All Forum Posts by: Andy Collins

Know your market, know what a house is worth in the area you are looking in, know the trends in both price and rent for the area.

I work primarily in 3 zip codes, I know those areas well (but know of parts of those I won't invest in),,you should know whats going on with the schools, any development planned in the area employment opportunities or potential layoffs,,knowing the area (and of course the knowledge you get from biggerpockets) will help keep you from making a mistake.

I look in other areas from time to time, but when I do I have to do a lot more due diligence

I have a tenant I ran the background check on today, first thing I found was the current landlord was evicting them,,then I noticed that landlord wasn't the name on the application.  First I called the real landlord and got the information I needed, then I decided to call the landlord name and number on the application.

They gave the applicant a great reference, great pay, keep the house up, etc etc,,I ask how long they had owned the house, she said "3 years",,I told her there was an issue because Central Appraisal district didn't show her as the owner,,she said "I just don't understand that, probable a paperwork problem",,I then informed her of the real owners name, and that I had just talked to him,,,she said "did you say 623 xyz street, I own 624 xyz street),,,I said first there was no such address, then I was curious how she gave me a great reference on someone that obviously wasn't her tenant,,,,about that time the line went dead.

When the tenant called me later I told her what had happened (I knew she already knew), and told her that lying on the application was an automatic decline.  

I am shocked at how people will just flat out lie, and just hope you don't really run a background check,,she was pushing me to get the application to me, the eviction was just filed about two  weeks ago, I guess she figured she might get the application run before it showed up.....

ALWAYS RUN BACKGROUND CHECKS!!!!!!!

I can't figure out how you got to the 15.35% cash on cash number, but when I run these numbers in my head it isn't even close to that.

Are you putting 20% down ($66k) plus $60k rehab?  with $126k in the property that cash on cash doesn't work, and are you including your holding cost during rehab as part of the rehab?  

for that short of a period just an insured saving account is the way to go,,you want the flexibility to get to it anytime, and no risk of loss.  For 6 months your just not going to make much money in anything that isn't fairly risky.

My biggest problem with many or most wholesalers is they don't know the ARV (but state one way too high), don't know the true cost of repairs (but state one way too low), and think they have a deal when they don't.

I had a recent wholesaler state the ARV on a property was $155k,,,,I have a house down the street that I just got an appraisal for $115k, and I was surprised it was that high.....if I see a wholesaler stating an ARV way off in an area I know, I don't trust any of the information on other listings they send me

in general mortgage rates are based on risk (credit score, are you taking cash out, what is your % down etc), and what the bond market is doing.

He obviously thinks you want a lower rate, ask him what the rate would be without any points

Depending on your broker you probable were going to have an origination fee with the earlier loan,,

One thing to do, when your change filters between tenants, put a date on it and your initials,,,that way when they say "I changed that last month", you can show them it was the one being used when they moved in.  I had someone insist they were changing the filter monthly, I ask them to go show me how to change it,,they had no idea where the filter was located.

Someone I know has switched over to the 3" filters and has his AC guy change them on all of his houses every 4 months,,,I use the same AC guy and he said he was amazed at how few problems they did since he was looking at the system every 4 months (and the guy has about 25 units so the AC guys gives him a decent price since he does all of his AC and electrical work, and can schedule it around his other appointments.

@Cal C. 

  Fannie only goes to 10, but if your married, you can put another 10 in your spouses name as long as they can qualify  without your income being counted

andy

I have my units at slightly under market rent, it lets me pick and choose who I want as tenants.  I don't require perfect credit, if they had perfect credit chances are they would be buying, not renting, but I want someone that pays their bills on time, has good rental and work history.

As they saying goes, tenants don't normally go bad, they normally were bad when you got them,,,screening is the key

No, you will get hit with a hard inquiry or two with a mortgage (on each credit reporting agency), and it will show up as a new account, however since it is a mortgage, not a new revolving account (credit card), the impact on your score will be virtually non-existant (or at least that's my experience).

Go out and open a couple of new credit cards and you will take a hit on your score (it really depends on your credit profile),,but  new mortgages don't hurt.

The only problem with mortgages is you now should count your rental income in your 'total income" if the mortgage is showing up on your credit report  when applying for a new credit card, car loan, etc.  The bank is going to figure that rental mortgage in your debt to income, so use the rental income to help offset that.

Make sense?