All Forum Posts by: Dave Spooner

@Wayne Brooks -  With Fannie Mae, my understanding is that you are correct. That's a hard and fast rule.

@James Nosack Have you considered a self-directed 401k? It's a little more complex, but all of the appreciated value would be tax protected.

Your job situation may preclude it, but it's something worth looking into!

@Jerid Meagan That's a very interesting statistic, and any way you slice it, landlords are definitely left footing most of the bill for unpaid rent, which is tough. I would echo what some others have brought up though - I think much better margins can be achieved. I'd of course start with the 27% spent on managing the property. Free property management software is a great place to achieve reduction.

@Alejandra Tapia Just wanted to add to this - you would not necessarily need 15% to refinance a duplex, as long as you're living there. You should be able to find a lender that will refinance at 5% equity. You would, however, need to qualify for their typically more stringent borrowing guidelines. You would also be required to pay PMI on the loan, but you're essentially already paying that in the FHA MIP.

Your best case scenario is that your renovations significantly improve the value of the property. If that's the case, you may be able to get to the banks desired 20% LTV. This will remove the PMI and reduce your overall cost!

I also want to reiterate Paul's cautions regarding moving out before the year mark. Best of luck!

Personally I would also recommend using Trello for task management. It is ideal for someone wanting simple project management and is also pretty straight forward to use.

For something more sophisticated I would recommend Jira or Asana. Both are a great option for someone with a large team working on numerous complex projects.

There are a lot of cloud based project management companies out there, you can always use Capterra to compare a couple options too.

https://www.capterra.com/project-management-software/

@Joseph Ayala As a couple people have mentioned, I would recommend first trying Zillow or Redfin for basic sold comps of similar properties. 

If you are still having questions or are wondering where to start, there are some blogs out there (Zillow, Trulia, Redfin, etc.) that have articles on comps. You can also find some resources on comps on BiggerPockets as well: https://www.biggerpockets.com/rei/real-estate-comps-house-value/

The most important part that people have alluded to is just learn and practice as much as you can. As you progress your workflow and process will become much quicker.

@Ellie Perlman Thanks for sharing this, it is interesting to see how COVID-19 cases, unemployment, industries, etc. have all effected the rental industry. 

I would be curious to see what the typical rent collection percentages are for each of the mentioned states for the same month over the last few years. Are these states typically high/low in relation to other state or have they been effected more drastically (greater than the 12-13% average decrease mentioned in the NMHC source).  Additionally I wonder how these states would shift if we only looked at full payments.

It will also be interesting to see how the stimulus package effects these percentages not only next month, but in the coming months as well. 

I think @Sarah Brown raises an important point. The criteria you set is not just to protect your rental from a bad tenant, but also to protect your business from a Fair Housing lawsuit. I often advise landlords and property managers to explicitly write out and file away a stated policy regarding applicant acceptance criteria.

As long as you always follow this policy to the letter, there is no room for a violation (or even an accusation of a violation). You may have a justifiable reason for accepting a tenant with a credit score below your typical threshold, but you leave yourself open to the interpretation of an angry future rejected applicant or (hopefully it doesn't get that far) a judge. Even if you win a suit, you don't want the headache.

All this being said, you could of course set your acceptance criteria policy to address this situation. For example "applicants must have a credit score of 550 AND income greater than or equal to 2x the rent, OR if their credit score falls between 450 and 550, they must have rental income greater than or equal to 3x the rent." Just be cautious moving forward and understand how to best mitigate the risk. 

@Pierre Streat @Leonard Calvin I work for Innago - we're just getting started in the BiggerPockets community and hope to lend some insight wherever we can. If either of you have any questions, please let me know and I'd be happy to answer them.

Venmo, Zelle, and Paypal are all common, but be cautious - accepting rent is against the terms for Venmo and Zelle and, while Paypal allows it, they'll charge you 2-3% per transaction. Venmo and Zelle haven't had a huge crackdown on this kind of behavior yet, but they could at any time. All three also tend to be extremely payer friendly, which means you run the risk of losing a dispute and losing rent that you thought was paid.

You're better off going with a platform designed to collect rent online, and there are plenty out there. Just find one that's a good fit.

And because I don't hear a lot of people addressing it, if you want to require your tenants to setup auto-pay, I'd strongly suggest getting a clause added to your lease requiring this or signing an addendum with the tenants. Keep in mind that in many states, you have to give tenants an option to pay in some other form (i.e. you can't technically force them into autopay).

Here's how California handles it (fyi, this is Civil Code 1947.3): “(a) (1) Except as provided in paragraph (2), a landlord or a landlord's agent shall allow a tenant to pay rent and deposit of security by at least one form of payment that is neither cash nor electronic funds transfer.”