All Forum Posts by: Kathy Henley

@Shannon Beck  Welcome.  I love your college town!  There seems to be plenty of student housing, in the organized way.  House hacking is a great way to start, as there is always quiet grad students who don't want the organized dorm type of housing. Read Kim Kiyosaki's book, 'It's Rising Time.'  She helped me get my act together.

@JaNIce Henderson -Moore  Go to lots of open house events and learn what offerings are in your back yard.  Find out what a deal looks like to you. When you can make a list of what a deal looks like, you will be closer to making a move when you see it.  Is you credit score ready to take on a loan?  Do you have a bit of cash to make tenant improvements?

@Demetrius Gatling  Each of your interests may need a different agent or lead generator.  I found my agent after a few months search of sending messages and see who replied, calling agents and interviewing for like-minded hunters, going to open houses, going to Saturday morning investment clubs and asking.  

@Matt Owen  The numbers say that this is worth a look. The seller is failing to be a successful landlord so you need to do your own evaluation. I went to the rentometer.com website, which compiles numbers from recent listings of rental ads.  It reports that the median rent of your address to be $675.  Do you know Taft?  Your perspective building is a little far from the college campus, with a hwy running behind the property, according to google maps.  Could your building attract rents on the higher side? I like buildings that can be improved; there must be an upside. Consider whether improvements would be supported by the neighborhood and your perspective tenants.  Are they seasonal?  Use a higher vacancy rate.  Is there a housing shortage? (lack of ads is a clue; clues must be verified.)  What are the habits of oil workers?  Are they good tenants?

@Dave B. Visit banks for a Home Equity Line of Credit (HELOC). The bank will appraise your home and give you a line of credit (if you qualify). Writing a check from this account, you may make a downpayment on the purchase of a duplex. This is leverage. It costs 4% interest, or so. Include this expense when figuring cash flow of the duplex. When the day comes that the duplex has enough value (equity) you refinance the duplex with a new note, at the higher value, pay off the original note and the HELOC loan.

@Account Closed US Bank has taken care of our different properties and different accounts many times over -- free checking with the HELOC. I met with the store manager BEFORE we were needing money right away, which was good because the appraisals and paperwork took awhile. During the couple of visits we became friends and now she is part of my team when facing money and credit matters. I don't know if this is exclusive to US Bank, but connecting with the banker has paid off many times over.

@Tzvi Ausubel  Either way is agreeable, as the allowance does not change the total dollars you will bring to the transaction.  If the purchase price remains the same, my agent gets her full commission and the loan papers do not need to be re-written by the lender, as you will be borrowing less money.  In the earnings department (your business records), all the costs associated with the purchase set the 'basis' for the investment.   For the concessions to off-set the closing costs, or lower the selling price, the change will be where/how the purchase will be recorded in your books. A credit of the closing costs means that you will pay the contractor for the repairs (or you could pick up the hammer yourself.)  There is another route, if the repairs are big dollars, that the escrow company doles out the money from the seller, as the repairs are complete.

@Lindsey Olson  You might want to live here awhile to understand how different the Bay Area real estate market is, and Vacaville practically Bay Area.  There are plenty of real estate agents, one on every corner.  I never found one to work with.  No matter, I could not find anything agreeable to purchase.  Labor prices are so much higher than in the midwest and the buy-in to purchase a building ties up so much cash. Would you be willing to live in a mulit-unit, being the landlord to the tenants? This would help with the cash flow.  Could you rent a place, to start out, and visit all the surrounding towns in your off hours? 

@Tzvi Ausubel My contracts have enough time in the inspection phase for me to get a professional repair quote.  I will include the quote with my counter of that the repair must be made by closing, and I share the quote.  The seller signs the counter, which means that they will accept the promise to do the repair, or the seller has the opportunity to offer concessions. I had one seller sign and do the repair through his own contractor (new electrical drip to the building) and another who countered with $3000 towards the closing (leaving me to higher a contractor to replace a busted sewer lateral.)  The $3000 wasn't full price of the repair, but I was willing to take the deal.  

Know your numbers.  Don't change your numbers to make the original sale price work.

@Nathan Klettlinger  2)  If these long term tenants are paying under market, they know it.  The tenants of my 4-plex got a personal 'hello' and a written letter from me, the day the sale closed. They were all on month-to-month leases. The letter told them of the rent increase that would be in affect 2mo in the future.  They could sign a new lease with me, at the higher rent, or move out.  They all resigned, even the women who was an 11 year tenant (and no rent increase for 5 years.) We just celebrated our one year ownership and will be raising the rents, as market rents have increased and demand has increased.  You have something better: 2 bedroom units.  These are even more desirable so your future will get better.  But it must cash flow from day 1.