All Forum Posts by: Account Closed

Rylie, I like your thought process of owning property vs renting while in college. I would be weary of doing this in East Lansing though. The city is strict on rental licensing and those properties are expensive- not saying you can't do it, just do your research first. Maybe get in touch with an experienced agent. You will see a lot of development around the city and the plan is to get rid of the student rental houses and build more apartments. This is part of the city's long term plan and has been for a while. You might have better luck in Lansing - bit then you're not in the college town.

The point when you should focus on real estate is now. My 1 - 5 looks like yours, except all 1 - 5 are listed as real estate. You should buy real estate

First National Bank in East Lansing buys Land Contracts

@Delmas Edwards I've found that typical management in Michigan is 10% of gross rents, with a tenant placement fee of $250 or half of a month's rent.  A tenant placement fee of $795 seems very high to me - unless they are renting out a high end unit and that is half of a month's rent.  

I also think the properties should be inspected on a regular basis, whether they are occupied or not.  If they are occupied a simple drive by inspection works fine.  I would want this done at least once a month for all of my properties.  

See if they will give you some examples of the monthly reports they typically provide for you to review.  Also, they should give you references from other property owners on their service.  Check reviews online too.

@Bernie Huckestein You should be able to transfer the property to an LLC or S Corp after the purchase. A quit claim deed is the easiest way. I have done this in the past with no issue. You are personally still on the hook for the mortgage regardless if the property is deeded to an LLC or not so the bank shouldn't have an issue with this.

Call around for insurance quotes.  I do so with every purchase, and every time our existing units are up for renewal.  Also, a good insurance agent will explain the coverages if you are not familiar with them to make sure your adequately covered, without being over-insured.  

I have a detailed accounting spreadsheet, I'm not sure where to point you to get something because I created the one I use myself.  I'm sure an internet search will yield some templates for you to use.  I look at income in, and expenses out to track every month.  I also like to see the cash on cash return.  Hope this info helps.  Good luck!

@Cody Begg 5 or more units is a commercial loan vs residential loan. The bank will likely loan you 70-80% LTV - so if you already have equity in the 4 SFH's you have you would not need to put anything down to convert those into a commercial loan (assuming the bank would let you). Call around with different lenders. Some will roll multiple SFH's into one commercial loan, some will not. Some will let you start with 3 or 4 units, most will make you have 5 or more. Credit Unions are more flexible than banks. The good thing about commercial loans is that they are not on your personal credit (if you get a non-recourse loan) so it won't bog down your credit if you are trying to purchase a personal residence for example. Be diligent about reviewing terms - most commercial loans are 20 year vs 30 year, and they come due (or up for review) every 5 years.

@Adam Pequignot Start with Rich Dad Poor Dad.  Its an easy read so you'll get through it quick.  Also, this will set the framework for your mindset.  Rich Dad is not a "how to" guide to making money or getting rich - but it helped me think differently about how money works - and how the rich and poor (or middle class) think and act differently.  Once you read Rich Dad, you'll want to check out Cashflow Quadrant by Kiyosaki too.  If your'e looking for buy and hold, I liked Investing in Fixer Uppers by Jay DeCima too.

@Kahn Kellams you should contact the selling agent and ask.  A lot of the time with foreclosures they will not turn on utilities.  Some will let you turn them on in your name for the inspection, some will not.  If they do, they will probably have you sign some legal responsibility doc.  

If they will not let you turn on the utilities for an inspection, make your offer reflect that - assume the worst.  I would assume that the furnace/boiler needs servicing (if it works at all).  I would assume you will have burst pipes from the house not being heated property.  Your offer should reflect these needed repairs so you are ready for these expenses once the utilities are on.  If you purchase, you will be budgeted for the repairs.  If you find out these repairs are not needed, bonus for you.  

FYI - you can have an inspection without the utilities.  Obviously they will not be able to inspect these things, but they will be able to give you a report on the condition of the roof, foundation, structure, etc.

@Russell Gronsky  This is a good strategy, but you will be limited on Fannie/Freddie loans (I think 4 is the limit now).  And yes, it will have weight on your credit report.  Try looking to finance with a credit union that holds the loans in house.  Let them know what you are doing and they might want to work with you without limiting your borrowing.  Or talk to lenders about combining all of your investment property loans into one commercial loan.  Some do this, some don't.  

@Jonathan Blandino I think that's a fine idea.  I don't think you would be selling yourself short - if you are trying to get started what else to you have to offer in exchange for knowledge and mentorship?  You might gain enough knowledge to make serious $$$ over the next few years.  

Define your strategy - buy and hold? fix and flip?  If you want to learn about your market pound the pavement.  Walk (yes actually walk) the neighborhoods you are interested in.  See what homes are listed for and selling for - this is usually public record.  What are properties renting for?