All Forum Posts by: Adam Kozuch

Ray,

You stated they are MTM at this point, what date did they specify on their notice to vacate? April 10th? From what I know of WI law (haven't had to exercise this yet) if they don't move out on either the termination of their lease or the date of their notice to vacate you then have to go through the normal process of evicting them. That could take another month, your best bet might be to try and ease tensions and get them to move out on their own, on time.

Thanks,

@Nic Badertscher I'm currently house hacking a 4 plex in Bay view. I also want to go with the Buy and Hold strategy as I'm really in this for more of a long term play. Are you relocating back down for work or play?

@James R. Maybe gray area was a bad term to use, but I think this is generally a confusing topic. 

I have actually attended both landlord training seminars, I did think that the City one was valuable (they give you an entire set of Wisconsin Legal Blank landlord papers) but it did not go nearly as in depth as Tristan Petit's course. Tristan is a local lawyer who has examples of specific cases and judges, and even fights to get new legislature put into place in Wisconsin!

To expand on what @James R. said, anytime you run a credit report on a prospective tenant they have a right to request a paper copy of their credit report. I'll double check the exact verbiage but you may be obligated to provide it to them if you deny them. 

In addition to that you are allowed to keep any "application fee" if you approve a tenant and they decide not to accept. Otherwise if you don't approve them you would have to return it. This topic on a whole is pretty confusing and there are a lot of gray areas.

I'll edit later once I get home with exact verbiage.

@Cody Barrett I'll paraphrase an answer from a seminar put on by Tristan Petit I recently attended that I would HIGHLY recommend to you. I am not a lawyer, but I will edit this later when I get home with the exact phrasing he used.

"For the purposes of obtaining a credit report you cannot charge a prospective tenant more than 20$. Anything above that is to be considered earnest money to hold the apartment for them pending their approval."

I think if you shift the cost of the background check etc. to the prospective tenant that is fine, but I recall Tristan specifically saying he removed his application cost due to recent changes in the law.

@Art Maydan a 203(k) so far as I know is for adding on rehab costs to the total price of the mortgage. I hope you still plan on lowering your asking price to reflect the cost of the repairs?

Not a lot of conversation yet but I'll share my $.02.

Are you also accounting for things like insurance, any pmi? Lawn Care/Snow Removal? Utilities?

Is property #1 two buildings on one lot? This will mean two exteriors, two roofs, two foundations etc.. something to keep in mind.

Ultimately if this is an investment it matters if the building will pay for itself, so whether that is a $250,000 or a $125,000 doesn't mean as much. Do the figures work? If the figures don't work, find the price that does work and start from there.

@Alex Hively In terms of management you need to hold a real estate license in Wisconsin in order to manage a rental property you do not own. I would assume this house is in your parents name so I'm guessing that applies. Otherwise you could move the property into the possession of an LLC where you are part owner and get around the requirement that way? You'd need to run that by a lawyer as I'm not sure if that would work.

In terms of sales it comes down to how creative you want to be with it. If your parents were planning on selling it anyways you can do seller financing and have a lawyer review the documents to make sure they are good. This avoids a lot of closing costs related to inspections, agent fees etc. Otherwise if they were planning on leaving the house to you if you wanted to lessen/avoid taxes on the sale you could get creative with their trust (IANAL). 

My dad was a GC in Eau Claire so I'm no stranger to 'grunt work' altho we had a different name for it! What are you in school for?

Shaun,

I was in a similar boat as you where I had no CC debt, but had some outstanding student loans. In my case I had strong W2 income and was still able to get a loan on a 4 family. As others have said finding a good loan officer will be very helpful (mine was). 

Getting a 4 family is probably your best bet because your DSCR (debt service coverage ratio) will be higher even if you decide to live "rent free" in one of the units as the other three units can likely still cover the cost of the mortgage. This doesn't leave much wiggle room for expenses like repairs and capital expenditures but is a good way to get your foot in the door.

Feel free to PM me if you have any questions about what I encountered.