All Forum Posts by: Dakoda Spencer

Quote from @Bob Stevens:

Quote from @Dakoda Spencer:

Recently a decent duplex hit the market in a local town. I scheduled a walk through and went and saw the property (I'm a licensed real estate agent). During the walk through, the tenants let me know that they are both Section 8. When I asked the seller's agent about rents, he told me and the numbers are below market value ($450 and $500). Should be closer to $650/month. The duplex is in good shape and a good part of town. It's relatively close to the local college.

My question is, since this is my first rental property, should I avoid it with the additional processes that come with Section 8 rentals? I've read that there are processes in place for attempting to raise the rent to market rent for Section 8 rentals, and that attempt can be done once a year. Regards, Dakoda

 Heck no, sec 8 makes it easier, they pay like clockwork. Now you will have to make sure all repairs are taken care of. Also, usually sec 8 pays MORE than a cash tenant ( in my market anyway) so you should submit the form for a rent increase.  

I called the local housing authority for the town the duplex is in. They seemed to be very helpful. They let me know that only one of the tenants are Sec8. If I buy the property, I can raise the rent up to market value $600-$650. That could put a hurting on the renter, though. The renter currently only pays $56 of the $450 rent that is charged. The lady also informed me that rent can only be raised in $25 increments (yearly). I'm torn on what to do.

Recently a decent duplex hit the market in a local town. I scheduled a walk through and went and saw the property (I'm a licensed real estate agent). During the walk through, the tenants let me know that they are both Section 8. When I asked the seller's agent about rents, he told me and the numbers are below market value ($450 and $500). Should be closer to $650/month. The duplex is in good shape and a good part of town. It's relatively close to the local college.

My question is, since this is my first rental property, should I avoid it with the additional processes that come with Section 8 rentals? I've read that there are processes in place for attempting to raise the rent to market rent for Section 8 rentals, and that attempt can be done once a year. Regards, Dakoda

@Austin Whitcomb the question about student rentals being impacted by online learning is a good one. I think it will see a change for sure, but how much of a change I have no good way of adding input to that. I do, however, believe that rentals in general will be a great investment going forward, especially because of the pandemic. With all the individuals moving back in with their parents, there will be things like storage space and rentals coming in higher demand. Frostburg is a nice place, but a lot of those places exist because of the constant flow of students. If things the students dried up, a lot of the money would as well. For that reason, I'm trying to focus my research efforts more on areas that have skilled laborers and hospitals. Those I don't see going away anytime soon, and for this area, those are the parents to the students. So these areas I believe are likely to see an incline for demand. 

I'd suggest watching Ken McElroy on YouTube. He puts out really good videos that I believe are worth the time. His book is good, too.

-Dakoda

I live relatively close to Frostburg (just inside WV below Cumberland MD), and I have been considering that market as well. I'm about ready to get my foot in the door of rentals as well, have some cash reserves saved up now.

Here's what I keep coming back to, does the goal I have set for myself realistically include student housing? Do I want to deal with it?

You said you're 2.5 hours away, so you'll either need a good set of boots on the ground, or be here kind of often. Would you plan on hiring a management company? You said you'll be buying with a good friend, would that person be local? Does that person have any experience or knowledge of rentals already?

Rentals, in general, are obviously a learning curve, but the angle of that curve steepens when it's for student housing. There's just more of everything. More turn overs, more renters, more repairs, and more money (if done correctly). Of course, the best advice you'll be given is going to be local advice from people who are doing it already. I hope they chime in. I think Bill Kenny owns (or used to own) some rentals up there. I'll tag him here and see if he's willing to chime in. @Bill Kenny

Read as many books as you can get your hands on. I personally use audible, cause why not. I recently went through "Landlording on Autopilot" and it was great.

Best of luck, Dakoda.

@Andrea Lorena Almiron, what are the details of the deal? I'm close to Romney and may be interested.

Looking for answers and recommendations from the BP Family. I'm 25 and looking to get into rentals.
Recently I have been looking into a 4-plex in my area and have been doing some research to gather all the numbers needed. I'd like some assistance to know if I'm looking at this correctly.

1. Taxes. Just over $2,700. I have the taxes for the property, since that is listed on the MLS listing.
2. Rent. $2,500. Have reached out to a local property management company to get what they think the units will rent for. Neither the property management company or myself have walked the property yet, so these are just our current best guess for running the numbers sake.
3. Utilities. Utilities are separately metered and will be paid by the tenants.
4. Variable Landlord-Paid Expenses. I'm setting aside 10% for each category for a conservative number: Vacancy, Repairs/Maint, CapEx, & Property Management (which I did confirm with the management company)
5. Net income desired. I'd like to get at least $100/month/unit. So a total of $400 for this 4-plex after all expenses, assuming that I'm not managing the property.
6. Closing costs and rehab. I put a place holder of $2,500 for closing and $5,000 for rehab, since I haven't walked the property yet (don't roast me on this, I understand that I need better numbers and will get them when I walk the property with a contractor).

7. FINANCING. This is the big one at the moment that I'd like recommendations for, if you all have any. Reached out to a local bank who wasn't willing to do a 30 yr fixed rate on the property, saying that it's commercial and should be done with one of their commercial loans, no thanks. I'll be reaching out to more local banks and have also been contacted by a BP member who is with an investor group. The financing is currently my largest question mark when it comes to running the numbers on these deals.
What I was told by the individual with the investor group said "30 yr is 6.25 on 4 units NOO without income or DTI calculations".

I have created my own excel spreadsheet and have also been using the BP rental calculator to go over the numbers. From these numbers, it looks like I can offer about $176,000 if I come up with a 20% down payment to keep on my mark of $400 net profit for the property.

What am I missing? Any advice as to what I am missing would be greatly appreciated. I'm basically using this property as practice for running numbers, but of course I want to follow through if it's a good deal. Thanks!

This is what I received just this morning from the bank:

"
This is directly from the regulation “Credit extended to acquire a rental property is deemed
to be for business purposes if it contains more than 2 housing units”.

"
I am trying to buy a 4 plex, with 20% down. Can I not get a 30 term with a fixed interest rate? The lending for rentals currently has me confused. I'd appreciate some valuable input.

This is what terms the commercial loans are, which I don't know is good or not:

10/3 ARM 6.625% - adjusting at Prime + 1.25% (Cap 2%)

7/3 ARM 6.375% - adjusting at Prime + 1.25% (Cap 2%)

5/3 ARM 5.99% - adjusting at Prime + 1.25% (Cap 2%)

3/3 ARM 5.625%- adjusting at Prime + 1.25% (Cap 2%)

1/1 ARM 5.25% - adjusting at Prime + .75% (Cap 1%)

***Floor: 4.25% ***

@Nathan Gesner Yeah, that's a good point. I'm reaching out to a real estate agent now to see what they could do for me. I guess I am just trying to save on time/money by selling it myself, but like you have stated, in the end it may not be very wise. Thank you for the input.

This may see like a basic question, but I am in need of some clarification. Currently I am selling a cheap house that I picked up a couple weeks ago. When I purchased it, it seems so simple. We signed the contract, they had it notorized, then we went to the courthouse and had the deed moved over to me. For some reason, I'm having a difficult time trying to do the same to sell it. 

My question is this. How do I sell a property off market? Do I need to work with an attorney who will do the closing (I'm not sure what all they do)? Or can I just get a generic AS-IS or cash purchase contract? I have been delaying selling the property because I don't fully understand the process. I only have it listed for 8k due to it's rough condition, and won't be making too much profit, so I'm trying to figure out how to do the process without paying too much extra. I have been in contact with a local closing attorney and know that it would cost me about $150 for a contract from them. If they were to handle the closing, it would cost the buyer $650 and the seller $325. 

Any assistance would be greatly appreciated! -Dakoda

Hello,

I have a property that I am ready to sell. Bought it for cheap and cleaned it out. This will be my first time selling a property, and I'm not sure of the entire process. What form(s) do I need to get signed by me and the seller? I know it will need to be notarized. I see several forms/contracts here on BP, but not sure if they have what's needed for me. I am selling in Mineral County in Wv. Property located in Ridgeley Wv. Any advice would be greatly appreciated!

Regards,
Dakoda