All Forum Posts by: Jesse Waters

If they renew the lease I wouldn't try and include any thing about the curtains.  Remind them of what was in the property & that either they will restore it to its original condition prior to move out, or you will and will deduct the cost of the repairs from the security deposit.  Tenants are free to decorate, but you would like your property back to the way it was before they moved in.  Just my though on the subject.

I had a discussion with some folks on this topic a while back.  The general consensus is that the mortgage will still stay on the seller's credit so long as they own the property.  So, with out getting in the weeds on the subject.  The seller when applying for another loan would take a copy of the contract that you have with them & show the bank that they are now applying for another mortgage through.  Depending on the exact situation, they would count the payments they receive as income for the seller, much the same as when you go to purchase an additional rental property, most banks will count the expected rents towards your income.

The key is to make sure that the seller continues to pay their note so that you don't get in a bind if they stop.  I have heard of companines, that for a small fee will process all the payments.  Call it ABC Corp.  You send your payment to ABC, they write a check for the mortgage and send it to the bank then send the sellers the overage.

Hope I answered your question & didn't convolute things.  In this case, I would suggest doing it under a land contract type structure so that you don't trigger any due on sale clauses in the existing first mortgage.  I would guess that most sellers would want to be paid off in a period of 3-5 years, at which time you should have enough equity built up to easily get the property under a tradational mortgage with the deed in your name.

Depending on your situation, following along with @Elizabeth Colegrove said, personal properties with low down payments can be a good way to get started.  A good start would to be buy a multi-family property like a tri or quad plex, live in one unit and rent the rest out.  If you are going to be moving around a lot this could work, or you can buy a place that need some fixing up.  Fix it up while you live in it & rent it out when you move.

I bought my first place as an owner occupant with 100% VA financing. Unfortunately, we didn't plan on it being a rental so the numbers aren't that great. I have purchased the rest of my properties with 25-30% down through traditional lending sources. This helps us avoid PMI & increase monthly cash flow. We are currently looking at a few small apartment building 9-20 units, and will be putting offers in for low down payments with seller financing with a 3 or 5 years balloon. This will give us time to bring up the rents, pay down some principle and get the property rolled up with our other properties under a blanket commercial loan.

It does take money to get going, however, it doesn't always have to be your money.  You are really only limited by your creativity & a few lending rules.  Hope this helps.

JW

Although many tenants could afford to buy a house, there are many reasons that people rent.  I just approved some tenants that will only be in place for three months, but that would get me into next year and perhaps they would stay longer.  I think we all want tenants that will stay in place for ever, however, that's not always the case.  I would prefer tenants that always pay on time & don't trash the place, even if I lose them every once in a while because they do buy their own home.

@Lester Scott Welcome to BP.  I have found the forum as a great place to bounce idea's off of folks.  Just post up a question & it should get answered.

The last eviction I did only cost $85, but that was in Lexington Co., SC.  If I remember correctly, the whole process was completed in about two weeks.  Unfortunately, the real cost of an eviction is much higher, a month's lost rent & potential damages beyond what the security deposit covers.  I had one eviction where the tenants left about 4 days before the eviction was finalized, the power had been turned off which lead to all the food in the fridge rotting.  Cost us the month's lost rent, carpet cleaning, 3 rounds with the exterminator, a bunch of cleaning cost, then another month of vacancy after we got the place cleanded up.

Welcoem to Bigger Pockets! Sounds like you are on the right track. REI is a great way to get steady cash flow & grow your personal wealth & secure your financial future.

@David Ramos Welcome to BP.  I am in the Aiken/North Augusta area & always open for discussion.  I'll shoot you a PM.

Welcome to BP.

Unfortunately REI is a cash intensive game, although it doesn't always have to be your cash. You can look into flipping of wholesaling as a way to fundraise. Also, if you don't mind moving around some, you can always consider house hacking as a way to increase your property holdings without the huge capital outlays required for non owner occupied investment properties.

@Bill Gulley Thanks for the pointers. The big one that I had forgotten about was the rules on using business space for personal use, in this case a quad with one of the owners renting one unit out. On that issue, I will have to dig further into it, as we haven't gone done any house hacking yet. It may be a better idea for my partner to hold that outside of the business for a year then transfer it to the business & move out. Should keep that one clean. We weren't looking to sham, avoid taxes are anything like that, actually, wanted to keep the bookkeeping easy as straight forward. All rents paid to the LLC & all expenses paid by the LLC. I'll have my accountant take another look at this one.

The only risk, as I see it at the moment, is that if the property that is mortgaged in my name is foreclosed upon then it is my tail in the hot seat and not my partners, very true. Again, short term issue as we are going away from personal mortgages to commercial. Currently, all payments are being made out of cash flow off the property once it has been run through the LLC.

As far as general liability, we have put the deeds under the LLC & structured our insurance accordingly. If someone were to bring suit against us, then it should all be limited to the company, and if I remember correctly, only to the extent of our equity in the company.

Again, most of these issues are short term & will be disappearing in the near future.

You are right, nothing can end a friendship like money, but, hopefully, we have structured in a way to avoid issues, we try to avoid over leverage, pass on some properties that could be good if we aren't fully confident in the numbers & generally take a conservative approach.  As business partners we seem to compliment each other & bring a balance that we couldn't achieve on our own.  Its like sports to me, it doesn't matter how well a quarterback can throw a ball if he doesn't have anyone who can catch it.

Thanks again for your opinions & input.  I always value the advise of those with more knowledge & experiance than I have.  I look forward to continued exchange of idea's.

All the best.

JW