All Forum Posts by: Jon Schwartz
Jon Schwartz has started 37 posts and replied 926 times.
Post: How do I go about renewing the rent on my tenants in California?
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Kyle J.:
Originally posted by @Jon Schwartz:
At present, because of COVID, you're not allow to raise rents on tenants.
That’s not correct. There’s no statewide law prohibiting rent increases during COVID in our state.
Thank you, Kyle. It's an LA municipal prohibition. My bad!
Best,
Jon
Post: How do I go about renewing the rent on my tenants in California?
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Scott Gadea:
I wanted to know how to go about renewing my tenants lease for another 12 month in CA?
Scott, don't!
Year-long leases automatically become month-to-month when the lease expires.
At present, because of COVID, you're not allow to raise rents on tenants. That will probably end within the next 12 months. If you sign a new, 12-month lease with your tenants, you're locking in the current rental rate for the next 12 months.
You're better off letting the lease convert to month-to-month, then raising rents when the moratorium expires.
Best,
Jon
Post: FHA owner occupancy with tenants in place already
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Derrick Dill:
I'm using an FHA loan to purchase a duplex property in California. The property has 2 tenants in place, with written leases that go until next year (2021). FHA guidelines give me 60 days to meet owner-occupancy (move-in). How can I meet FHA guidelines and owner-occupy one of the units? California tenant protections are strong and eviction will likely take at least 60 days+.
Any ideas?
Derrick Dill, you're in a pickle!
(Sorry, couldn't resist.)
Not only do evictions take more than 60 days, but there's a statewide eviction moratorium in place that is likely going to be extended until Jan 31, 2021. You have no legal means of getting a tenant out.
One option is to knock on each tenant's door and offer them cash to move out of their own accord in the next 60 days. Even this option has legal guidelines, so check with a real estate attorney!
Another option is to just proceed as though you'll be moving in after closing and hope nobody checks in on you after the fact!
Good luck!
Best,
Jon
Post: Looking to house hack on a 6 unit apartment building. Financing?
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Josh Turansky:
I have identified a 6 unit apartment building where I would like to house hack. The asking price is $1.5m. I have $40k in savings. What is my next step to get this financed? The numbers make sense once the building is purchased, but I need help understanding the upfront capital.
Josh,
A six-unit building is a commercial building -- as opposed to residential multifamily, which is 4 units or less.
Commercial and residential buildings are financed differently. Residential financing includes low-dow-payment options like the FHA loan, which has a minimum down payment of 3.5% for an owner-occupied multifamily.
Commercial financing typically starts at 20% down, and you're more likely required to put 25% or 30% down. There's also no advantage to living in the property. In fact, to satisfy your lender, you'll probably have to pay rent to the LLC you form to own the building.
For househacking, you should familiarize yourself with the FHA loan and focus on duplexes, triplexes, and fourplexes.
Good luck!
Jon
Post: Recent college grad just starting out
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Brennan Doherty:
@Jon Schwartz
Thanks Jon, much appreciated.
I haven't heard of the "streamlined" 203k loan before, so I'll be sure to look into that! Sounds like a pretty good option.
Does the property need a specific amount of work that needs to be done in order to qualify for a 203k loan? I'm assuming they don't hand those out to just anybody.
Brennan, the minimum amount of work for a 203(k) is $5000. Here's some info from HUD, which operates the FHA loan program:
https://www.hud.gov/program_offices/housing/sfh/203k/203k--df
Post: Getting Started With The Rest of My Life
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Logan Harrell:
I live in NE Arkansas. Since this posting a lot has actually changed. My dad was just deeded a house through his grandmother's will. Now we just have a lot of repairs to go through. I guess another question would be is how can we take this one property and turn it into maybe 3 or 4?
Logan, congrats on pursuing this path!
It's already been mentioned on this thread, but you should talk to a local lender and local investor-friendly agent about househacking a duplex.
I see in your profile picture that you have a young daughter; I do, too! Right now we're househacking a duplex in Los Angeles. My wife, daughter, and I live on one side and we have wonderful tenants living on the other.
When you buy a multifamily property and move into one of the units, you're eligible for an FHA loan, which has a minimum down payment of 3.5%. So for example, a down payment of $5250 gets you into a $150K duplex!
But here's another idea: you and your dad should flip the house you get inherited. Make the repairs, make that house look like new, and sell it! Since you've just inherited it, your cost basis is the current value of the home. That's a complicated way of saying you'll pay no or very little taxes on the sale.
Flipping your inherited home will give you seed capital to pursue your real estate ambitions.
Anyway, back to househacking a duplex... It's a great idea because it will lower your living expenses at the same time that it supercharges your net worth in the form of principal paydown! I have tenants who not only subsidize my cost of living, but they also pay down my mortgage every month. It's the best!
Good luck!
Jon
Post: Rental Properties Spreadsheets
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Austin Culp:
I was hoping someone could help me or if someone knows resources that I can make spreadsheets with for managing expenses and doing book keeping for rental properties. I am a new investor within real estate and I am not good with making spreadsheets...yet haha. But any help on making spreadsheets or resources for house hacking would be appreciated. Thanks!
Austin, I'm surprised nobody has mentioned that you don't have to make your own spreadsheets from scratch!
One great service is stessa.com. It's specifically designed for mom-and-pop landlords to manage the expenses and bookkeeping of a small portfolio, anything from 1 to 20 or more units. Check it out!
Best,
Jon
Post: Recent college grad just starting out
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Brennan Doherty:
Hi everyone,
This is my first post on biggerpockets in a couple years, and it's going to be a long one so bear with me! I'm looking for advice on how I should get started.
Im 23 and I recently graduated in January with a degree in finance from Umass Lowell, 0 debt whatsoever. No monthly payments aside from car insurance and my phone bill, totaling roughly 150 a month. I realize how lucky I am to be in that position. I feel like it's also important to mention my yearly salary is roughly 45k at the moment.
I knew I was lucky to have 0 debt so I tried to take advantage, working as much as possible throughout college. Currently, I have 25k sitting in my dividend growth portfolio, adding 250 each week, and another 20k sitting in growth stocks. Then I have roughly 10k (which I'm building on) in savings which I plan to use in the near future for a house hack in the Lowell area. I planned on doing this for the first few years, growing a nice little portfolio of small multifamilys using FHA loans and refinancing. I secured a job at a bank after interning there for about a year, and I've been there since January (they offered me a job upon graduation.) I guess what I'm asking is, what would be the best way to use this money in terms of real estate? My ultimate goal is to be "retired" from my 9-5 by my early 30s so I can make the switch to real estate investing full time. Any advice is greatly appreciated as I know there's plenty of wisdom from experienced professionals on this site. Thank you in advance!
Brennan, your plan is fantastic! You're doing it right. I wish I had your wisdom when I was 23.
Keep savings and stay at your job for underwriting's sake.
You might also look into the Streamlined 203(K) loan. This has a reno cap of $35K, but there are fewer hoops to jump through. It's a great idea if you need a little extra money for cosmetic rehab. Find a lender who's completed Streamlined 203(k)'s before.
Good luck!
Jon
Post: Pros and Cons of Home Possible loan (Illinois)
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Ashley Budyak:
@Will Fraser I am looking to house hack. Buy a multifamily home and live in one unit. I just graduated and talked with a lender and he said I should start with a home possible loan.
Following!
Any lender able to enlighten us?
Thanks!
Jon
Post: Lots of Applicants: How to choose?
- Realtor
- Los Angeles, CA
- Posts 952
- Votes 1,153
Originally posted by @Matt Huber:
Hey all,
Total newbie here.
We're getting set to rent our house in the Sacramento, CA area. I posted an ad on CL a couple days ago and have received about six replies so far. We will be ready to show the property on Sunday Aug 30.
Now, I want to be fair to the tenants, and so I'm trying to figure out the "fairest" way to give them an opportunity to rent the house. The ad was very clear about our requirements (ie minimum FICO, income, rental history, etc), so here's what I'm thinking:
I'll invite the prospects to view the house, giving them choice of time lots in the order I received their inquires. After viewing the property, I'll provide them with the application and instructions for submitting it with a deposit. Then I'll process them in order received. Of course, if the first applicant doesn't meet the criteria based on the credit/background check, I go on to the next,so as to not waste somebody's application fee if there is another application in process ahead of them.
Does this sound like it meets the requirements of the law and general decency? Is there a better way I'm not seeing?
Many thanks in advance.
Matt, to stay in accordance with the law, you must base your decision solely on your business interest as a landlord. So long as you use the same metrics to judge each person's financial situation, you don't have to abide by a first-come, first-serve rule. If you conduct several showings that first weekend, I would instruct each application to return their application by, say, Tuesday so that you can make a decision by Friday (it takes a few days to contact employers and previous landlords). If you receive multiple applications, call employers to confirm income and previous landlords to inquire about previous tenancies, then chose the best. That's my two cents!
Best,
Jon