All Forum Posts by: Jim Ehlinger

Hello @Mary D.

In the small research I have done with buying my property, the no doc loans were not available, every conversation I had was for income verification. I have spoken with Enterprise, St. Mary, Meredith Village up in Laconia, Citizens... I never talked with Sovereign or another Credit union, but I think they are a myth now unless you talk with a private lender or hard money lender, but those are really short term loans as you probably know.   Have you tried to talk to any of the independent mortgage brokers to see what they can find for you at all?

Good luck...

@Corey Smith

Hello Corey, I think the 4 limit you are thinking of is the Freddie and Fannie Mae loans. I know that on my property (my first), I bought it through my LLC and my bank (in NH) said that they use Freddie Mac and Freddie won't loan under an LLC, so the only choice I had with this bank was their own portfolio loans. Which they do as a 3/5/7 year ARMs for 30 years and only 20% down, and I could do the loan thru my LLC, but I had to secure the loan with my own income and credit scores. I was also told that there was no limit on the number of the properties financed through their portfolio loan program. So the options are out there, you just have to look for them. I am in the north east, so I have no insight on the northwest, but I wish you luck.

Hello @Kelley Lefmann

Welcome to BP, you have come to the right place to figure things out.  There are so many different choices you can make on what niche to try. The important thing to consider is that each niche requires different funding requirements, different time commitments, levels of understanding and in some cases additional complexities to overcome.

Foreclosures would typically require more funding as you will be competing against other who are doing cash purchases, so you would need to be able to have private financing/ hard money lender, or just simply cash available to not only purchase the foreclosure, but need the additional funds to make necessary repairs. With a foreclosure, what would be your exit strategy? Are you looking to flip it, or hold it as a rental with buy and Hold?  I don't think it is naive to just do a buy and hold if that is where you end up.  Buy and hold can be very rewarding in the long run, while there can be a lot of money to be made flipping, there is also money to lose if you miscalculate your expenses with the flip. So there are lots of other things to consider with those and many more people on BP with more experienced than I am who can lend their experience to help you.  

For the tax liens, that is more of a long term commitment as the state you choose to invest in will very possibly have different laws and time frames as to when you buy the lien and when the lien is either satisfied or you are able to take possession, which is not an easy process. 

I personally chose to do buy and old for multi-families and invest about 1 hour away from where I live.  I also am self managing so I can learn the process better and as I increase properties, then I can look at the possibility of a property manager.  However, if you do buy and hold out of state, a property manager is almost a requirement.

Good luck with your research and choice.  Hopefully others will add their .02 to your question as there is a lot of good experienced people online.

@Reedi Matthews

Congrats on your first deal... the first one I hear is the hardest, and makes us the most nervous. I know I was nervous when I bought my duplex.  Living in it while renting out the other side will give you the basic experience on how to be a landlord, save money on living expenses, and be able to start saving for the next building, which is what I am doing now.  The only different is that I don't live in my duplex, so both sides are rented out. 

I wish you good luck in your next steps, I just know that I am not the one to help coach you as I am only a few steps ahead of you with my own journey. 

@Troy Zsofka 

Thanks for the great post with a different angle that I had used... I was tending to stay away from the southern hospitality angle, but for me, I spent over 4 years at Ft Bragg, NC while in the Army, so I am also very familiar with living in the south (10 years in TX) and especially time in NC. Your explanation and analysis is exactly what I was trying to say, but I was not as eloquent as you were. Improving cash flow is always important, but keeping good tenants happy to reduce tenant changeover expenses is just as important, so if my tenants are happy paying all included, and I average a 22-24% ROI, then I am pretty happy too... Thanks

@Jessica Vollendorf

Hello Jessica, Thanks for the feedback, While I live in NH, our water meter is in the basement and it is read remotely, so no one has to come into the basement. But your comment made me think about my mom's house in Texas and her water meter is out by the street, so the meter readers open up a small cover at the street, read the meter, then close it and move on. So if I were to split her house into separate lines, I would have to do the same thing you are describing.  So there is no cheap or easy way to put a second meter at the street and dig up the lawn to lay all new pipe and then re-pipe the house for the separate lines.  All of which is pretty expensive and would take years to recoup the costs.  Which is why I have repeated that every house and property is different, some times you can split the meters and others you can't... and if you can't, it doesn't make you a "slumlord". 

I am by no means an expert and I am doing the same as you, reading posts and trying to learn from other people's experience and opinions, whether I agree with them or not... it is all part of the learning process.    

@Account Closed

Thank you for your insight. I definitely agree that there are unscrupulous tenants who will try to milk you for everything and drive your utility bills thru the roof, but my feeling is that those are fewer and far between the ones that will still turn lights off when they leave a room.  My unit was built in the mid 1800's and while it has two electric meters, it only has 1 furnace and gas meter in, and only 1 water/sewer meter.... so splitting my unit up for those two would be costly for me and it would take more than a few years to recoup my expenses.  This property has been managed for over 30 years this way and it was just one of over 80+ doors that the previous owners managed. I have walked several of their properties, and they are definitely not slumlords.  This method worked very well for them. Will I keep it the exact way going forward or convert to separate utilities? I don't know, only time will tell.

While you are correct, I do not invest in Industrial property nor do I claim to have any experience or insight into that, at no time did you differentiate between your opinions are for Ind. properties versus residential.  Also, I never said separate meters were bad or good. I just said that every property and every situation was different. In most cases, yes, separate meters and bills make sense, others, it could be a big expense up front and only a marginal return of investment to convert and would or could take years to recoup those costs. 

I fully understand your opinion and the points you make, I just believe there are other options for every situation, but that is what makes each investor different.  There are dozens of different ways to run a successful property and everyone is going to manage their own properties based on what they feel is the best way... 

I, and I am sure that many other investors who follow the forums here would not appreciate being called a slum lord just because their properties don't have separate meters or they include utilities into the rent for convenience... I think that your opinion is yours and you are entitled to it.  But, I just ask that you treat others with a little bit of respect because they choose to manage their properties differently than what you think is the only way a "professional investor" should invest... 

This has been an enlightening conversation to say the least and has given me thought for the future of my investing career...

@Account Closed has that the only way to make money is to make the tenants pay their own utilities. Well, I am glad that I looked at this property and bought it. I have an 11.37% Cap rate, and a 24% ROI and a solid 1.77 towards the 1% or 2% rule for whichever you follow. The numbers speak to themselves and the tenants do not abuse the utilities. Even as a precaution, the thermostats for the heat are programmed not to exceed certain temperatures, so that is controlled to an extent as well. While I also believe as Ryan does in maximizing profit and cash flow, my objective is to also create a property where the tenants are safe, happy, and willing to stay long term. Which seems to be working as one of tenants has been there for 12 years paying ontime every month...

Ryan, your quote of "And, since you asked about me personally, I make several hundred dollars every month in profit (legally) by sub-metering industrial utilities and charging my own rates that are higher than what the utility charges. More than some people rent entire units for" is where you are clearly in this to only make a profit regardless of anything else.  Uslegal.com describes a slumlord as "A slumlord is an unscrupulous landlord who milks a property without concern for tenants, neighborhoods or their own long term interests."  

There is nothing about a slumlord that has anything to do with what you are trying to explain.  To me, your own words appear to show you are milking your tenants thru their utilities payments for as much as you can get..... I may be wrong, but that is what it sounds like.

@Account Closed

@Account Closed was referring to.