All Forum Posts by: Jon Kelly

@Jacob Beg if you don't want to charge late fees then why are they in your lease? You can't have it both ways. Either enforce the late fees or continue with the pattern that's developed. You'll be texting/calling/leaving messages for the tenant to "please catch up on rent" with the hope they will choose to pay rent. 

You have 3 options: 

1. Charge late fees - tell them you were lenient throughout COVID, but now you're enforcing late fees on all your rentals. No questions asked

2. Do nothing. The existing pattern will continue

3. Do not renew their lease 

@John Huynh For a 4-plex it's very common to make offers without seeing all units. If you're offer is accepted you have at least 2 opportunities to see all units before closing, during your: (1) inspection, and (2) final walkthrough right before close.  

If you're a seller and you have 2 offers that are identical except for: 1st offer waives inspection and doesn't see any units, and 2nd offer requires inspection and must see all 4 units. The seller will 100% go for the 1st offer. 

You have to find the right balance between making attractive offers to buy deals and protecting your investment.

When I purchased my first 4-plex, I saw 3 out of 4 units prior to making an offer. I waived the inspection. During the final walkthrough ~1 hour before close I saw the 4th unit for the first time. Of course, it was the worst unit of all 4. It was substantially worse than the seller described it. Right at closing I requested an additional $5k off to account for the additional repairs. 

@Anders Nordberg have you made any decisions since your post? 

Why is the HELOC and cash out refi on property #2 risky? As long as the price is right for property #2 this could be a great option. You will increase your rental income on property #1 when you leave and you'll have another investment property under your belt.

2 years to wait is a long time. If you're able to find a deal now I'd go for it! 

@Joseph Goode Typically something like: wake up, stretch, make coffee, sit by the pool, check your bank account, nap, eat a snack, more pool time, dinner, sleep... 

@Nate Kovaly Don't overthink this. Let's say you borrow $50k and accrue $2k in interest over the first 6 months. You will owe $52k to pay off the loan in 6 months... If you refinance and pull $50k out then you need to come up with another $2k to fully pay off the loan. 

Don't let this hold you back from doing any deals. 

@Michael Cavitolo You won't know what's best until you start to analyze deals and see what is possible. After you start finding deals your question changes from "should I start investing in real estate or wait 2 years," to "should I buy this duplex cash-flowing $400/mo with a 18% cash-on-cash return or continue to wait..." 

It's a lot easier to answer this question. If you find deals like this I imagine you'd want to get started ASAP. 2 years is a long time. 

@Thiago Oliveira Definitely. Condition of the property is considered in appraisals. You'll also be able to charge a monthly fee to use the car port, which increases NOI.

It would also show well if you have at least 1 new lease after you complete the upgrades with an increase in rent. This proves you not only improved the property's condition but it will improve expected rents. 

@Jason M. Your option A and B analysis just shows your cash output in year 1. That's not really helpful when it comes to making a decision. Most people will consider IRR, CoC return or monthly cash flow per unit so they can compare different opportunities.

In scenario B your monthly cash flow is $98/unit and CoC return is 3% ($4,704 / $159k). Does $98/unit and 3% CoC meet your goals? I'm sure you can find better deals out there.

Most people analyze a house-hack using numbers after you vacate the property. You can still assume 10% down, but you should add fair market rent for the unit you occupy. 

@Nicole Harrington Can you still find interest rates of 3.65% for investment properties? 

$720/yr in maintenance and capex is very light. How confident are you in the $20k in repairs? 

If EVERYTHING works according to plan you end up making 6% cash-on-cash... there's likely better options out there. 

@Luke Hoffman Why don't you give it a shot and try it yourself? If you completely screw up and you end up with water spraying everywhere you can always hire a plumber. Chances are that won't happen. It always comes down to time and money.