All Forum Posts by: Jeff Bridges

The only way I could see that working is if you setup a long term lease written by an attorney that allows sub-leased tenants and justifies the amount of time/money you put into renovating to recoup and earn profits over the years. The problem I see is that you have no legal standing if he were to terminate the lease, sell the property tomorrow, or the relationship deteriorated and told you to go screw. You would not be entitled to cost of improvements you added, appreciated value, or future income- just like a tenant renting an apartment who makes improvements. You ultimately don't have control over the property long term or benefit from appreciation due to improvements.

Also, he is onsite as well, so he will want to a) approve/deny the tenant and b) micro-manage your property management, including repairs etc which you might not like. lots of opportunity for disaster.

Doesn't appear to be the best plan for earning cashflow at first glance... sorry for the bad news...

@Account Closed I feel like I was setup for some gotcha that you already knew the answer to.... But based on Brianna's info, I'll feel secure even if I don't run them through alaska, puerto rico and Hawaii's state criminal checks:) Bonus that they aren't on the no-fly list:)

@Account Closed They provide full credit report, credit score, and national criminal background check and a conlcusion with applicant recommendations. Quick tip: if you go through the link on USAA online bank account portal for mysmartmove.com , they charge $15 instead of the normal $30.

@Brie Schmidt has a great system in place. I second it as a good system. Accepting applications before the tenants really know what the place looks like is a waste of both of your time. It doesn't hurt to list out some of your application criteria both over the phone and again at the showing to have applicants self-disqualify before you need to pour over their financials to find the same thing. Things you might want to share: 3x rent needed in income, no prior evictions, credit/background check performed, prior landlords will be called for reference. Finally, open house style showings are the way to go both for your convenience and to generate a sense of urgency to apply quickly when many are at the showing at same time...

Anything that needs to be mailed delays your ability to make a decision and quickly evaluate applications. Demand fax, email or in person application submission. All are not unreasonable and easy to access for many.

here are some options that dont require silly signature pages in order to access background credit checks and you can make the applicant pay the fee directly for the background check. You email the applicant from the website and they approve the check and pay the fee in advance on the website for you:

https://www.mysmartmove.com/

$30 background credit check paid for by applicant or landlord (your choice)

http://www.rentingauthority.com/

$25 paid by applicant, emails approval to applicant to pay with cc and includes electronic application form too. You can manually enter applicant social and pay for background check if they pay you personally.

Good luck!

you need to first obtain a FEIN from the IRS, which is a business tax ID. even if you are sole proprietor and have pass through taxes, you can get an ID and it will have no effect on your personal taxes, except to make sure the income is reported to IRS.

sign up for one here:

http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Apply-for-an-Employer-Identification-Number-%28EIN%29-Online

I supplied my FEIN and the confirmation page download they provided when I received mine using the upload document feature. I used a personal bank account. compliance needs to review the confirmation page and then review the bank account. It took a couple of days but you use the chat feature on the bottom of the website to tell them you have uploaded the doc and ask them to review your business info. Once approved, you can proceed with giving payslips to your tenants. I just signed up so cant speak for the service, just sharing my experience... Looks good so far. I hate having to accept and deposit tenant cash as my bank is not nearby and it uses up precious time...

You're going to deal with turnover costs of getting the current tenant with pets place in rent-ready condition by moving her to the new place, so this clearly needs to benefit you before you agree for her to move into larger place. You can toss out a healthy increased rent figure that would make it worth your while and require the pet deposit or one time fee. If its too high for her, then she would decide to stay put hopefully. BTW, $300 is the same as $25/ month, but by charging monthly, you collect the fee for multiple years potentially vs one time fee. If she decides to stay put, and she's been there for some time, consider offering to arrange a carpet cleaning service at her existing place to control odor and to help with tenant loyalty.

Homepath is still a viable program. You can only use this loan program on homepath listed homes owned/ foreclosed by fannie mae as its meant to be an incentive to help sell their properties. You can search for fannie mae homes on homepath.com. These are also listed on MLS, but searching their website helps you identify the homepath specific ones. I have a Owner occupied homepath loan and it took a little over 30 days to close, pretty much identical to a regular conventional loan. I used Wells fargo, who can handle homepath loans in my area. They do have 10% minimum down requirement. Their rates tend to be a smidget higher than normal conventional, but also they also dont have PMI, which adds to the interest rate of a normal loan. They don't publish homepath figures. You'll have to ask your loan officer for a comparison of the 2 type of loan rates. Lastly, be careful as homepath listed homes tend to be listed at or above market value (homepath knows they don't require appraisals) so be sure that you know you have a good cashflow property or the deal works for you. In my market, they don't often accept bids under asking, they rather lower the price after 30 days on market and wait for more bids. Also, you can ask for 3-6% closing assistance for homepath loans, but they will accept it with Owner occupied bids, but not usually investor bids. It's always worth incorporating into your offer if you aren't worried about competitive bids for that particular property. You can always bid again without asking for closing assistance...

But in your example, you mentioned your strategy to save 20k to purchase said property. a more realistic 500k 4-plex property might require 17500 down minimum (assuming you are able to get property and your credit to qualify you for FHA loan with 3.5% down), 10-15k closing costs, and renovation costs for 2-4 units. I'm just saying you should make your expecations to be more realistic for both savings goals and target property price so you can actually follow through with your goals when the time is right. No one else is tracking your savings goals but yourself, so you might as well understand those costs now rather than be disappointed later. Good luck.

you want to buy a 4-plex in brooklyn for 100k? Is that a reasonable example to use for your investment planning or are you considering a different geographic region? I would estimate higher and look for current examples in your area that match your property type your interested in and calculate the loan based on that. You also need to adjust your expectations for closing cost- Higher. A higher priced property will have higher closing costs. can be between 3000-7500.. You won't have a choice with escrow when getting a loan in most cases, so you will have to fund the initial escrow account balance at closing, pay for insurance up front etc on top of the normal closing costs you listed. Its hard to cashflow in NYC, esp since multi-units are not bargains there. PMI is not one of your main concerns inhibiting cashflow; purchase price and potential rental income vs. debt service expenses is...

go to aimloans website and use their free good faith estimate to get a better estimate of the exact costs based on the purchase price so you can understand what to expect. I'm not trying to promote their loans, their estimate tools are just easy to use.