All Forum Posts by: Luciano A.

@Account Closed

Congrats on your success. However, for any new investor coming in it is not the number of doors you own it is the cash flow that is coming as a way to measure your investment goals. Owning 50 doors and making $100 per door is not all that impressive if you can own just 10 doors making $500 per door. To the rookie, the person owning 50 doors seems to be the successful one but at the end of the day, it's how much money is hitting your bank account.  

I give you props for moving to an area you wanted to invest in as many can't or won't do that. But as another investor, @Victor S. pointed out to becoming a GP without any experience is risky for all the LPs. But that is not your fault in being able to sell the deal to them. They (the LPs) should be doing their homework. 

WE all look like rockstars when things are going well. It is when the market has correction the real players are still standing. I just fear how many people will be hurt as not everyone is a War Time General. Experience helps when the economy has a shift. 

I know this sounds like a put-down directed at you but I am directing this more to those wanting to run before they can walk. Too many people read a few books, see HGTV, join groups, and think they are good to go. Everyone is an Entrupuner in today's society. Everyone wants to retire like yesterday. Everyone wants to own 100s if not 1000s of doors. I would rather own 100 doors with one or two partners than walk around saying I own 4000 doors with 800 partners. 

Starting small is OK. Just start is what I tell people. Scaling takes time but we all want it now. WE are at what some will call the peak of the market. It's okay to take it slow and make small moves as long as you are moving and doing something to get to your number that will help you not depend on your job to pay your bills.

Best of luck 

@Mason Blake

As some mentioned a Builder's Risk policy is recommended when you are rehabbing or the property is going to be empty for more than 30 days. Insurance is to protect your investment. Taking a risk for two weeks is like driving without insurance and hoping all goes well. Also having the wrong type of insurance is like no insurance at all. I would call your insurance agent and ask to get the builder policy in place. This will protect you and won't have any issues if something were to happen in the two weeks you are finishing up. If something were to happen and the insurance adjuster sees the house was being rehabbed your claim can be denied.

If your policy lapses that are not good as a lender-placed policy is to protect their interest thus you are still on the hook for liability and your content. And their premiums are hefty. 

Best of luck 

@Kyle Neville

I am not sure if your state is the same but here in Texas, the new owner has to honor the lease of the tenant. If you want to sell sooner you can ask the tenant if they are willing to move and offer them small cash for keys type of deal. Some tenants in my experience don't care and if they are offered money to move they will be packed by the end of the day and others were not wanting to move because they have a routine that they don't want to break. 
I agree selling without a tenant in a property will get you the highest return since those looking to buy as a primary residence will pay more than an investor who is using numbers to make a decision. 

However, one thing to consider is if the tenant moves out and you want top dollar you might have to put money into the house to bring it back to move-in condition.

Best of luck 

@Suneel P.

Most banks will require a 6-month seasoning as they call it. You might want to look at the additional cost to refi and see how long that would take for you to get back with a new loan. I don't see rates going up any time soon so wait and then shop around. 
Otherwise, you can call your local banks, credit unions to see if anyone of them would refi you out. Be careful they might offer a low rate but their fees and points might be really expensive.

Congrats on your purchase.

Best of luck 

@Danette C.

I'm bored and decided to help answer other people's questions versus watch tv. I will do my best from when I got an FHA loan 100 years ago. It's been a while but I don't think many things changed.

First, no you don't need to put property into LLC. Your daughter's friend is still accumulating assets and if she buys with an FHA loan there will not be a lot of equity thus will be judgement proof. And not sure what state she is in but in Texas a homestead is protected.

FHA is a great way to get into a property with very little down. 3.5%

In this market, some sellers don't want to go with FHA buyers for many reasons. They are flipping and haven't held the property long enough so allow a buyers loan to qualify. Or they don't want to go through the extra process that FHA loans require. And many FHA buyers will ask for help with closing costs thus costing sellers more to work with an FHA buyer.

FHA sends out their own appraiser and inspector. Thus something like no stove can cause the loan to not go through, or any maintenance issues can cause the loan to not go through.

The rate I think is a lot higher and you will have PMI, which is like insurance that she will have to pay because she has less than 20%.

So the only pro is that you don't have to bring a lot of money but that might outweigh the cons I posted if the property is in liveable condition and has all the normal items people will assume to have when buying, like flooring, appliances. 

It's awesome someone at 21 is looking to purchase. Hope this helped.

Best of luck 

@Janki Shah

Congrats on getting your first investment. I'm sure you are anxious and can't wait to have this investment start performing. I would check that local area's MLS to see if it is listed, look at the pics, and description to see it is accurate and shows well. Maybe if the pics don't show well that you hire a professional photographer and not someone with just an iPhone to take pics. You can use these pics for future vacancies. Even virtual placement of furniture.

I would be careful going by Zillow's estimate.....after all, they lost millions using their calculations on buying homes and ended up selling for a loss. 

On the MLS look at local rentals and maybe reach out to another agent that has numerous listings and ask them for feedback. Not all agents listing rentals are PM so they might be able to help or go look at your unit and give you feedback. Might have to pay a few bucks for their time but money is well spent in my eyes since they have no incentive to lie. They got paid for their time.

One last piece of advice...... maybe you offer a lower security deposit for anyone with good credit or offer no security deposit by using a surety bond for the security deposit (look at Rhino and others that offer this). Or offer to waive the application fee or credit to the first months rent for anyone who is qualified and moves in. 

Best of luck 

@Christaye Foster

Congrats on accumulating over 30 doors. Getting a bookkeeper was a great move. I don't think you should bring on employees but rather put systems in place. A great thing for you and your husband to do is find the stuff you don't like and sub it out. If you don't like showing properties or taking repair calls then instead of an office manager get a property manager. Will be cheaper than paying salary, workers comp, insurances, taxes. 

Once you scale larger and your cash flow and the volume of work is there then you can higher in-house something you want to more control of but don't want to do yourself. 

FInding good subs like property managers, accountants, lawyers, a handyman is a way to help reduce your headaches and work on the business and not in the business.

Best of luck 

@Lawrence Paul

Congrats on getting a higher appraisal on your rental. Usually, banks will give you 70-80% depending on the lender on appraised value. They will also look at the rent and make sure your rent can cover the expenses and mortgage. Your mortgage person will be able to let you know how much they will be willing to give. Just make sure your property still has healthy cash flow versus taking out all the equity.

Congrats again

Best of luck 

@Asa Dewitz

I have done many owner-finance deals especially after the market crashed back in 2008. One way to help the investor see why owner finance might work for them is the capital gains if they sell. Also, if they have owned for a long time and don't plan on buying more rentals ask them if they will miss the monthly payments coming in. Ask them how would it feel to have your money make you money without the calls, headaches or repairs, paying property taxes, showing the place, etc. 

If you find out why the seller is selling that might help give you ideas on how to structure a deal. 

Another option, might be to get private money or hard money, fix up the place so it can be appraised for higher then go get long-term debt that can appraise higher thus cash-out refi with less money in the deal if this deal is a good buy.

Best of luck  

@Trent Warner

I would be happy to discuss. I am a builder so can give you advice on areas that you can focus your attention thus can build up your knowledge to certain areas of the city for possible deals since Houston is massive, unlike many major cities.  

Just PM me. I am happy to help.