All Forum Posts by: Brant Richardson

I doubt Michigan will be seeing a rapid increase in prices soon. If you have rehab skills their will always be deals in markets with older properties. Grand Rapids looks like a great niche for rentals, there is so many schools to provide student tenants and steady jobs for residents.

What to do with your money is a personal question. I want to grow a large portfolio of properties. If you are like me then the answer is to use your cash for new acquisitions not to pay off old ones. I like Kevin R's idea of using FHA loans to stretch your 10k as far as possible.

Picking a market is step one. The Bigger pockets news letter just had a great article by Ali Boone (an out of state investor who lives in CA) on just this topic.

http://www.biggerpockets.com/renewsblog/2014/02/22/which-market-should-you-buy-in/?utm_source=BiggerPockets+Newsletter&utm_campaign=4cb39babde-February_23_2014_Newsletter&utm_medium=email&utm_term=0_97489b8401-4cb39babde-71098349

Some people go with a turnkey provider others do not. In my opinion it depends just how dedicated you plan to be to your chosen market. If you want to pick up a property, maybe another if things go well, then turnkey is the way to go. If you plan to build a serious portfolio in a market then you need to commit to networking and building a team there. You want to spend the time up front learning about the market. If you find the right contact that person can open up a market for you. For instance, a good investor oriented realtor will turn you on to the cash flow properties in good rental areas, may know which PM's have a good reputation and may know a lender who works with out of state investors.

The last bigger pockets news letter had a blog post about Blackstone.
http://www.biggerpockets.com/renewsblog/2014/02/21/blackstones-portfolio-financing-investors/?utm_source=BiggerPockets+Newsletter&utm_campaign=4cb39babde-February_23_2014_Newsletter&utm_medium=email&utm_term=0_97489b8401-4cb39babde-71098349

5 years seasoning? 12 months is standard.

You need to show 2 years as a landlord for the lender to have your rental income count as income. I'm sure you have been doing this that long to have that many properties. You have had rentals for over two years right?

Perhaps you should look into a business loan. You will not get as good of a rate though.

You should write out a good business plan to present next time you talk to a lender. You should have some clear documentation on what you have done to increase the values of your properties above the purchase price as well. Go in organized and professional. Show them what good investments you have made and what you plan to do with the money they give you.

Another possibility to ask about is a home equity line of credit.

Unless you are in a rent controlled area there probably isn't a legal aspect. I think it is nice to give a tenant two months notice. How much to hit her with will depend on how far below market it is and what she is currently paying. A $5o increase is a lot different for a $500/mo rental than a $1500/mo rental. I like to tell the tenant in person and hand them a written notice while doing so. This makes it more personal for them and there is no miscommunication about what is going on.

Do the math so you can tell them what percent per year the increase is, it makes it look small when it has been a few years since rent was increased. For instance if the rent was 1000/mo, you were raising rent $50 and it had been 3 years "While we have had 4% inflation yearly the rent increase is only a 1.6% increase per year."

Where do you plan on moving? Is it a good rental market?

Cash, excellent credit, motivation, and retiring soon so you will have time to educate... a good start to real estate investing.

How soon is retirement? One thing to consider, lenders like to see income. It will be easier to get loans before you retire. If you have a lot of cash, a nice pension or big retirement plan of some sort it might not be a problem. Your rental income will not be counted by most lenders until you have been a landlord for 2 years, proving that you can be effective.

Where I live in CA is a horrible rental market too. I saved for 10 years to get a 20% downpayment. I had the exact same intentions as you, buy a duplex and rent out half. The best deal I found (this isn't a joke) was 750k for a duplex that rented for $2200 each side. So I gave up owning in my hometown for now. I expanded my search to an hour away, then 3 hours away (there was actually cash flow possible there), then finally realized that out of state investing was how I was going to go. I'm currently investing in Kansas City, let me know if you want to talk to my guy on the ground there.

@obinolson - Do you already have 4 mortgages? Do you have bad credit or a high debt to income ratio? Are these small loans, under 50k? If not then you should not have a problem at the big banks. If you are refused, ask the lender which part of the equation is a problem.

If you want to finance based on purchase price you don't need a seasoning period. If you wait 6-12 months (depending on lender) you can finance based on the after repair assessed value. The beauty of option two is you can pull all or most of your down payment and rehab costs out if your after reparair value is high enough. Financing at 75% of value is pretty standard from what I have seen. If you have less than 4 mortgages currently then you will not need to find a portfolio lender to do this. Just start making phone calls to banks in your area, ask about "cash out refinancing".

I actually didn't know the exact break down of the 50% rule. My understanding was that 50% covered "all" expenses except P&I. I figured it was used by people who run their own properties so PM was an extra expense.

When I say $100/mo with PM is good, I am assuming we are talking about a decent looking 3/2, in a B neighborhood with decent schools, where you will get quality tenants and have a reasonable expectation for some appreciation. In a lesser neighborhood/property with higher risk and little hope for appreciation, I would want a higher ROI than this deal. Knowing that this one and others around it sold for over 100k before the collapse gives you some hope that it will get back up their sooner or later, unless a major employer leaves town or something.

Kansas City has tons of properties that would cash flow more than what I am buying but my guy on the ground keeps steering me away from them because they are areas where tenant problems are likely. The most recent steal of a deal I asked about "has a Walmart right behind it that most people wouldn't go to at night".