New Investor

10 Replies

Hello,

I have a bunch of questions as a new investor into real estate, especially through Home Union.   I suppose listing them out would be easiest:

1.)  When I invest, do I actual own solely the property?

2.).  Home Union, finds tenants for the properties?

3.)  Typically what is the minimum investment Home Union is looking for?   Typically banks wants 20% of the homes value.

4.)   How is the tenants monthly mortgage check divied up?  Does Home Union take 1% of each check?    

5.)   Home Union takes care of all a problems a tenant may face (ex: broken water heater at 2:00am)?

7.)  if and when the tenants move out, does Home Union assist in finding new tenants?

8.)  Most importantly, say (for example) 30 years down the road when the mortgage is paid off, is the house deed in my name?   Will I have complete ownership of the home once the mortgage is paid off?


Thank you for your time and consideration.

@Derick Epstein

Welcome to Bigger Pockets. BP is full of resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members. This is one of my favorite features of Bigger Pockets especially for asking specific questions.

This post has been removed.

Originally posted by @Derick Epstein :

Hello,

I have a bunch of questions as a new investor into real estate, especially through Home Union.   I suppose listing them out would be easiest:

1.)  When I invest, do I actual own solely the property?

2.).  Home Union, finds tenants for the properties?

3.)  Typically what is the minimum investment Home Union is looking for?   Typically banks wants 20% of the homes value.

4.)   How is the tenants monthly mortgage check divied up?  Does Home Union take 1% of each check?    

5.)   Home Union takes care of all a problems a tenant may face (ex: broken water heater at 2:00am)?

7.)  if and when the tenants move out, does Home Union assist in finding new tenants?

8.)  Most importantly, say (for example) 30 years down the road when the mortgage is paid off, is the house deed in my name?   Will I have complete ownership of the home once the mortgage is paid off?


Thank you for your time and consideration.

 Hi Derick,

Welcome to BP.  I am a new investor myself and used Homeunion for my first property.  I honestly think you need to do some more homework before you start investing.  You started in a great place signing up here now buy some books and do some reading.  Homeunion themselves should easily answer all of these questions for you.

@Derick Epstein I have purchased hundreds of single family rentals in my role as the investment director for one of the largest REIT's and would be happy to answer any questions you have about the different way to go about finding the best deals.

Hi Derick,

I'm happy to answer all your questions in a message. I tried to do so in this forum, but my post was removed because answering these questions is considered too marketing. I've made a connection request. When you approve that I'll answer your questions.

-S


Originally posted by @Derick Epstein :

Hello,

I have a bunch of questions as a new investor into real estate, especially through Home Union.   I suppose listing them out would be easiest:

1.)  When I invest, do I actual own solely the property?

2.).  Home Union, finds tenants for the properties?

3.)  Typically what is the minimum investment Home Union is looking for?   Typically banks wants 20% of the homes value.

4.)   How is the tenants monthly mortgage check divied up?  Does Home Union take 1% of each check?    

5.)   Home Union takes care of all a problems a tenant may face (ex: broken water heater at 2:00am)?

7.)  if and when the tenants move out, does Home Union assist in finding new tenants?

8.)  Most importantly, say (for example) 30 years down the road when the mortgage is paid off, is the house deed in my name?   Will I have complete ownership of the home once the mortgage is paid off?


Thank you for your time and consideration.

Okay. I found out what I did "incorrectly" the first time I attempted to answer this...so here's attempt #2.

1.) When I invest, do I actual own solely the property?

Yes. When you purchase through HomeUnion, you own the property yourself.

2.). Home Union, finds tenants for the properties?

Yes, we do all the property management for the properties including finding quality tenants. 

3.) Typically what is the minimum investment Home Union is looking for? Typically banks wants 20% of the homes value.

HomeUnion doesn't actually do any lending. We have a variety of partners with whom we connect our investors. Some are typical banks others are asset based lenders. In general, they want ~20% down as well which means the out-of pocket investment for our investors is around $25k and up (depending on the property value).

4.) How is the tenants monthly mortgage check divied up? Does Home Union take 1% of each check?

HomeUnion collects the rent for investors, pays all expenses, including mortgage payments, taxes, HOA fees (if applicable) and the property management fees. The left over money is then distributes the rest to the investors back account.

5.) HomeUnion takes care of all a problems a tenant may face (ex: broken water heater at 2:00am)?

Yes. HomeUnion takes care of all maintenance issues, tenant calls and any other issues that may come up with the property and informs our investors of all such occurrences.

7.) if and when the tenants move out, does Home Union assist in finding new tenants?

Absolutely. As soon as we find out that a home is going to be unoccupied, we start the marketing process, perform any necessary maintenance needed to get the property ready for the next tenant. Our goal is to get a quality tenant in as quickly as possible to make sure we're maximizing our investor's cash flow and ROI.

8.) Most importantly, say (for example) 30 years down the road when the mortgage is paid off, is the house deed in my name? Will I have complete ownership of the home once the mortgage is paid off?

Yes. HomeUnion never takes any ownership part in the properties we help our clients acquire. You own it completely.

If you have any additional questions, please let me know.

Scott

Good evening guy,

Forgive me for chiming in late on this one.  At the risk of being redundant.  Are you saying that Home Union will do all property management and seemingly a lot more for 1 percent of the Rent?

How is this doable?  Some things just at first sight come off as gimmicky.  Second, Are they available in Virginia?  Can they manage properties that are already producing.

No it's not 1% of the rent. It's 1% of the property value at the time of purchase...depending on the situation, it works out to be anywhere from 8%-11% of rent. 

@Scott Hetherington , Thanks for clarifying its 1% of purchase price. Is this 1% charged every year?  I am assuming this "prepayment" of property management fee will come with certain "rent guarantee".  If not investor would be stuck paying property management fee upfront and HU property manager has no motivation to really find a tenant.   BTW, I am working with folks @HU and preparing my documents for pre approval.  I was told the property management fee is 1.5% (not 1%) which translates to 12% to 17% of monthly rent based on your previous post. 

Originally posted by @Venkat B.:

@Scott Hetherington, Thanks for clarifying its 1% of purchase price. Is this 1% charged every year?  I am assuming this "prepayment" of property management fee will come with certain "rent guarantee".  If not investor would be stuck paying property management fee upfront and HU property manager has no motivation to really find a tenant.   BTW, I am working with folks @HU and preparing my documents for pre approval.  I was told the property management fee is 1.5% (not 1%) which translates to 12% to 17% of monthly rent based on your previous post. 

 Hi Venkat,

The Asset Management fee is not prepaid. A equal % is taken out from the rent payment before distribution of the income. We are definitely motivated to get a new client in place ASAP. If our clients aren't happy, we wouldn't be in business very long. After all, a big portion of our business is from repeat investors and referrals.

As for the 1% vs 1.5%, sorry for my typo. I misspoke, but It doesn't work out to a 12% to 17%. At least none that I've seen. I'd suggest checking out the financial calculator that you can find for each of the available properties in our database. It very clearly spells out all the costs and allows you to make changes for vacancies, maintenance, etc so you can see how different scenarios work out. You can then easily how much the asset management fee is relative to rent. For example, the first property, I just looked up has an annual rent income of $13,920 with asset management fee of $1619 or 8.83% of rent. The next random example I found is a property with an annual total asset management fee of $1200  on rental income of $10,800 or 8.9%. So while I made a typo in one area, the % for asset management fee is still anywhere from 8% to 11%

Oh and, please always double check things with one of our solutions managers. I can't go back and update posts and things do change over time.

Hope that helps.

-S

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