All Forum Posts by: Frank Woodin

 Not to beat a dead horse but I took a seminar on City of Chicago LTO and they had a lawyer who was teaching part of the seminar and he told us his whole practice is based on suing landlords.  The main point he sues on the fact that most landlords don't pay interest on the security deposits they take in from tenants, and they win all the time.  I agree with the move in fee and not handling security deposits.

The following article illustrates the point as well as the point to treat your tenants well, especially in Chicago!

http://www.chicagobusiness.com/article/20141206/ISSUE01/312069986/a-landlord-tenant-dispute-that-brought-down-the-roof

A lot of towns might allow you to change the water, sewer, trash etc into the tenants name but they will ultimately hold the owner (you) accountable.  

As long as you have it in your lease so that they are responsible for the payment of them then you should be good.  You can ultimately hold it against their security deposit and evict them over it.

I have sent the bill to my tenants when this happens in the past and they have paid it, but ultimately the buck will stop with me if they don't pay.  But I also like the ideas above, so its really up to you how you want to handle it.

 If you haven't discussed specific deals with them then I think you have two options:

1.  Ask them about what information you have supplied them with that is giving them concern?

2. Ask them what they are looking for in a deal, usually they have specific guidelines for the investor (your credit, financial situation, cash on hand), and the project (LTV, Location, type of property) that they are looking for.

What kind of information have you supplied them with so far?

One more thing - it is awesome that you are asking these questions instead of quitting, most people would have already said "oh well I guess RE investing isn't for me", keep digging, it takes grit and determination to make it in RE and you are on the right path - don't take my questions as poking holes in your plan I am truly trying to give you the best advice possible!

Usually when HM turns down a deal it **usually** means the deal was not as good as the potential investor thought it was. 

The first thing a HM lender needs is to ensure they get their money back and then they work on how much they can make on the deal.  So ask them what they need to approve a deal first then use that criteria to find the deal, if it fits that criteria it can then warrant further due diligence.

A good technique that I have used in the past was to ask why you were turned down, if you get honest feedback it will help you work on those areas they feel are deficient in the future.  The problem might not be your financial position but rather the deal itself or vice versa.

Good Luck!

I would do it on your personal name, that is what the pre approval was for and I would guarantee you will have to take the title in your name since that is what the mortgage will be in.  

Was your plan to transfer it to your LLC? If so there are several fantastic threads on BP about "due on sale" problems with transferring the title. I would definitely read up on that.

The other option you would have is to find a bank that will give you a commercial loan, you can then put in your LLC's name right out of the gate, the downside is that usually the terms on a commercial loan include a higher rate, a shorter amortization period and usually a balloon payment.

Since this is outside my state (Illinois) I would also consult a real estate attorney to make sure you are 100% on the laws and regulations of Kansas.

As it sounds from your original post and reply that this is NOT an FHA loan but rather the bank is using the FHA guidelines as their assessment standard for the loan. IF it is an FHA you won't be able to do the repairs yourself, but if the bank you are using is lending for their own portfolio then they MIGHT allow it but that is something you will have to work out with them.

If you want a list of FHA inspection standards you can just google it and several sources will come up on the first page. The gist is that all mechanicals must work, except as stated before the AC.

I think you need to bring these questions to you lending broker/bank to see what the information is from the horse's mouth so you can go forward confidently and not loose money on inspections that could have been avoided.

Best of luck!

First - good that you are here and learning, this is a fantastic conduit of learning about real estate.

At first blush it looks like to me you will be short of good cash flow on this property.  If I were you I would put it in the rental property calculator here on BP www.biggerpockets.com/calc I think that will open your eyes to the costs that will be associated with the property.  

Is your dad going to finance the property if he owns it free an clear or are you going to have to get a bank loan?

What is the total income on the property per month with the garage stalls rented as well?

The key will be to make this work for both you and your father in the short and long term.  Input your deal into the calculator and see what it tells you and keep asking questions!

Good Luck

Technically no, your lease probably states (as most do) that you forfeit your security deposit if you terminate the lease early.  On the other hand you did help them out and if I were you landlord I would give it back to you since you didn't do any damage to the house and I didn't incur any loss of income because the property was vacant.  It will truly be up to what you landlord thinks and how they will handle it.  I would call them and talk about it for sure so you can verify which way it was heading and say your piece.

If the rents are truly below the market for the same type of property (condition, amenities and location) then you should raise the rents to the market rate.  Depending on the tenant 25/mo shouldn't rock the boat too much if you desire is to keep them in the unit.  The key is what you goal is, I would personally raise the rents because of them being below the market and not because my expenses being higher.

For me the one big advantage is time - I don't have to actually show the property with my Realtor, he will put a lock box on the door and show the place at anytime.  This frees me up to work on other things, I do also work on filling the vacancy myself  at the same time, I will list it with my Realtor and then work to fill it myself.  I have found that the Realtor route opens up a new pool of candidates to fill my vacancy.