All Forum Posts by: John White

@Mike Hurney 

I understand what you're saying, but you're in MA, so you probably already know that there isn't a more tenant friendly state on the planet. We've had tenant in place (non paying) for years that the bank seller can't get out. Even when lockouts are finally ordered, it's not at all uncommon for them to be canceled, countless times. It's definitely not a state that I would want to own rental property in, just given what I've seen over the past 5 years of my career, on the REO side of the real estate business.

Thank you Dawn. 

@Account Closed 

Can you point me in the right direction to find a boiler plate estoppel letter that I could "borrow".  I appreciate your feedback.  I'm just trying to ensure that I dot the I' and cross the T's.

I've do several flips a year, and always put  a "Builders Risk" policy on each of those properties.  I'm not an insurance expert, but I believe that any other policy would not cover you while you're doing renovations.  It is a bit of a pain, because once you're done with the renovations, your Builder's Risk policy would not cover you, if anything were to happen.  At that point, you would need a vacant home policy.  We usually put the Builder's Risk in place for three months, and then move to the vacant property policy until it sells.  I hope this helps.

Good Evening...

Forgive my elementary question.  I've put my first investment property (with tenants in place) under contract.  I won't be closing until mid April.  Is there any need for me to meet with the tenants before closing, and becoming the new Landlord?  It's a duplex, and both tenants have leases in place.  I know the leases run with the sale, and I have no desire not to honor them.  They both seem like really good tenants.  Both units were immaculate when I viewed the property, and the rent is paid on time.  I have copies of both leases, which spell out the fact that the owner is responsible for, and therefore owns all of the appliances (range, refrigerator, over the range microwave, and dishwasher).   I certainly don't want to get to the end of either tenancy, only to have them claiming they own any of the appliances.  Should I have them sign something (before the closing), acknowledging that the appliances are owned by the property owner, or are the leases they signed sufficient?  Do you always meet the tenants before the closing, and if so, is it just to introduce yourself, or are there other things I need to do, before the closings, as it relates to the two tenants I'm inheriting?  Any and all feedback is most appreciated.

As has been previously mentioned, be familiar with your state specific laws, as even "cash for keys" is very much frowned upon in some states.  I do a ton of foreclosure work in Massachusetts as part of my day job, and I can tell you from experience that any Attorney (familiar with MA housing law) will cringe if they hear you even mention "cash for keys".

I have limited experience with this, but I did ask the seller of the multi family that I just put under contract to provide me with proof (easy enough to do with bank records) that both tenants I'm inheriting have made on time rental payments, during the duration of their current lease. He had no problem doing that.

@Sky Mikesell 

Yes, it does cash flow on the 15 and the 30. The cash flow is obviously significantly less with the 15 year option.

Thanks for all the great feedback. Just another reason that I love this community. As an old mortgage guy, I definitely factored in the DTI, as I would like to purchase some additional properties. I think the flexibility the 30 year amortization gives me seals the deal. I make far more than the minimum mortgage payment on my primary residence, so I'll certainly do the same with my investments, when it makes sense to do so.

I admittedly live in and work in an area where real estate is VERY expensive. Any seller around here would laugh at you if you even offered only $200.00 in an EMD.

Good Morning All...

I signed  contract to purchase my first rental property.  It's a townhouse (i.e. two floors on each side) style duplex, and is the only multi family property in this neighborhood (the entre town is predominantly single family homes).  Because of the location (centrally located to the main highway, supermarkets, restaurants, major mall), and the quality of the property (definitely higher end property, for a rental), I suspect that I'm not going to have a great deal of difficulty renting either unit, when one unit does become vacant.  Each side is rented for $1600.00, and neither existing tenant wants to leave.  I've reached the point where I'm debating on a 30 versus 15 year amortization.  Obviously, the 30 would result in more cash flow, from month to month.  The 15 year would obviously build equity a whole lot faster (giving me the ability to leverage the asset a couple of years down the road), and would still result in a positive cash flow (just to a much lesser degree).  The tenants pay for all utilities, including snow removal. Beyond the mortgage, my expenses include taxes ($6K per year), insurance ($1200 per year), and obviously any capital expenditures or routine maintenance that comes up. 

I'd love to hear some opinions on how other investors treat this.  I always assumed that everyone opted for a 30 year note on an investment property, just to keep the cash flow as positive as possible.  I just figured if a 15 year allows me to still stay cash flow positive, that perhaps it's worth considering.  Any and all feedback is welcomed.