All Forum Posts by: Bill Schrimpf

The Atlantic recently published a report saying 47% of middle class Americans cannot afford a $400 emergency.  Most people in this country have little to no financial literacy, which is why you own properties and they make crazy car payments.  

@john Powell 

You should get back in touch with that PM that gave you a quote.  They probably have the local knowledge you need.

Hi @Eric Moeller - As others have pointed out, look out for changes in short terms rental laws at the municipality and state levels but also watch for changes governing hotels.  Some jurisdictions are moving towards collecting room tax on short term rentals!

Location, location, location...

Based on what you said, the auto loan likely wouldn't be much of a factor, particularly if your fico is 790 and your DTI is low. The best thing to do is go to a local credit union or bank and get a mortgage pre approval. This does 2 things, educates you and establish a relationship with a lending institution. They probably have better auto financing too.

Good luck

@Nick M.  - @David Hedges Brings up a good point.  Talk to the tenant if they are in good standing with you, they probably will stay that way.  At this point, your the only positive creditor they have!  Use that to your advantage.  Would you accept a new application from someone in BK?  The tenant probably wants to stay on your good side.  It will actually become easier for the tenant to pay rent and in their best interest to pay because other obligations will be put on a payment plan.  That is what CH13 is; a court ordered payment plan.  Assuming rent is not extraordinary like +35% income, (casually ask if their employment situation is unchanged from what is on their application) the court will restructure other debt based, at least partially, on whats left after paying for necessities like housing, food, student loans, clothing and transportation for employment.  If the tenant isn't paying rent, the tenants payments for other Ch13 debts will increase because they have more available cash.  A smart (and/or unscrupulous) tenant may actually ask you to increase their rent until the BK is discharged.

If the tenant misses a payment, don't delay on eviction notifications and notify the BK court accordingly to protect your interests.  BK is complicated and takes a long time.  If you think evictions or closing documents are complicated, you should see the BK paperwork!  Talk to an experienced BK attorney about how to best protect your interests as a landlord and property owner.

I'm not a lawyer and this knowledge/advice comes from watching a friend file CH13.  Take it with a grain of salt, except the talk to a lawyer part.

@Hanan K. - Sounds to me like your on the verge of violating FHA anti-discrimination laws protecting race, national origin and familial status. NY likely has additional statutes that are even more "protective" than the federal laws. Cover your rear, have a darn good reason based on written policy if you don't rent to these folks.  They may be looking for some unwitting landlord to discuss protected status matters like race, family status and national origin.  You already did that.  Tread carefully.  If you don't rent to these people, make sure you have a documented reason not to.  Perhaps there is somersetting invalid about the section 8 status you can verify; either way, make sure its documented in e-mail, text or something.  At this point, all these people need to do is hire a shyster lawyer to make your life hell.

Or maybe your gut feeling is wrong and they really are nice, open people looking for a place to live.

Spending a grand or so now on a good attorney will probably more than pay for itself down the road when you get sued or a unit burns down. Murphys Law is not a theory. Simply moving properties into the LLC properly is a legal action in most states too that is best done by an experienced pro.

Thanks for the kind words Ben.  I'm just starting out so cashflow is king.  I would refi and take the immediate cashflow.  If I had a more stable business with 10 or 20 units, I would probably take the longer view and keep the lower rate.

@Ben Franco, Jr. Remember a mortgage officer is a sales person!  They get paid when you purchase a product, err, refi.  That doesn't mean the advice is bad, rather, its important to understand where the advice is coming from.  How long do you plan to keep the property and what are you goals?  Do you really plan on keeping it 30 years?  

Your current payment is probably about $1160 + 350 PMI = $1510

New payment on current amount owed but higher rate is about $1220.

$1510 - 1220 = $290 monthly savings to eliminate PMI

$290 * 24 = 6960 savings (if it takes you 2 years to eliminate PMI on current loan)

$290 * 48 = $13920 savings (if it takes you 4 years to eliminate PMI on current loan)

---The PMI savings goes up if your making additional principal payments every month! ---

1220 - 1160 = $60/mo in additional interest (which is tax deductible)

$60 * 360 months (remaining life of loan) = $21600 in additional interest payments over 30 years

Since we like lists, how about one for the top and/or most interesting news stories for 2015 that effect (or dont) real estate investing?  Please post you list and indicate what your primary strategy is.  Should be interesting!

1. 1.  Fed raises overnight rate by 0.25% and says more is coming. To me, a buy and hold guy, this is the biggest non-news story of the year
2. 2.  Housing starts in most markets are rising
3. 3.  Rental rates in most markets are rising
4. 4.  The most famous RE developer/investor in the world is leading the Republican primary.  Regardless of my/your thoughts towards this guy, it's an interesting story.
5. 5.  I closed my first deal!