How to avoid JAIL time as a landlord…. [Will’s Story]Reading Time: 10 minutes
Will has been interested in real estate investing as long as he can remember. He loves the fact that real estate investment properties involve tangible assets.
And while Will loves doing deals, he’s also had some adventures during his investing career…
In 2008, when the market crashed, he had to find a way to get out from under 12 rental properties.
When he found a great wholesale deal in a niche market, he bought it with a credit card at no interest knowing he’d eventually find the perfect buyer.
When he was afraid to visit one of his rental properties in a bad neighborhood, he ended up spending a night in jail! (You’ll never guess why…)
Listen to our conversation with Will to hear more about his investing experiences, the deal he found on MyHouseDeals and his tips for new investors plus…
- Why you should focus on rural areas when finding motivated sellers
- How (and why) he bought a wholesale deal with a no interest credit card
- How to avoid JAIL TIME as a landlord…(Yes, really!)
NOTE: Will is a premium member, he received a FULL refund of his upfront membership fee for simply doing a deal! Find out more about our premium membership here.
Tell me about yourself…
How did you become interested in becoming a real estate investor?
Back in the late 80s and early 90s, I was buying properties, renting them out and fixing them up. I’ve always been interested in buying properties, but I stopped in 1993. Then, I came across your website and thought, well, I’m going to get back into it and see what happens.
Why did you get back into real estate investing after you stopped?
As a student, I bought a house for $32,500 and rented out two of the rooms. I had that for about three or four years. After I graduated, I sold that house. I took a second mortgage that got refinanced and I ended up getting paid for that second mortgage. That was the first one I ever did.
I bought another one-a duplex down in the city where I was going to school. I rented out the upstairs and lived in the downstairs.
After college, I took a full-time job. But I always loved the idea of investing because it involves tangible property. I love doing real estate rehabs.
What is your primary investing strategy?
To buy and then wholesale. Or if that doesn’t work, I would repair and flip it.
How do you wholesale a deal?
Well, the one I did was actually the sixth property I looked at. I called up the realtors of the two that had the sign out in front. I was going to make an offer but they said: “Already under contract.”
For this one, I went out and took a look at it. It’s on seven-and-a-half acres in the rural part of Illinois, about an hour drive from St. Louis, which is where my office is. The house is up on steel beams.
It’s jacked up by the Illinois Department of Natural Resources because of mine subsidence. Built in 2002, it is about a $240,000 house: three-bedroom, two-bath, and an underground swimming pool. It was covered by insurance by the previous owner and he was asking $35,000 for it. Well, that’s what the price was on MyHouseDeals.com.
There’s a lot of value there because of the land and house, even though the house isn’t on the foundation; it’s up on jacks. And with the swimming pool, it’s worth way more than $35,000. He wanted about $50,000 for it.
He and his wife didn’t really want to do it, but they said “okay” and they sold it to me for $35,000.
Why do you think they decided to work with you?
Well, because it’s in a rural area and there’s probably not a whole lot of buyers out there. And they had gotten $240,000 from their insurance company.
They told me that they had about $350,000 into it with the pool, land, and everything. They’re also suing their insurance company for errors and omission because the pool wasn’t covered: they underinsured the property.
They still have that lawsuit going on. Back in 2002, they paid $30,000 for the land. So, I guess they just wanted their money back out of it. They were just cutting their losses short and moving on.
He wanted to fix it up, but she had enough of it. She didn’t want to do it anymore, so they just decided to buy a smaller place and get rid of that place. It was devastating to them: they put their whole 10 or 15 years into it. Then the mine subsidence happened. They were just sick of it.
Is working with motivated sellers a strategy that you think you could repeat?
Yeah, I like that strategy. I and my fiancé live in a rural area. I like the rural area strategy: there’s less competition.
What did you end up doing with the property after?
Well, I applied for financing with some hard money lenders that was on the list on MyHouseDeals and they rejected it. Everybody rejected it because it was a rural area.
So, one of my credit cards had a special offer. They would put the money into my checking account with zero percent interest for 12 months. I took the special offer and they put $40,000 into my checking account; zero percent for 12 months.
We closed the deal and I bought a ‘For Sale By Owner’ sign. Paid $150 for it. I put it out in front and I’ve had six calls on it so far. People are interested in either just buying the house or the house, the land, and the pool. I have just re-listed it back on MyHouseDeals.com.
Why did you decide to buy the house outright rather than do an assignment for it?
On the assignment, I didn’t know how long it would take to find a buyer. This is the first one that I’ve done in 30 years.
I may wind up just sitting on this property for a while. I talked to the Illinois Department of Natural Resources. They are monitoring the mine subsidence. They said I could end up putting it right back on the same site once the subsidence is completely stopped or put it on a temporary site.
My son-in-law knows a lot about concrete and piering. He wants to do some of that stuff. He actually wants to buy it with his wife and live there, but his wife’s mother is like, “I don’t want you moving that far away.”
There’s a lot of value in this property, so if I wind up sitting on it for a bit, it’s not a really bad thing.
I’m just doing one deal at a time for right now until I get my groove back I guess. I don’t want to get into 2 or more properties and get stuck. That’s what happened to me last time. I had 12 properties and I got stuck.
How did you get out of it when you had those 12 properties?
I sold them for what I could. Some of them that I couldn’t sell because they were in bad neighborhoods, I wound up donating them to the City. It hurt my credit for a while too.
I was getting cited for not cutting the grass and maintaining them. So, it was in my self-interest.
It wasn’t completely generous. It was solving a problem of not being cited for cutting the grass. I actually went to jail one time, they picked me up because I ignored them.
Yeah, I went to jail one time for not cutting the grass on a property, so I ended up donating the property to the city, so I wouldn’t have to keep going to jail for not cutting the grass.
Was it just really inconvenient to cut the grass?
No, it wasn’t really inconvenient. They were in North City, St. Louis. I was naïve and didn’t know how bad it was. Three of my tenants over a three-year period were shot in drive-by shootings, or their children were shot.
And I also evicted a tenant down there. The tenant told me that they were going to put a contract out on my head because I evicted them. They weren’t paying their rent so I got a judgment against them and had the Sheriff come in and put all their stuff out on the street. They didn’t like that. So, I took that threat of a contract out seriously.
Three of my tenants’ children have been shot in drive-by shootings in three different occasions. It was a bad neighborhood. It was called, Beam Street, like “Beam me up Scotty”, because they did drugs.
I actually had contracts to sell it two different times and both times before they closed, the property got vandalized. So, I didn’t want to go there.
How did you recover from this loss?
I went to law school, and I took student loans of $40,000. I defaulted on my student loans because I didn’t have enough money to pay them back.
They added a bunch of attorney fees, late fees, and everything. I worked out a deal with the student loan people to do an Income Contingent Repayment Plan. Then, I started doing mortgage loans; I was a loan officer.
This was up until about 1987, 1988. Then one day, I had clients who had bad credit. I referred them to bankruptcy attorneys to get a fresh start and get their credit going back in the right direction. Then my wife said, “Well you’re a lawyer, you have a law license, why don’t you do the bankruptcies?”
So, I started doing bankruptcy law. I never did a personal bankruptcy myself, but I have filed about 4,000 bankruptcies for other people. But, I just kept paying my student loans on the Income Contingent Repayment Plan.
I bought a house in 2002 with my wife, and we fixed it up. She died in 2016. Then, I sold that house. I paid off my student loans with that money. It took me 26 years to pay off my student loans.
I made some money off another house that I sold. Now, I have one where I live and there’s some equity in it because I put a big down payment on it.
But it was hard work because I didn’t do any credit for about 10 years.
What are some of your top tips for newer investors who want to get started?
The top tips I would say is to do what you understand and enjoy doing. Don’t do something if you don’t understand what you’re doing. Do what you understand and what you like to do.
You might not make money on the first or second deals, but if you really like it and enjoy it, stay with it.
There are some interesting stories on MyHouseDeals; like the couple who for the first year made $7,000 or $8,000. He was going to quit and go back to do computer software stuff. But his wife said, “Are you crazy? We’ve done this for a year. Let’s give it another year.”
They did it for another year and now they’re making a million dollars a year because they stuck with it. I think just sticking with it and doing what you like to do.
And then, buy it right. You definitely have to buy it right. That’s the biggest part of the whole process. Try to negotiate down and if they don’t want to take the lower offer, walk away from the deal. That’s probably the best deal you’re ever going to have: the one that you walk away from.
It takes a lot of properties to look at before you can buy one. I looked at 6 and that’s probably faster than most people would do it. Sometimes you might have to look at 10 or 15 properties before you buy one.
Will Ridings targets motivated sellers and properties in rural areas that don’t have as much competition.
Obviously, there’s going to be a challenge with that: like not having as many comps in the area, and having the area being a little further from where you live. But because he is from a rural area, he understands that market and that really worked well for him on this wholesale deal.
He was able to get a no-interest loan to buy the property, which is great because he had a lot of extra time to find a buyer. He also shared with us the story of how he got stuck with 12 properties and the various techniques he used to get out from under those.
For a weekend he got stuck in jail because he didn’t mow the grass and also shared his story about how to avoid that. That story led to why he avoids high crime areas for his rentals.
His biggest advice is to just stick with it, do what you like to do and to buy it right.