All Forum Posts by: Charles Carillo

@Ronald Mejia

I like the idea of doing it all cash and then refinancing it. I would use current interest rates and terms for your refinancing calculations in case rates do not decrease. If you are cash-flowing at those numbers, great!

@Ross Kane

The cap rate is calculated using the NOI, not the gross rent. The property expenses are all left out here. Maybe once the actual property expenses are added to the equation, you will see a more realistic cap rate.

@Antonio Thomas

Finding the value of mixed-use properties can be a little tricky. You said there are comps of other properties for sale at a similar price. What I would want to know is what similar properties have actually sold for recently. This is going to be much more helpful. Yes, it is a commercial property and it normally is valued off cap rates, but by checking sale comps, you have an idea of roughly what properties are trading at, and you can work backward. I would review the property's current and potential NOI (after you complete repairs/renovations). Be conservative in your rent projections and overestimate the repairs.

I am not sure what the age of this property is, but I have found with older properties (mixed-use and apartment complexes), there are several variables that are typically not an issue with newer properties. Like small apartments, grandfathered-in apartments, or access ways that would never fly with new construction. This changes what units can be rented for and the property's overall value. This is why you really need to review the comp sales versus the subject property to make sure you are comparing apples to apples (or as close to). For example, your property has a weird attic apartment, and the sale comp has a normal apartment. Which location is better, and how will that change my rents and value?

@Mahmudul Shoikot

I am unsure if you NEED to accept it (you would want to check with a real estate attorney in your state), but I have accepted this type of assistance from many tenants over the years. I would make sure you understand how much they are assisting her. Are they sending it directly to you? How much are you still collecting from the tenant? I would also review this with the tenant so you are not getting her portion (if any) late in the future.

@Yaakov S.

I would definitely start enforcing the late fee and see if anything changes. When I started enforcing the late fee with my first rentals, late rent decreased dramatically. 

@Carlo D.

Your real estate attorney should be able to do it. I would, of course, ask them if they have done it before.

@Dallin Godfrey

I always suggest that investors and homeowners avoid home warranties.

"the typical home warranty costs $450 annually, and only 25% of premiums are paid to homeowners. The company providing the warranty keeps most premiums as revenue and profit."

https://www.ramseysolutions.co...

https://www.zanderins.com/dave...

Every time I hear about property warranties, it is when something major goes wrong, and the tenants are complaining (rightfully so). The warranty company takes its time accessing the situation, and then they tell you there is a deductible; they will only cover so much; you need to use their preferred company, and it will take three weeks. All the while, the AC is out, and it is July.

It is much better to have a reserve fund and add it monthly. If you know that something major will need replacement in the future, increase the monthly amount you are depositing into your reserve fund. When something goes wrong, you can find the best contractor for the job, who can make the repairs right away, and now your tenants are happy, and you have minimized the time you would have spent speaking to your tenants about the delay or fighting a warranty company.

@Ryan Denman

It sounds like a Reg A offering might work for you.

https://www.investopedia.com/terms/r/regulationa.asp

I would speak to a Securities Attorney before making any decisions.

@Justin Skiles

Just a question, but if you have the funds to buy and renovate, why do you need a partner? It would be much easier and safer for you to do it yourself. If he does not do the work he is supposed to do or do it in the timeframe that was initially anticipated, what happens? It sounds like the house would be in his name; I'm not sure what type of recourse you would have. 

@Noyessie Hubert

Down payment assistance cannot be done in a couple of days. It is an entire program with participating lenders, and the process should be started before you start putting out offers on properties.

Read more here:https://www.nj.gov/dca/hmfa/roadhome/index.html

If you need funds to close, I would probably suggest starting the process for your 401k loan now.