All Forum Posts by: Dustin B.

Working on structuring a deal and would like to know how others may have done it/experiences. Have a family I am working with, they are looking to buy something larger for their family, pay off some debt and I am looking for another rental.

With today’s market, obviously it’d be difficult for them to get an accepted offer on their next place while holding a contingency on selling their current house. In order to remove that contingency, they’d likely have to sell, pay realtor fees, find a rental, move, try to time out a lease, get accepted offer and move again.

I would like to provide a “solution” by buying their house and renting it back to them for principle, interest, tax and insurance. This would help them remove contingency, pay off their debt, have downpayment up front, avoid realtor fees, avoid renting/lease, moving twice and they can end a m2m lease for when the time is right. I would then get a complete turnkey rental at a below market rate in an appreciating area - creating a win-win for both parties.

My question now, is how much of a "premium" should i add to the monthly PITI to set as a rent amount. I'm completely fine with not necessarily profiting until they move but also aware I'll have to report the rent as income. Property tax, insurance and depreciation would cover a decent amount of that ‘profit.' Also, not sure if I should try to define a "future" rent amount of rent exceeds 12mo?

Has anyone structured anything similar before? How have you handled this?

Hey Matt! Welcome aboard. The REIA meetings are by far the best way to network and learn within this area.

Nearly every local commercial lender in this area (GB to FDL - possibly further) offers 20 year fixed rate - which I am currently using. Have came across a 25yr ARM that I am trying to work with but nothing has materialized quite yet. I've seen some national ones advertising 30 years but haven't personally talked with them yet.

1) Your interest on hard money is a variable. With 3 points plus 12% interest - it actually works out as 3% starting and +1% for each month you have it - so depending how long your rehab will take. With hard money generally being max of 6 mo - you'd be looking around $10,350 in interest on it.

2) You should be able to get 80% LTV refinance, so you'd be looking at $139,840 on that ARV - which would cover and profit a bit as long as all other numbers are constant. Still would have closing costs, utilities, etc. but that shouldn't be too much. (Would find a different lender if yours only is offering 70%)

Welcome to the area! 
We’ve house hacked two duplexes in appleton so far.

One huge piece of advise from our experiences - is talk to a local credit union and find a place that can do 5% down conventional (may be a 5 or 7 yr ARM) instead of 3.5% FHA. It may cost a tad more up front but will save you a lot in the long run. In our case, the extra $2500 up front saved us nearly $40k over life of loan (if held constant)

It's my one gripe about BP recommending FHA - doesn't make much sense unless in expensive area. Yes you have to pay 1.5% extra upfront and PMI (that goes away at 20% or two years of payments), but with FHA - you have PERMANENT PMI (until you refi), extra costs/fees that get lumped intI your mortgage and certain inspection criteria. Many sellers actually look at FHA offers as negative aspect to an offer as well.

It’s a very buyers market like you said - which is sucks when starting out. However, it is an excellent area for jobs, growth, appreciation, underserved rental market and not many “bad areas” so great for rentals. 

Fran Bourassa with VantagePoint. Wont find a better one in the area

Thanks. I would also like to add - if the tenant does submit it - there is a clause of perjury in the moratorium in which the would be lying on the “loss of income due to covid19” portion

Good Afternoon BP,

Have (an inherited) tenant behind on August's rent by $175. This tenant also did not pay for September's rent for $875. We sent out the 5 day right to cure on Thursday 9/3, so we would be looking to file eviction with the court tomorrow morning.

She messaged after receiving 5 day notice and claimed she did not have to pay the rent due to the eviction moratorium (enacted 9/4/20.) 

However, it is my understanding that you must hit ALL of the criteria in order to be protected from eviction. 1) she did not fill out and send over the declarations page to her landlord 2) her income was definitely not affected by COVID-19 as she is not working and using receiving government assistance - just decides not to pay.

I tried to call the clerk of courts to ask the questions, but they did not want to answer these questions. The main question here - Am I still allowed to continue eviction? Her inability/unwillingness to pay rent has nothing to due with Covid-19. Just want to make sure I am not interpreting anything incorrectly. 

The Order went into effect on September 4, 2020, and prohibits residential landlords nationwide from evicting certain tenants through December 31, 2020. The Order protects tenants who:

• have used their best efforts to obtain government assistance for housing
• are unable to pay their full rent due to a substantial loss of income
• are making their best efforts to make timely partial payments of rent, and
• would become homeless or have to move into a shared living setting if they were to be evicted.

In addition to the above requirements, one of the following financial criteria must apply. To qualify for protection, tenants must:

• expect to earn no more than $99,000 (individuals) or $198,000 (filing joint tax return) in 2020
• not have been required to report any income to the IRS in 2019, or
• have received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act.

Tenants must complete a declaration under penalty of perjury that they meet the criteria listed in the Order.

Hey Skylar, welcome aboard! We are fortunate to be living in a great area for REI. Feel free to reach out if you need help finding connections in the area, have quite a few solid ones in all aspects.