All Forum Posts by: Kathy Henley

@Amanda Coleman My husband always says yes. Down payments come from somewhere, or short term repairs. By using your own money, it is available immediately and at a low rate. This allows one to take action. The monthly obligation payments of the HELOC are interest only. The cash flow in the investment property should cover this payment, in our strategy. As a California investor, I am tapping into my crazy appreciation. This will not go away. The interest payments are a business expense.

You mentioned the BRRR strategy. This is a long term strategy. One must BUY a good deal, REPAIR and then REFINANCE. The repair dollars must increase the value of the property so that it is eligible for refinance. Like this: buy an under market property, fix it up (repair costs not exceed market value of the neighborhood.) Now you bump rents up to market value. Your cash flow just increased. When it is time, visit the lender and refinance at the new market value. Pay off the first loan (the deal) and use the proceeds to payback the HELOC debt. The improved building now has higher rents, a slightly higher monthly mortgage payment and continues to cash flow. You now have an investment property, which gives you passive income each month, AND a lovely primary home.

@Amanda Coleman

Why not tap into your significant appreciation on your primary home?  Home equity lines of credit (HELOC) are very useful for down payments on investment property, or, for the funds to refresh a purchase.  The lender will appraise your home and give you a line of credit, depending on how much equity is in the home. The paperwork is a pain and it takes a month, so do it now so that you are ready.  You are doing a great job learning about options. Visit and analyze those surrounding neighborhoods. You will become better at recognizing the good stuff. Be ready for action.

@Jay Patel A smokin' deal and it is in your town! 

@Roberto Lebron Home equity line of credit.  This is borrowing against the value of a building that is almost paid for.

@Ross Y. Analyze the deal in front of you. Learn about out of state investing later. You are looking at a CONDO. This has its own story. One cannot add value without the building cooperating. There are holding costs that include HOA's and higher HOA's next month when it is decided to change something by the Board. Will the appreciation give you the passive income needed to build an empire?

@Steven Aponte Is this an investment? The part about the family being tenants is adding an element that only you can value. Is Sister able to contribute funds to deal?  There will be improvements and upkeep under your ownership. Analyze the purchase with rent as a consideration.  Will you have to reach in your pocket for the next few years to cover the expenses? Will this hold you back from buying another deal next year?  

@jeremy  

I need an address.

@ nate

Roof and window replacement can be done with occupants.  Get bids for both so that you have more information on what will be coming out of your pocket.  What are the terms in the lease?  When the lease is fulfilled, the place is yours.

@Nate Mao

@Brian S.

I have used certified mail for important tenant notices, which requires a signature, but it takes too much time for me to stand in line at the post office and takes up to 2 weeks for the post card to come back.  Of late, I put the letter in a UPS envelope and printed the label from my desk, including a check mark in the box to ask for a signature upon delivery.  This costs an extra $4. It took 24 hours for success.  I logg-in to my UPS account to see the 'Delivered' status and can see the delivery signature.

@Kevin R. All but the windows being stuck open (inspection reports always find a few of these.)  The other stuff is costly.  Now that there is a report, the owner knows that any potential buyer will find these issues, whether he shares your report or it under goes another inspection.  Work with the seller. Put dollar amounts next to the costly issues and adjust your counter-offer accordingly. The tenant improvements must be made to attract solid tenants. In St. Louis, some of the repairs must be made to get the occupancy permit.  In the end, if you don't get help from the seller to adjust the price, you will have to reach in your pocket and pay for them yourself.  Your contribution to the deal must not exceed the market value.