There are several potential risks and problems. Most risks and problems are associated with the risk of tenants. A few problems created by tenancy are potential destruction to the property or non-payment of rent. Making necessary repairs will rectify the destruction and the eviction process can cure non-payment of rent. While both will require allocating additional time and financial resources, creating a productive loss, future income will overcome this potential obstacle. Additionally, finding an insurance company that will insure more than two rental properties is a current problem. We are currently researching alternatives to overcome this issue.
Additional problems, or constraints, that exist are personal and economic factors. From a personal perspective Jarrod is currently undergoing a short sale on a property in San Diego. This has had immense adverse effects on his credit rating; all other credit obligations have been met and are current. It is estimated that it will take one to three years to recover from this. A consequence to this shortcoming, in conjunction with the current economic conditions, Ferventure Realty LLC will have difficulty obtaining financial support through conventional means.
A few alternatives to overcome this financial obstacle will be to obtain financing unconventionally, some options are; 1) utilizing a hard-money lender, 2) sell properties at market value to acquire “two for one,” 3) sell properties contract for deed and use capital received to purchase another, 4) save rental income until sufficient money is saved to purchase additional properties, 5) purchase additional properties contract for deed, or 6) purchase properties with credit card.