All Forum Posts by: Dan H.

 Are you stating a property with a value below $1m is getting $120k rent?  Something seems off in these numbers.   If they are accurate, I would be interested in where this is.

Now for your question, have you considered a lease to purchase of seller financing?   On seller financing, an option just above money market could be good for both of you.  In addition seller financing can minimize the cap gains your mom would be stuck with.  

Good luck

 >Even if the tenants are on a lease, if you end up selling the home and the new owners don't want to keep it as a rental, the lease will no longer be valid and the tenants will have to move.

This is not correct.   The new owners are obligated to abide by the lease until the end of the lease.   If the lease is month to month, then in most markets you can get the tenant out by giving the required notice to the tenant.  However, if the tenant has 6 months left on the lease, the tenant has the right to stay the 6 months.  The owner can try to negotiate with the tenant, but the tenant is not obligated to accept any offer.

Good luck

What is your plan for the property after you leave in a year?   If it is to sell the property, you are going to be far better off renting.

My market is your current home market.   This is what I recommend here for non value add purchases: 

- if you are going to own 10 years, buy.   It will likely be a great investment.

- if you are going to own less than 5 years, rent. The cost to purchase, the cost to sell, and there are 2 recent studies that show virtually everywhere it is initially cheaper to rent than own at high LTV. So you will be in that home for a certain amount of time before owning is cheaper than renting.
- from 5 to 10 years you are in the tough to decide duration.  The last 15 years, 5 year holds likely did pretty good.  But what if you purchased in 2007?   1991?   There are times were average markets took about a decade to recover.  Has Detroit hit the GFC average home cost yet?  If they have it is fairly recently.   But they are an outlier.  Virtually all markets recover in less than 10 years.

good luck

Even on day 1 the fha loan only required you to live in one of the units. You could rent the additional units including renting them as an STR. In addition, after living on the property 5 years, you long ago met the owner occupancy requirement and no longer must live on the property. So the fha loan at this point does not limit any usage.

Your limitation is what is permitted by your local jurisdiction.   I have zero knowledge of what is permitted in that jurisdiction.

STRs require work and skill to be successful.   If you are a cleaner, you are not afraid of hard work.  

Good luck

I get threatened to be sued on a regular basis.  You know how many times it has happened?  Zero.  The last time was in December where I kept $3K of deposit (fully documented).  Tenant threatened to sue, but did not.  They never sue me.  I have the evidence and I do what I say.  The tenant would have wasted their time.

I think there is virtually zero chance the tenant makes the effort to submit a small claims action for the cost of a broken faucet replacement.  I suspect total cost was less than $150.  It is so unlikely I would not worry about it.

However, let's say by some small chance that I am incorrect.  Your PM indicated it was not normal wear and tear.  Your PM is more an expert on this than the tenant.  So if it goes to small claims court you get an introduction to the process, with a good/great chance of winning, and if you loose who cares?  you may not collect the $150 for the faucet. 

I would not worry about it at all.  Even in my tenant friendly state I do not worry about it at all.  This is because I follow the rules, am fair, and have any evidence.  The tenants know this and know they will lose in court.

I would not do a thing about their threat to go to small claims court.  You want to wager a lunch nothing comes of this?  Are you going to BP Con this year?  Burger and soda on me in Vegas at BP Con if I am incorrect.  No need to wager anything; I offer it because I am that confident (as well as it could be nice to have lunch with a fellow investor).

Good luck

I am not in Texas so do not know how these tools work there but the first 2 sources I use for valuations is 1) Property Hub 2) Penny Mac home valuation.  Other valuations Redfin and Zillow.

Property Hub and Penny Mac both include the comps.  This implies you can easily manually eliminate inappropriate comps to derive an even more accurate valuation.

Good luck

I enjoy Robert k’s books and believe it can enlighten to Other possibilities.  However, I do not agree with everything he says. 

I have owned 2 primary homes in my high housing cost market.  Both have appreciated ~$900k for a total appreciation of $1.8m

market rent on them is $5k and $7.5k per month. 

If I was renting I would be paying that rent to a landlord that would use that money to pay off his mortgage and ideally have some cash flow for his efforts and risk.  

So it is not only the money that can be made on leveraged appreciation but the saving from not paying rent. Note leverage appreciation magnifies based on leverage. The higher leverage, the greater the magnification. Owner occupied is the easiest way to obtain very high leverage. At 96.5% LTV, the return from appreciation is 28 times the appreciation. So a modest 3% appreciation returns 84% return. 6% appreciation like my market, returns 170% return.

The market is more challenging than usual Studies show in virtually every market the typical Purchase at high LTV has initial negative cash flow. But for the long hold, the negative cash flow will turn positive and the gains from appreciation will be great

I question what Robert K believes will provide a better return than a long term OO home purchase. My opinion, not much.

I would take my 2 owner occupied liabilities every day.  

Good luck

Is there a discount for being a BP pro member on top of the early bird pricing?

thanks

Why would the rates have anything to do with whether you extract all your cash unless you are referring to lower LTV necessary to get positive cash flow. This amount to buying cash flows and the underwriting shows buying cash flow provides a poor return.

I can still find purchases that project a full investment extract. My issue is that if I refi at high LTV after rehab (so top of market valuations), I bleed cash in my market. This negative cash flow reduces the initial return from the value add. Enough months of negative cash flow can consume all of value added via the rehab.

Good luck

Your post does not indicate why the MTR unit cannot have its own mailbox that the postal service delivers to, but I will assume (you know what they say about assume) for some reason it does not have its own address.   If it has its own address the answer is simple, add a mailbox for the MTR unit for the postal service to deliver to.

It is almost as simple when the MTR does not have its own address.   You provide a mailbox for the MTR that the postal office does not deliver to (someplace that the postal service would not confuse for the primary mailbox).  When you empty the primary mailbox, anything for the MTR gets transferred to the MTR mailbox.

We have been doing this at a unit since we acquired ir in 2020 and previous owner already had this method established.  Only difference is a tenant does the distribution into the personal mailboxes from the primary mailbox.   We have yet to have an issue.

good luck