All Forum Posts by: Daniel O.

@Alex Hostetler If you look at your purchase agreement, it should stipulate that you are using VA financing. The seller's agent should have caught that and understood the owner-occupant requirement. Seller's agent dropped the ball. From a legal standpoint, the seller and seller's agent essentially said "I agree to sell you this property that you have indicated you need to owner occupy, but I am not going to do it in a way that will allow you to fulfill the legal requirements of your financing." You can make the case that they were at best negligent and possibly not dealing in good faith.

What is your agent saying about this? He or she should understand that the seller screwed up and the seller's agent screwed up. Can he/she push them to make this right?  That is what your agent gets paid to do, so put them to work!

Love love love those below market rents. That is where the value is hiding!  Unless you really want the larger unit for yourself, I'd still work on getting the seller to bounce the new tenant before they move in. That way you can have the benefit or either raising the rent on the larger unit or moving the tenant out yourself and then bumping strait to market rate. That said, it may be worth getting a little less than the maximum you could get if you have a great tenant.

@Account Closed no need to be discouraged. You can do this in your current situation, it just means you have to exercise more care about what kind of place(s) you buy. You can save yourself some headaches by finding a place that is less than 15 years old. But avoid places that were completed during the housing collapse. Too many builders just slapped stuff together to cut their losses then.  Begin working with an agent soon, and let him / her know what sort of place you are after. Agents may know of places that are going to be coming on the market before they are listed, so you might still get a crack at them when you roll back into town. But you will still need a property manager.  Your situation makes it harder, but by no means impossible. And I agree, it will be harder to arrange financing if you are only just recently in your new job. Better to make the purchase before you switch jobs.

@Lee M. You open yourself up for problems if you don't run the credit / background check for all applicants. What happens if you allow someone to rent without running a credit / background check, then refuse another person after running the credit / background check on them? What if the person you refused is a member of a protected class and they claim that you discriminated against them by requiring the background check on them but not someone else. I think you would have a hard time defending against that charge of discrimination. Yes, it makes sense the way you describe it, but are you sure it would make sense to a jury?

I don't know what the laws are in Texas, but in places where I have lived or invested, it is common practice to take a place off of the rental market when you know an offer is coming in. Why would someone wait until they had a written offer? What does your purchase contract say? Has the new tenant moved in yet? Does your financing hinge on you being an owner occupant? Did the seller / seller's agent know this? What kind of financing is stipulated on the contract? If the seller knew or should have known this, you are on pretty solid ground telling them they need to break the lease with the new tenant or you will walk away. And no, they could not keep your EMD. While they could break the month to month lease with the reliable tenant, why would you want to do that? Even if the new tenant checks out fine, they are still more of an unknown quantity than the one who has a mulit-year track record of being a good tenant. From my perspective, this is the seller's problem, not yours.

Good luck!

@Account Closed sounds like you have set yourself a bit of a challenge. If it were me, I'd steer clear of condos because of all the reasons others have mentioned on BP (HOAs, Condo Fees, Difficulty selling, etc). I don't know what the market is like in your area, and I also don't know whether you are considering looking outside of your area. For what its worth, you could kind of make the case that you don't really have a home area since you are there so little. Do your travels give an opportunity to look at properties in other areas? That might be something to consider.

You also didn't indicate how much you are able to invest. That may dictate the type of properties and locations you should be thinking about and looking at. But at least for the first couple of years, you are going to need to have a GOOD property manager. Someone you can trust and count on to take care of business for you while you are rolling down the back roads of Kansas or wherever else your travels take you. So I guess maybe that is where I would start if I were you. Even a great property with great tenants in a great place will turn into a money losing disaster if you don't have someone who can respond quickly when something needs to be fixed. Be sure to build that cost in as you use the BP calculators.

The next issue you will face is that the logistics of finding a place, looking at it, making a decision, getting it inspected, and doing all the myriad other things involved in actually buying it will be challenging if you are only home to do it for a few days at a stretch. If you haven't already done so, start interviewing real estate agents. Explain that you are an investor, and that you have some constraints on your availability. If you know other investors, ask them for recommendations about agents and property managers. You might also ask them if they know of any landlords looking to get out of the business. Who knows, you might just be able to take over someone else's existing property.

Good luck!

@Lindsey Andrews you should be aware that most banks and credit unions have a hard and fast rule that they will not issue a mortgage to someone who already has 5 mortgages. For investors, that can be a real obstacle. If you already have mortgages on other properties, you should let them know at the outset of your discussions with them so that this doesn't throw a monkey wrench in your plan when the deal goes to underwriting. There are some banks that do not have this limit of 5 mortgages. One such is Bank of the Internet, an online / branchless bank based in California. I've been very pleased with them so far. Good luck.

Not to pile on, but you have been training your tenants to see how far they can push you.  Can our daughter move in? We'll pay our rent in full if she can bring her dog (they didn't). Well....OK.  Will you accept partial rent? Well....OK. Can we still live here if we don't pay on time? Well...OK.

NEVER DO THIS.

What is the point in having a lease if you consistently let the tenants violate it without consequences? Think about your own role in creating this situation. You can think about it on your way to file for eviction.

@Russell Brazil is correct. You can use the filters on popular real estate web sites so that they just display multi-family properties. Just search by county, and you will see how slim the pickings are. Yes, those are typically only the places that are on the MLS or big auction sites, but it will give you a feel for the market.

@Matthew Tierce unless you can figure out a way to generate more income from it, it does not sound like a deal you should take. I don't know what you used for inputs on your numbers, but it looks to me like you would have to subsidize this thing just to hang onto it. What happens when it needs a new roof / walkway / HVAC / tax increase / etc?  What happens when you have a vacancy that goes a month or two longer than you plan for?  On the bright side, assuming you worked your numbers correctly, nobody else is going to jump on this either, so the price may come down. If someone else does buy it, you can still feel OK about walking away. There are lots of people jumping in these days who think owning a 4 plex is like owning a printing press for money. If the numbers don't work, the numbers don't work. What does the cap rate look like on it? How does that compare to other places in the area? 

You can find good deals on the MLS. You can find them on Craigslist. You can find them on lists from wholesalers. But you can also find bad deals on all of those places. It just depends. @Candace Postell suggested driving around because that is a good way to find deals that nobody else has seen or knows about. And those can be the very best deals.