All Forum Posts by: Casity Kao

@Jacob Prelle  I would consider a live in flip for your first purchase as you can get equity and at some point down the road claim rental income.  I am confused of your goal, is your goal to travel the world or to get 10k of income, or is 10k of income what you think you will need to travel the world?  The reason why I ask is because I know people who do it with far less just by downgrading their lifestyle, and turning their residence into an AirBNB rental when they are gone.  I would start with why do you really need the money, and then go from there.  A number of years ago I rented an AirBNB rental from a woman on AirBNB, and I recently checked out her profile and it turns out she has rentals all over the world now that allow her to travel all over.  She has no income outside of AirBNB but she is able to go all over the world because she just blocks off dates on the calendar for her rentals.  I would reverse engineer the goals to see what gets you there most.  If you set multiple goals then that will cloudy your strategy, focus on the one goal that will make you happiest and go from there.  I think you are having trouble figuring out which one you want to do because you are unsure of your goal.

@Tatya Waghole Make sure your condo allows rentals. A lot of condos do not allow rentals or only a certain limit because it affects their ability to be approved for FHA financing if too many homes in the complex are not owner occupied. What we found is a lot of condos say no, but they just turn a blind eye to owners doing so because they don't want to include it in their non owner occupant numbers. This is one of the reasons we have chosen not to invest in condos in addition to the assessments they can levy at any time. Condos do make great rentals if you want to self manage however because there is no exterior maintenance and little CAPEX although you could count assessments as CAPEX. Also find out if your HOA is on market with other condos, if the HOA is below market I find a lot of HOAs will unneccesarily raise it to market which could cut into your cash flow. So to answer your only question, condos should rent out quickly if priced well, but make sure you look at he inventory on your market to price appropriately and have a good expectation of what is out there. My in-laws live in that market and from what I know 2 and 3 bedrooms condos priced reasonably are flying off market both for sale and for rent because people are trying to save up to buy those big expensive new builds.

@Joe P. If nothing is signed or in writing it is never too late. The appointment is not to confirm their application has been accepted but simply to review the lease so they can think it over.

@Joe P. It is not always me that is physically visiting the home but we let the tenant know we will stop by to review the contract with them.  Up front we give them a good idea of our underwriting for renters, so it appears we are offering a service to the to answer any questions that they may have.  Many PM companies may say they do not have the time to do this but of course they have the time to charge you to look for a new tenant.  We strive for long term renters to obliterate vacancy so we'd rather spend more time up front than every year.  What we have found is credit quality and background has no correlation to how well they take care of their home.  Although the cleanliness of their vehicle does to some degree.  In the end when we review the contract with the tenant before taking their application fee they normally appreciate it.  If the home is cleaned spotless to the point we can smell chemicals right before we get there that is a red flag as well.  We prioritize this over reviews from past landlords because past landlords are typically not truthful because they may want to get rid of tenant.

@Ian Livaich Only you should do those numbers or somebody you trust. I would find a realtor/property management/contractor with investment experience to do that for you or spend the time to know what everything costs. This would depend on your time costs. When we started out investing it made more sense for us to learn it all ourselves but if we started investing today, we would surely just pay for the knowledge because what we make hourly now would not have been worth the time spent. For investors regardless of where they come from out of state or in state we give them the breakdown of the repairs versus return. So they know that they are getting. So for example, we may say $4500 on a new kitchen to get $100 more in rent a month but rent ready is very subjective. You should know this too. Also, if the realtor listing the deal is an investor their contractor prices may be lower than what you can get due to economies of scale. We charge our investors that we find homes from that are out of state a 10% project management fee that we have considered raising because between our wholesale discounts, and our contractor discounts and time saved we normally he buyer having to shop around, we save well more than 10% to the investor. I would suggest homeadvisor.com or another website where you can type in the scope of work by zipcode to get an estimate on pricing if you really don't have any contacts but your best bet is to actually ask investors in your area or local REIA what things cost. In my experience when a realtor has to put numbers in to make a deal look good it's because it's not a deal because another investor would recognize it's a deal so quickly they don't need somebody to give them numbers. There is a home inspection report on the Bigger Pockets file place that we uploaded to help you get the list of repairs you need together. You can use this to recall what you need repaired if you don' t have the experience to do it onsite.

@Joe P.  Site visit your prospective tenant at their current home so see how they take care of the place that they live in now.  I always ask for a glass of water, and to use their bathroom.  If they have to wash a cup to give you water, or the bathroom is gross then we don't rent to them.  Also have a good lawyer on hand to be ready for these situations.  I think what scares people is that lawyers are expensive, but if you know exactly how the process works and what it costs then you won't be afraid to evict the tenant.  Lastly, do not ever say anything you don't plan on doing.  For example, if your tenants is responsible for exterior maintenance and they don't pull the weeds, don't say you are going to evict them if you don't if you are not 100% confident you would.  In this same situation once a year we send the tenant a bill telling them we have a quote for this much, if not concluded by this date you will be sent a bill.  We also specifically notate the part of their agreement where is it their responsibility.  It's probably not as nice as them doing it every month but it is a compromise on our end and yet still reasonable to the tenant.  Lastly, we only use a 5% vacancy calculation because we will price our properties just below market rent.  If you are self managing you really could pass on 18% of rents to the renter and still be ahead so we strive for long term renters.  The last thing we do to get high quality renters is we offer our tenants an escape clause where if they are prospective home buyers we allow them to break their lease at anytime with 30 days notice if they purchase a home with us.  It allows us to get higher quality renters that are qualified to purchase a home and also generate another stream of income.  If you are not a realtor, then I would try to find a realtor that will work with you for example, not charge you a listing fee because of the referrals you send them or simply become one.

@Alex Johnson Based on where the Denver market is at, find a lender that will allow you to take a line of credit off of your rentals because of the amount of the appreciation and also find a lender that will allow you to use the current income off the rental for DTI calculations. You should be able to go up to 75% LTV for both. Getting ideal financing is the life blood of our business so we are constantly calling financial institutions and private lenders to get the best financing possible. We have lenders that will do both in West Michigan under 5%.

@Corbin Wafford If I were your lawyer I would offer completely different advice, but in general banks do not care if you are not occupying it as long as you are paying the mortage. It's kind of like the due on pay clause should kick in if you transfer deed into your LLC but literally never does. Now you may run into issues if your lender sees you do this multiple times as once can be a coincidence but try to fool them twice and shame on you. I would also ask your lender and tell them your situation, and I feel they would be fine with it. Generally the best answer is from the source directly. If you truly did have the intent of occupying it but there was a significant life change, I feel the lender would have flexibility considering it is a conventional loan.

@Ashley Pohlman If you are looking for a private investor I would expected to pay 10-15% and go through a pretty extensive due diligience period the first time you do a loan with them. That seems like a high rate but that normally does not include junk fees. With that being said my neck of the woods may be different than your area so I would try to go to your local REIA and or try to see if there is a facebook group you can find out what is customary amongst private lenders.

@Michael J Callinan  You would so if this is only a one time thing for you it would not make sense, but we buy lightly used furniture from a furniture rental and staging company so normally we are staging regardless so our units our lightly furnished.  Once they become occupied we are rent the furniture to the tenants or sell to people purchasing home or we sell on Craigslist or Facebook marketplace.  We actually will make a couple of hundred bucks selling the furniture in addition to the AirBNB income, so altogether I would say it's a least several thousand versus having it sit vacant.