Archive for the ‘learn to invest in real estate’ Category

A Passionate Life, Turn Your House into a Rental

Saturday, June 5th, 2010

In the movie Man on a Wire, French tightrope walker, Phillipe Petite, runs a cable between the two World Trade Center Towers in 1973, and walks across the 200 ft wire.

It is truly an awe-inspiring feat. People on the ground watching commented:

”It was extraordinary, it was very very beautiful. It was like he was walking on a cloud.”

“It’s beyond anything you can possibly imagine. It’s mind boggling. The awe of the event and the overall largeness of the scale was magical. It was just profound.”

Even one of the NYPD officers who were sent to remove him said, “I personally thought that I was watching something that no one else would ever see again in the world. But it was a once in a lifetime experience. Everyone (all the police) was spellbound in watching him.”

Petite planned the event for 6 ½ years.

He said, “There is a great joy when I am on the wire. Passion is something that knows no bound. It’s not that I am ready to lose, it’s that I’m ready to gain. It’s living intensely. I lose myself in my passion. I do not care about the aftermath.”

“If you are passionate, you are going to do what you want to do all day long, and you are going to become the best at it.”

Movies like Man on Wire remind us that passion is an option and a choice in our lives.

Sometimes it may take something like losing our job to realize that we are not following our passion, and to provide us with the opportunity to pursue that passion.

Following your passion can involve something as simple as turning your house into a rental.

Protecting Rental Properties: LLC vs. Insurance

Tuesday, May 18th, 2010

I met Tucson attorney John Gravina following a presentation that I gave at the Tucson Festival of Books. We talked about different ways for rental property owners to protect their properties and safeguard their liability.

I asked John if he would write a post for my blog on this topic and he kindly agreed. Below are his insightful comments.

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Recently at the Tucson Festival of Books workshop, in addition to self publishing, you mentioned your underlying rental property business. I was more interested in your underlying business since I too have rental properties. I am also an attorney that represents claimants in negligence claims, workers compensation, social security disability, probate and estate matters.

So, I am one of the attorneys that will sue a landlord under premises liability if there is a case. What is frustrating to me is the fear of law suits against landlords that they will lose everything.

I have found at similar seminars (not yours) business consultants coincidentally selling limited liability companies and/or promoting their use as some kind of immunity or shield against law suits.

Protect Assets with Insurance

I advise property investor’s landlords to get insurance. If you have insurance, you really don’t need to worry about lawsuits since the insurance should defend you and indemnify you (pay) for any suit. The best asset protection is purchasing insurance.

Also, premises liability suits are some of the most difficult cases to take. Call around and ask for an attorney on a slip and fall case and you will be surprised by the lack of interest.

My advice to landlord property owners is to have a good insurance broker. Discuss with the insurance broker your specific concerns of a handy man being hurt and/or a tenant suit. It’s important that you are very specific at this meeting. Later if you are sued, you can bring this conversation up for coverage under reasonable expectations.

A landlord should have a business relationship with an insurance broker. All insurance needs such as liability, workers compensation, premises and an umbrella policy should be covered. If the selling agent states coverage is available, this should be confirmed in writing, such as providing a letter itemizing specific coverage.

Reasonable Expectations

Arizona had wonderful insurance law on reasonable expectations. If you go to an insurance broker for a specific example or insurable interest, the broker or insurance company can be bound. Under Arizona Law, reasonable expectations of a contracting party are to be enforced even if the written contract, such as an insurance policy/contract is contrary under the Darner decision/doctrine- 682 P.2nd 388 (Ariz., 1984).

There is a very famous landmark case in Arizona under reasonable expectations and insurance law. An auto broker went to his insurance broker requesting insurance on all of his vehicles. The broker wrote a small policy on one vehicle. The consumer was able to have coverage on all of his vehicles under the reasonable expectations.

It really should go without saying property investors need to be reasonable in their dealings. Underlying most premises liability issues, is notice. So, as a property owner if you are on notice of a dangerous condition, it must be fixed.

Notice of Dangers

The landlord obligation for premises safety may be summed up as Notice. For example, in Siddon’s, a four year old child was injured by a heavy door removed to allow access to the leased premises. The tenant asked the landlord to remove the door.

Another example is Shields, a landlord renting to a tenant repair shop that allowed pit bulls, that the landlord knew were dangerous.

I could go into some other areas such as fraudulent transfers, but that would be well beyond the scope of your inquiry. Perhaps in the future I could address this too for your readers.

John A. Gravina
Attorney at Law
John.Gravina@Azbar.org
http://gravinalaw.com/
520.795.4330

Welcome to my new ‘fixer upper and rental house’ blog home!

Friday, May 7th, 2010

Welcome to my new website.

Make yourself right at home. Pull up a chair, have a cup of coffee, and check out some of my articles, useful links, or previous posts. Hopefully, you’ll discover some useful investing information.

To keep you in the loop, I am developing some new resource materials to help you get started in the house fixer-upper and rental business.

First and foremost, I am putting the finishing touches on my new book entitled “Never Sell Your Home! How to turn your home into a rental house.” Watch this space for further developments.

Even with rising interest rates, now is still a good time for do-it-yourselfers to start a new income stream with a rental house or two. House prices are still at rock bottom lows, but before too long they will start moving up again.

The key is to find a good fixer-upper house in a location where people like to rent. It’s still the best way to start your own business, and establish some long-term economic security!

Sometimes going through tough economic times is just the push that we need to start on a new path.

When tough times hit, I like to reflect on Lincoln’s saying, “We can complain that the rose bushes have thorns, or we can rejoice that the thorn bushes have roses.”

Breakdown of townhouse purchase costs

Friday, February 13th, 2009

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Here are the final numbers on the rental property that I purchased.

Price: $106,000
Interest rate: 5.125%
Term: 30 years
Down payment: $21,200
Principal & Interest: $457.37
Taxes & Insurance: $128.87
Total monthly payment: $586.24
Estimated rent: $770

The townhouse is 1100 sq.ft., 2 beds & 2 baths, washer, dryer, carport, and small back yard. It has a great central location and should rent easily. I have another property nearby that is very easy to rent.

It needs some cleanup and repair work in the kitchen, fire alarms, blinds in the windows, new toilet sets, etc. There is nothing big that we have to do to it. With my wife and kids pitching in, we should have it ready to go by the end of the weekend.

Here are a few more photos of the kitchen, the living room, and the back yard.



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"Fix em Up, Rent em Out" Featured in Newspaper Article

Friday, December 5th, 2008

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I was recently interviewed by the Arizona Daily Star and responded to a variety of questions related to my house fixer-upper business, such as:

Why did you write the book?;
How did you get into the fixer-upper business?;
Can you give away one secret of success?;

as well as several other questions that inquiring minds want to know the answers to.

Here is the complete interview, entitled “UA researcher fixes up houses on the side, writes about it.”

See also:

For yet another newspaper interview that I did see: Fixer Upper Business Highlighted in Newspaper Article.

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"Fix em Up, Rent em Out" wins USA Book Finalist Award

Monday, October 20th, 2008

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I’m pleased to announce that my book, “Fix em Up Rent em Out,” is an Award-Winning Finalist in the Real Estate category of the National Best Books 2008 Awards, sponsored by USA Book News.

Top 50 Amazon Reviewer D. Blankenship says,

What this work does give you is ideas and an outline, that through hard work, common sense, and a bit of luck, you can do quite well for yourself and have a bit of fun while you do it. The author is quick to point out the down side of every aspect of this business and points out ways, if there are any, to avoid them. On the other hand, the author does a wonderful job of pointing out the positive. He not only emphasizes the financial aspects, but does a very nice job of drawing attention to the many side benefits involved, and there are many of these! I like the way that the author directs your attention to the fact that a job well done is a wonderful feeling. The author has listed given us a great list of other books and resources to turn to which I find most helpful. Actually, his list of places to go for information is almost worth the price of the book alone.

A complete list of winners and finalists in each category can be found at:
http://www.usabooknews.com/bestbooksawards2008.html.

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Closing day approaches on fixer-upper townhouse

Monday, July 7th, 2008


The purchase process is winding its way toward a conclusion for the fixer-upper townhouse that I am purchasing. I had the inspection done last Wednesday (naturally, I followed the inspector around so I could see the problems that he saw), the appraisal should have come in today, and we are closing Friday.

The good faith estimate from the mortgage company came in at around $650/month PITI. I plan to charge $775 for the base rent on the new townhouse. We put 20% down on the $105,000 sales price, and the seller cooperated by paying for part of the closing costs out of her proceeds at closing. (I’m going to discuss that in more detail in a future post.)

It’s a property that’s really worth a hoot because it has all the right things wrong with it. It needs paint, needs vinyl tiles replaced, needs wood putty in door holes, a few outlets are cracked, has some oil on the driveway, and it has a few leaky faucets. On the plus side, the A/C is only one year old and the roof is solid. And all the appliances work. It should take about week to get it in ship shape.

The best part about the deal is that my other unit, 3 doors down, rents like hotcakes. As soon as we put the For Rent sign up, we have people knocking on the door. I’ve been waiting for another one these units to open up at a decent price.

On another note,

There’s a good aritcle comparing oil vs. latex paints over at fliprent.com.

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Fixer Upper Business Highlighted in Newspaper Article

Saturday, May 31st, 2008

My wife and I laying laminate flooring

The Tucson Citizen Newspaper highlighted the fixer upper business that my wife and I operate in Thursday’s paper.

Entitled Learn to Fix Up Houses, Rent Them Out, it describes some details about our business and mentions my book.

Who says newspapers aren’t interesting anymore?

To read another insightful (to me, at least)  newspaper article that I did, see “Fix em Up, Rent em Out” Featured in Newspaper Article.

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Due Diligence and Property Inspection, Part 9: Qualifying the Inspectors

Friday, May 16th, 2008

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Buying fixer-upper houses, repairing them, and renting them out is a safe way to generate short-term income and long-term wealth. But, how can you be sure that a house is worth what you are offering to pay for it? Based on experience, we can eyeball the property and probably be able to make a pretty accurate estimate of its worth 90% of the time.

However, that’s not good enough. We need more information than our educated eyeball can provide. In order to:
1.) avoid any surprise defects after its too late, and
2.) negotiate a lower selling price for the house,
we hire a professional inspector to do a physical and structural inspection.

For the last post related to due diligence see Due Diligence Property Inspection, Part 8 – pest control and property damage.

Most purchase agreements require the seller to deliver the property in good physical condition with all basic systems in good shape, unless the seller discloses otherwise. Generally, the inspection process reveals deficiencies that need to be corrected, whether they were disclosed or not.

So with inspection reports in hand, you are armed to arrange for the seller to correct the noted items at his/her expense. The seller is trapped in a corner. He reads the report and sees the photos showing the inescapable evidence that repairs are needed. He either makes the repairs or you walk.

Inspect the inspectors before you hire one.

Most investors hire a property inspector based on the advice of a real estate agent, which is not necessarily a bad way to go. But, you will be spending a tidy sum to hire an inspector, so its best to interview a few before deciding. You may see a big differences in experience, qualifications, and ethical standards. I would never hire an inspector who would not allow me to accompany him during the inspection.

Tagging along with the inspector presents a great opportunity to learn about your property, and will arm you with knowledge that will be invaluable throughout your entire ownership of the house. You’re the one paying for the inspection. How can the inspector say no?

If you want a true professional, hire a full-time inspector who perform 100 inspections a year and who carries “errors and omissions” insurance. This coverage tells you that the person is working full time in the field and is participating in ongoing continuing education.

To locate certified inspectors and find out more about the inspection process see the American Society of Home Inspectors web page.

Ask for a sample of one of the inspector’s recent inspection reports prepared for a comparable property. And, require your finalists to provide you contact information for 3 people who have used their service in the last 6 months.

Price should be a secondary concern because like other professional services, they often pay for themselves. An internet estimate of inspection costs indicates that prices range from $215 to $750, with an average price of $260 (in the southwest where I live).

Earlier articles in this series:

Due Diligence Part 7, Physical and Structural Inspection

Due Diligence Part 6, Tricks Sellers Use to Avoid Inspections

Due Diligence and Fixer Upper Properties Part 5 – the “as-is” sale

Due Diligence, Part 4 — Disclosure Requirements

Due Diligence, Part 3 — Inspecting the Property

Conducting Due Diligence, Part 2 — Reviewing books and records

Conducting Formal Due Diligence

Info on Terry’s Book

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Five Questions to Identify Motivated Sellers

Friday, April 18th, 2008

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Thinking about buying an investment property?

Check out Real Estate Investing – The 5 Magic Questions at ezinearticles.com, by Robert Rentalman (yes, Rentalman).

The MARLA formula consists of 5 magic questions that will help you quickly weed out the motivated sellers from the rest of the pack. MARLA is an acronym for Motivation, ARV (After Repair Value), Repairs, Loan balance, Asking price. For more details on the 5 magic questions, take the link above.

Info on Terry’s Book

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