All Forum Posts by: Dawn Anastasi

As I have found, @Kay Mays @Richard P and @Kyle Mack are all from the Milwaukee area.

I just had someone email me about a rental property where I advertised the security deposit was $1100. She said that all she had was $900 for a security deposit.

So I replied that it sounded like this place wasn't in her budget.

She answered that the rent assistance program would pay for her rent, that she only has $900 for the security deposit, and that she was a single mom who just moved here from California.

Well for all the people who want to loan it out, loan it out to me. I'd take $100K and buy 3 single-family homes and rent them out, and use the rent money to pay back the loan. The loan can be for 3 years at 6% interest and I'd still do it.

I never provide appliances for tenants unless I can't help it. One rental unit has a built-in oven and cooktop and dishwasher, and another unit has a built-in dishwasher. Those were there so the tenants use them. Everywhere else the tenant supplies their own appliances.

I checked and the higher one was 7.64%. I was a little embarrassed at first getting these loans, because they are so much higher than a mortgage. There is no balloon -- they will be fully paid off in 3 years. Yes, the payments are higher than what you'd get if this was a mortgage only because the interest rate is about double. But the important thing is that the rent pays for the loan payment.

For example -- the loan I got for $18K, I put some of my own money into the purchase and rehab because the purchase price was $23K and the rehab money was $1500. The monthly loan payment is $579. Rent is $875/month. Property taxes are about $158/month, water/sewer is $60/month, and insurance is $50/month. So as you can see that only leaves $28/month left over.

So this is why I wouldn't advise just anyone to do this. You'd have to run the numbers first and make sure you have cash reserves to cover any repairs that may come up in the future.

But, for a $23K purchase that is worth approximately $65K, I would say this was a great deal.

And here I thought I was still a "newbie". Well, I will always consider myself having something to learn, because once you think you know it all, start ignoring all there is out there yet to learn.

I certainly don't advocate taking out unsecured loans to everyone. Just in these particular situations, the numbers made sense.

Kay Mays@Kay Mays I am in the Milwaukee, WI area. Maybe we could talk sometime? I have been doing this since 2008 and my primary strategy is buy-and-hold, but two heads are always better than one.

The first Lending Club loan was in January 2012 and took just a week or so to close. They take their "closing cost" out of the proceeds of the loan, so there is no money down. I used those funds to buy a single-family home that was a bank foreclosure. The property sold for $24,900 on 2/29 and I borrowed $21,000. The remaining funds for the purchase and rehab were from my own funds. I showed that property on 3/10 and had a renter in as of 3/15. Rent is $800/month for a 2bd 1ba home.

The second one was from Prosper and I received $18,000 -- this was in November 2012. I used this to buy a $23,000 single-family home (3bd 1ba) from a seller who just wanted out. There was little wrong with the property ($1500 in repairs, literally) and already had tenants. $875/month. Closing on that was 11/27 and I started collecting rent the next month. Tenants have been great and payments are like clockwork so far.

The third one was for $30,000 from Lending Club. I used that to buy a 4bd 2ba single-family from a bank (closing was 12/14), price was $24,000. I used the remainder money plus my own funds to fix up the place. This one required about $15K in rehab (most of that was a new roof). Renovation is still in progress, but close enough to being done where I had showings yesterday and took applications for renting it out March 1st for $1100/month.

All 3 loans were over 7% interest rate, which is high when compared to traditional mortgages. But they were only 3 year loans so the total amount of interest is really not too much.

The most important thing is that it allowed me to get these properties which will give me income month after month. My vacancy rate is extremely low and over all the time I have been renting out properties, I have never had to evict and the longest a property has sat vacant was 3 weeks. I believe providing high quality rentals and proper screening is the key to getting good tenants.

It's gotten to the point where I have had multiple people email/call me wanting me to buy their properties, and it's hard to pass up on some of these deals, but funding is the main issue. As a result, it looks like I will have to take a break from investing for a while.

I have used Prosper and LendingClub for loans to buy single-family homes because I have been frustrated that no bank will seem to lend to me even though I have excellent credit (775), long-term employment (15 years) and almost $1m in assets. All because of the "4 mortgage" limit.

However, the loans are short term (3 years) and I have no issues paying them off because the rental income covers the payment. They have been great for me in that respect however I have seen that my credit score, which used to be over 800, took a hit each time I took on one of their loans (have 3 loans for 3 single family homes).

I change the locks on the house and keep the locks for a new property. I can then rotate between tenants/properties.