All Forum Posts by: Jon Kelly

@Humberto Perez I agree with the other posts here regarding the poor cashflow on your existing property. HOWEVER, this should not hurt you on obtaining financing for your next property. If you're struggling with your existing lender then call 20 other lenders in your area and find one that works for you. I'm assuming you used a residential loan for your existing property and will look to do the same for your 2nd property. You can also consider a portfolio or commercial loan. These will be slightly more expensive but are underwritten based more on the property and less on the investor. 

@Lilach A. why don't you run an analysis and determine if it meets your minimum thresholds? Doing quick math, you're putting $100k down for $500-600/mo. That's 6-7% cash-on-cash return. Do those numbers work for you? Does your monthly cash flow include reserves for repairs, vacancy, etc.? 

@David J. whenever you'll feel you won't regret the decision. What do you value more, buying a property with $200/mo in cashflow or a new car? Maybe buy both 

@Fahadbin Alam You can add anything you want in the lease as long as it is legal. Your property manager will have a lease. If they do not have a lease, then run far away from them. 

Sit down with your property manager and review their lease line by line. Explain any concerns you have with them (e.g. tenants smoking inside). I would hope they have experience in dealing with that. I would also research standard inclusions / exclusions by state 

@Nathan Gesner we do not include it in the lease, but I have considered it. I think it's a great way to take emotions and "shock factor" out of the decision to increase rents. The tenants will be prepared for the pending increases as soon as they move in. 

@Nic Juncos don't worry too much about the "best" move. Your logic is sound and would get you closer to your goals. 

I would consider two additional things: 

1. Selling your first property. This give you access to $100k for your endeavors. Now you can look for multi-family properties up to $400k instead of up to $300k. Does that open you to many more opportunities? If not, then stick with your plan. 

2. Look for a househacking opportunity for your new home. Can you find a duplex for $200-250k and rent out the other side? 

@Fahadbin Alam If you don't have to, why would you? If the unit is priced right you should still have plenty of interest from non-cat owning families. 

It could also depend on the tenant class. Class A, maybe you allow it with pet deposit, cleaning fee, etc. Class C or below, maybe best to avoid

@Michael Montana your goals and your why usually outweigh fear. Research and data always helps. A few other things could help: 

1. 1. Speak with investors or agents in the area and understand what typical vacancy rates are
2. 2. Look at active listings (zillow, craigslist, facebook marketplace, etc) and see how long they have been listed
3. 3. Create a "fake" listing on craigslist to pressure test the market and see how many and how quickly you receive responses

@Dan Auciello I would exhaust a few free options before paying for a list. Google search, real estate meet-up groups, ask your agent(s), search through BiggerPockets... 

@Connor Mather that's 100% doable. I would explore two approaches: 

1. Use hard/private money and borrow $210K (purchase price + closing costs) in the form of an interest only loan. Schedule the loan for 6 months, but no penalties for paying off sooner. After you purchase, find a local/regional lender to finance 75% of the LTV within NO seasoning period. It's common for lenders to require a 6-month seasoning period (you can't refi for 6 months). But, you can find lenders requiring 0-3 month seasoning. After the refi, pay off your hard/private money lender and you're on your way!

2. Find local/regional lenders that provide financing for the GREATER of the purchase price or appraisal value. Most lenders finance the lesser of purchase price and appraisal value. This will take some effort to find, but use the BiggerPockets community and see if you can find one. On the most recent BP podcast the guest used this exact strategy to finance deals with little or no money down