You bought a property that you thought was a great deal, but now everything is going wrong. The tenant won’t pay, the property is falling apart, the values dropped, you have problems with the city – on and on.
This deal sounds like a big headache and I don’t envy the owner, but I hear this kind of story almost every day – she
is not alone.
One of the reasons it happens is because the investor either didn’t listen to me or had never heard me teach how to buy property without using their own money or risking their credit.
Here are my suggestions on what to do and how to avoid this kind of thing in the future.
PS – If you make comments and ask questions on the post, I will answer them.
By the way, there are some good reasons to make COMMENTS and ask questions about my blog postings. First of all, I want to hear them and am willing to personally answer questions.
Second, they help me get better search engine positioning.
BUT… third, and most important to you, if you have a website, you can put the web address in the comment and it will provide a link back to your site. Search engines see this and will rank your site higher. So it benefits us both. Make sure the comment or question is relevant and not an ad for your site.
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
My PushButton Automarketer Program – Automate your business:
My 6 month mentor program:
My Two Day Buying Events
My Real Estate Investing Blog:
My home study program (there are 68 free videos you can watch on this site):
A Free Audio About How To Automate Your Real Estate Investing Business:
Free E-letter Opt-In Page:
A few Case Study Video Interviews with my Students:
30 Day Free Trial Monthly Printed Newsletter and Audio:
Read Transcript for “A Disaster Deal! Help Me”
Let me answer a question to show you how to get out of deals that weren’t viable investments and how to find the deals that are.
“I have two rental properties I got pretty cheap but they’re causing me an issue due to lack of payment by the renters. I do have a really great property manager, though. The one that’s the major issue to me, however, is a condominium. I purchased the property in a Detroit suburb in a pretty nice area. Detroit, as everyone knows has taken major hits in the real estate market.” – Natasha Randolph
Joe: The issue is that the Condo Association basically is insolvent on this condo she’s talking about.
“They have a water bill in my area of the complex alone, of $17,900. They haven’t had a zero water balance on the water bill since 2005. I found this out after hearing a rumor and going to the city water and tax office.”
Joe: By the way, these problems with homeowner associations don’t happen very often. I’ve seen a lot of deals and you don’t see this stuff happen very often. I’m dealing with a situation on one of my condos right now where the builder went out of business before he finished for the condo association. So we have these properties and they’re pretty new; they’re nice condos. But the tax assessment is incorrect; nobody’s paying taxes on those, so there are issues with that.
Joe: But I’m still on the deed for the condo that I own. The tax assessors are not going to take those properties away from me because the builder didn’t pay his share of the taxes, so I’m still protected on that and it’s the same thing with the water bills. The likelihood that they’ll shut off the water for all of the units, assuming each unit is individually metered, is very, very slim. I don’t see that actually happening unless they’re all on the same meter and the meter is being paid by the condo association, which kind of sounds like what she’s talking about here.
Joe: So you ought to check that out, Natasha. It’s unusual for the water company to allow that kind of arrears. I’d be talking to the water company personally and asking about that specific condo that you’re talking about rather than just the homeowners association. Now, I think it’s conceivable that there would be a homeowners association that had sprinkler systems that had water bills that weren’t paid because the homeowners association wasn’t managed properly. So, those things could be turned off. But it’s not really going to impact the people who are living in the house other than the fact that their grass is going to die, or the homeowner’s association people are not going to have access to water.
Joe: Granted, that’s not going to be a good situation and you want to try to avoid that, but it’s pretty rare for it to happen. I wouldn’t worry too much about homeowners associations getting into these situations.
“I’m having my manager search other citations and liens that are presently on the property. The vacancy rate is through the roof. I would guess around 75%, and will obviously be 100% if the city turns off the water which I expect to happen any day. On top of this, of course, there are a series of ongoing maintenance issues including a decaying roof, running faucets, holes in the parking lot, crumbling bricks, etc.”
“I have one tenant in the unit which I renovated and it looks great, but the rest of the situation is pretty dismal. I’d like to take the situation and make lemonade out of this obvious lemon. But quite frankly, I’m not sure how to do that. I have no idea where to begin. I’ve considered buying the available units in the building and there are many, and as a majority owner for the association, I don’t even really know if this is possible.”
Joe: It’s probably not possible. There are probably mortgages on these other condos. Now, if you’re talking about a multifamily building, that’s a different story. I don’t think that’s what you’re talking about here. I think you’re talking about condos that have separate titles on each of them, that have separate water bills (which is the way most condos are set up).
Joe: And, most of them have mortgages on them and some of those mortgages have obviously gone into foreclosure. That’s probably why you have a vacancy rate like that – because people got kicked out. It’s also possible that they were owned by a bunch of investors and that investor lost his shirt and had to give those properties back, and they’re vacant as well.
Joe: The question is – who owns those properties? Can you track them down? Can you find out what the situation is on their mortgages? Can you get their mortgages back on track and have them deed you the property? Have they only not been paying for a month or two months or have they been vacant for months and months and months and the property’s already gone back to the bank?
Joe: If they’ve gone back to the bank, you can buy them directly from the bank and probably get a discount from the bank. Bottom line, though – you need to protect the investment that you have right now, so you need to find out what’s going on with the homeowners association with the water. Is your water going to be cut off? You need to find out those kinds of things because I don’t know if you have the full information here on this.
Joe: Maybe I’m wrong on this. Maybe it does affect everybody. But I have a feeling that they’re not going to shut off one particular unit if you make these payments properly. On the other hand, if the city comes in and says ‘This house is no longer habitable,’ and, ‘We’re going to shut you down and condemn the property,’ then that may knock you out altogether as well.
Joe: I don’t know if you own this property free and clear or if you have a note on it. If you have a note on it, it could potentially damage your credit that way. On the other hand, does it make sense to keep putting money into a bad investment? – That’s questionable.
Joe: I think if you want to make money as a real estate investor, you should start looking for ways to do it without using your money or your credit – use the zero down structures that I taught in the earlier videos. Go get my programs, PushButtonMethod.com or look at ZeroDownInvesting.com for my mentor program and learn from me how this is done without using money, credit and without having to do all of this due diligence that you’re doing.
Joe: I just gave you a fraction of all of the things that you’ll have to do to find out whether or not this is a viable investment. You should be able to look at a property and determine whether or not it’s a good investment just by looking at the numbers and knowing how to talk to folks.
Joe: The best way to get a good deal is by talking to somebody who wants to sell the property. If you go into the cities and say, ‘Here, let’s find some properties that are in foreclosure,’ and you try to contact those people that are in foreclosure, the likelihood is that nobody’s going to talk to you. The best way to do it is to go knock on doors of those people. But a lot of times, they don’t want to talk to you and won’t even answer the door. It takes a huge amount of time to do it. You’re not able to automate the process.
Joe: If, instead of doing that, you went and talked to people who had their properties for sale by owner or who were trying to rent their property, those people are actively seeking ways to solve their problem with their property, and you have solutions for them if you use the techniques I give you.
Joe: So, use these things instead. Don’t use your money. Don’t use your credit. Use the zero down structures. Use the flipping techniques and the long term investing techniques I’ve taught you. Take those things and use them to build a business to where you start having cash flow coming in.
Joe: Then, automate that process so that you have the Push Button process going where everything is being automated by technology OR is being outsourced to someone else. You only have a couple of high value tasks to yourself – tasks that not too many other people can do, the things that you’ve developed your skills to do, which is talking to the seller and putting the deal together.
Joe: The deal is where the money is at – remember that one thing – ‘The deal is where the money is at.’ Learn how to put together a deal that is viable. That’s what this whole video series is about – learning how to figure out whether a deal makes sense or not.
Joe: And then, once you find the ones that make sense, how can you replicate the process of finding more and more deals like them? What’s the way to do it?
Joe: That’s what the Push Button Method is about. It’s about showing you how to make that process happen over and over again, with a fairly narrow scope of properties which are still properties that are easy to access and for sale by people that are actively trying to sell it, rather than people who are trying to hide from everybody.
Joe: If you work with those types of things, you’re going to be a lot better off and are a lot more likely to make money on it. Natasha, don’t spend too much time on it. Instead, focus on making some money in real estate using some of what I’m teaching. Thanks.