All Forum Posts by: Alvin Sylvain

Hi, sorry to hear about this.

No, I doubt it's fishy. In this age of Covid, many lenders are tightening their requirements, asking for higher credit scores, higher down payments, etc. They're trying to lower their risk anywhere and everywhere they can. So maybe yours has decided that MF is too risky right now.

I would suggest you follow their advice -- find a new lender, pronto.

Try searching on Bigger-Pockets. I know there are a lot of people who advertise services here, including lending, contracting, sales, etc.

And I can't emphasize this enough -- do it now! Being pre-qualified is really big these days, as good as cash, and you don't want somebody to snatch a good deal out from under you while you're still filling out the paperwork!

I would suggest that if you're just going to go with somebody you know nothing about, you might as well search on BiggerPockets and at least get somebody more amenable to investors.
Most lenders out there, particularly with cutesy names like "Loan Guys", are looking for consumer borrowers. They want a customer who wants to buy a house (to live in) or a car or a boat. That's not necessarily a bad thing, but going with somebody who's more familiar with investors ought to be a better thing.

I expect most people will move to a neighboring suburb. It has all the advantages of the Big City with only a moderate transportation cost for that twice monthly "Waste-of-Time" Meeting, plus it will be culturally very similar to the Big City.

Yah you can work from Kuala Lumpur, but that monthly flight will be a killer.

Don't discount culture -- yah, you can work from Kuala Lumbur, but who'd really want to? If you move to Kensington, everybody there already speaks the language -- "Neoo Yawrkah".

I want my money now. Appreciation can be expected and is probable but it's only a dream that might not happen. You can put your hands on cash flow.

Appreciation is "nice to have" but not a hard requirement. Cash Flow is a hard requirement.

I understand there are some expensive markets where Appreciation is King and Cash Flow is a Dream, rarely realized. I can't afford those markets.

From what I've heard, and this is what I've done, you want to do some sort of increase annually regardless. It doesn't have to be a measurable percentage, like 5 or 10 or 15%. Raise it $5. Anybody ought to be able to afford a $5 increase.

The point is to help train your tenants to get accustomed to the fact that the rent will increase.

And why shouldn't it increase? With the inflation we've had for like forever, everything else is going up in price. Why carve out a special exception for rent?

You will need to increase it enough to at least chase market rents. Otherwise, you'll end up after a few years with tenants paying a third of market because you never raised it, and they can't move out because everywhere else costs three times as much. If you sell the place, the new owner is going to triple the rent which would create extreme pain.

The long and short of it is, you can keep it below market, which helps reduce turnover, but don't lock it down with zero increases. You don't have to increase it a lot, but your tenants should expect that it will increase. Then if you must increase it due to some necessity (e.g., unexpected capital expense), your tenants won't be shocked.

David Greene just had a webinar on July 22nd on this topic. Did you attend? You can still buy his book.

Stay tuned. BP webinars tend to repeat, if not the actual content, but the subject matter. Brandon Turner must have talked about "Your first or next investment in the next 90 days" at least three times in as many months, and I know coz I attended two of them. So maybe in a week or two David Greene will do another webinar on long-distance investing. If he does, be there!

@John Settles do me a favor, will you? It's really for your own benefit, but do it for me.

@Scott Passman mentions how the numbers you showed didn't make sense. I didn't happen to crunch any of the numbers, but after reading his post, I did some quick back-of-the-napkin arithmetic, and the numbers certainly do appear, shall we say, somewhat optimistic.

So here's what I want you to do. Visit the BP rental calculator at https://www.biggerpockets.com/...

You can click that link, or go to the "Tools" menu on BP, and under "Calculators", select "Rental Property". Enter in all the data you know about this deal. The price, the mortgage, the rents, the expenses, everything. You can tweak things like down payment, property management, etc., to see how that affects the results. If (when) you stumble on to something you're not familiar with, skip it for the time being. You can always ask more questions later, then go back and fill in the blanks.

Get familiar with that calculator. As Scott mentioned, it is vitally important to run your own numbers -- what the seller tells you sometimes qualifies for a Pulitzer Prize in Fiction.

I forget how many times BP lets you use the calculator before you have to become a "Pro" member, but even the first time is a valuable education. See if you can make it come up with answers anywhere near what you put in your original post.

Then come back to this thread with a full report. (and you thought you were done with homework!)

You remind me of when I was young, and listening to all the RE Gurus on TV and the radio and books, hawking all manners of no-money-down paths to RE Riches. I went into a RE Agent's office and told the nice lady I wanted to buy this $200K house and I had $5K to put down. She very kindly and nicely threw me out of the place.

OK, lets go over some of the fine points, in no particular order of importance.

1. You're not going to do a 1.4 million dollar deal with no money down. Ain't gonna happen. Especially not a fully-rented turn-key place. A dump where the seller is desperate, maybe, but then you end up with a 21 unit dump that needs money to fix up.

2. You can partner with somebody, but what are you bringing to the deal? If it's a great deal and you find somebody to put up the down payment, what do they need you for? Your management experience? They can hire a manager off Craig's List. Best you can do is ask for a finder's fee.

3. You're not going to get an FHA loan for a 10 duplex complex with a house that amounts to 21 units. The FHA covers loans up to 4 units, tops. Anything more will be a conventional loan at 25 to 30% down.

4. Start with something simpler? Definitely. I would suggest "House Hacking". Look it up. There's tons of materials on it here on BP. What you do is find a 2-, 3- or 4-plex in your price range, and live in one of the units. Rent the other units out. Do it right, and you can live there essentially for free. For that you can get an FHA loan, and as your first home purchase, I believe there are other incentives available as well.

5. Are you handy? Find a fixer duplex, and fix it. It's a great way to force-build equity.

6. Save your money, hard-core. There's an old truism, and it's 100% true -- it takes money to make money. And you need the financial discipline. So put down that Caramel Latte with Half Foam and Extra Sugar that sets you back a day's wages. Drink tap water, it's free, and healthier anyway.

7. Am I discouraging you? I hope not. RE remains one of the better ways to build wealth (some say best, but I still think owning and running certain kinds of businesses can be superior). But the thing is, you don't start out with no money and right out the gate pick up a plum million dollar deal that cash flows three times the median W2 income. You haven't even got your feet wet, and you're talking about swimming the English Channel.

So keep watching the podcasts. Attend the webinars. Exercise your financial discipline. Educate yourself big-time (and BP is great for that).

Who knows, maybe in 10 years (20? 5?) you'll have enough experience and wherewithal to go buy one of those million dollar deals -- all cash. Then write a book about your immense financial success.

But don't go into a RE Agent's office today with this plan and get yourself nicely thrown out!!

Are you sure you can sell this car? This is not like you found a fifty cent coin on the floor, this is a major asset, and if there's any next-of-kin around, they might want to have some say in its disposal. Considering how this may have some legal ramifications, mayhaps you should consult a local attorney.

You generally can find the owner's particulars in the local records office. I don't what it would be called in your neck of the woods, but over here it's the Country Recorders Office. Some areas will let you search online. Some areas charge a nominal fee. All of them will let you visit in person and browse, as after all, that information is all public.