neighborhood the investment becomes much more risky. You're going to attract worse tenants on average. And you don't really ever know what you're getting into on a rehab until you get started - no matter how many contractors look at the place. IMO a new investor is prone to make very large, costly mistakes on a deal like this that could be avoided. I'm not saying don't do it, use your own judgment. If you are comfortable, go ahead and give it a shot.

IMO low income areas are the best places to invest if you are investing for cash flow. The trick is to only rent to Section 8 tenants. You'll still have your share of problems, but now as many as you would renting to non Section 8.

Don't bother trying to get your money. Tomorrow get up early, go down to the court house and file for eviction. I have no idea why you let these people get 2 months behind. If they can't pay by the DEADLINE, which should be in your lease, you should have filed for eviction. Forget getting the money, and stop listening to their excuses. Are legal fees more important than keeping a roof over their heads? Nope. But they know that you are a sucker that is willing to let them live for free. So they're going to go spend your money on something else. Screw that. Evict them immediately and NEVER EVER allow a tenant to get this far behind again.

This was what I was afraid... I have already filed for eviction. I just thought there were ways in getting the money back.

I truley want to make this bitches life a living hell. Only because she chose not to pay when should could no problem.

Spex,

Are you saying that most sellers who have property listed on loopnet aren't motivated? I mean, aren't most advertised properties going to be listed for as close to retail as possible? Yet, surely these seller's expect some bargaining taking place?

would it be a good idea for me to look into a property management company if I purchased multiple cheap properties to rent? I'm not too concerned with losing some extra money in repairs short term, but I am a bit worried dealing with tenants, especially when I most likely won't be living in the city I want to invest in.

You should definitely have property management if the rental isn't in the city you live in. Personally though, even if it is in the same city I get property management anyway because tenants are such a headache

Yeah, basically I'm saying that you're going to have a hard time finding a motivated seller on Loopnet. Most of the time properties will be listed at retail. The sellers do expect some bargaining to take place, but if you're talking about knocking 20% off the price and having them carry back a large chunk, that isn't going to happen unless the seller is pretty darn motivated.

I think that you're going to have a very hard time finding a good property management company to deal with your property. Property management companies are not too interested in dealing with poor condition properties in bad neighborhoods. So be careful that you'll actually be able to find a company to do the job.

so then it may be better for me to invest in fewer relatively cheap properties in the suburbs, than ones in the ghetto- easier to manage, better tenants/higher occupancy, more likely for me to find a good property management company?

I know I have a lot to learn, but I could not believe the number of properties in just a small area I saw where the pics in the listing made the place look like a dump- very old garages, bushes/yard left unkept for a yr +, pics of the inside showed it dirty with ancient fixtures.

maybe when I find places like that in not so good neighborhoods it would be better for me to fix + flip for a few k profit, than to hold on and try to rent.

If you can get a judgement against them you may be able to garnish their wage. Don't count on it being anytime soon though, takes a while.


I would find a collection company that specializes in this and let them handle the entire collection / garnishing of wages process.


If you do it yourself, you will end up dropping it.

100% with your past 2 years tax returns.

Not necessarily. If you need high cash flow property that you can hire out the management for, you are wasting your time trying to buy single family homes at all. ON the one hand, you're not going to find properties with good cash flow in good neighborhoods, but on the other hand, you can't hire out the management on properties in bad neighborhoods. See? You're stuck.

Perhaps you should save a while longer and buy an apartment building or a commercial property instead.

It seems to me that you're going to have a hard time accomplishing this because its hard to find buyers in such neighborhoods. Maybe rather than flip for a cash sale you could do some seller-financed deals or something. What I'd probably do is buy, fix, carry back the mortgage, then sell the mortgage to a private investor.

Yea, I got an agency that specialize in landlord claims. The only problem is though, I lost her application form and I dont have any important info like social insurance number, previous address, landlord. But I do know where she works (down the street frome me) so I think this will be ok.

What to you mean garnishing their wage?

Garnishing someones wages basically means you'll get (part) of their wages.

Spex

Have you ever done an assemblage? Buying 5+ properties adjacent to one another, getting them re-subdivided as one lot. Then tear down and sell to a builder, or tear down and develop? Any thoughts on this type of maneuver?

Until the dept is paid off?

Ive never been through this so its kinda interesting/frustrating...

Is it going to be tough for me to get a 25% COCR if I have to put 50% down on a property in order to qualify for financing? Since I have no credit, and am a professional poker player, I assume I will have to put a large amount down if I want to be able to purchase something...making it much tougher to get a high COCR than if I was able to put only 20% down. Am I going to have to just accept this in order to get started? Or, how I could I make a deal (such as the one below) more attractive given my circumstance?

Asking price $380,000
Two buildings, 8 units total built 1983
1 1/2 townhouse style units
in more cultural/artsy part of town 30 seconds away from two hospitals/med school
proforma rents at $600
GOI is $57,600
NOI $35,648

So the cap rate would be 9.2%...not quite 10%...what would need to change in this equation in order to make this deal more satisfying to you and actually a deal? Would the price have to be reduced? If so, to what? It would obviously have to be reduced drastically in order for it to have a 25% COCR...so much so that it's impossible for the seller to accept...again, I anticipate this being the problem with any offer if I have to put 50% down

Have you talked to a commercial mortgage broker yet?


I know a couple of good national brokers that may be able to hook you up...


Talk to a GOOD mortgage broker first and see what kind of commercial loan you can get.

Yes, you will get a portion of their earnings till paid off.

Spex x,

I was just wondering how did you find managers for your properties? It seems very difficult to find trustworthy people (especially those not connected to any big management companies). Also how much would you pay them? Is it a free room, percentage of gross rents, or a salary? Which option do you think is best?

Why do you not like big management companies? I'm pretty sure one of my management companies gets higher rent and keeps costs lower because of economies of scale. Things like being able to list all of their properties on a website to cater to college students.