All Forum Posts by: Luciano A.

@Vijaianand Thirunageswaram Congrats. So I have a few things you might want to consider. When you owner finance you will no longer be able to depreciate or write off like you can as a rental. Which I am sure is no big deal since you wont have the headaches of a landlord. You are more like the bank now. 

Due on Sale clause........ I was told the same thing when I did a few wraps. One was called by bank about 2 years into the deal. Payment was always on time. With home prices up some banks will not hesitate to call loan given they know they can turn around sale asset and protect themselves.

The other issue is the whole Dodd/Frank Act. You might want to look at the details  before you rack up alot of these wraps. Especially I think after 5 houses there is more steps you have to take than when you do just one. 

I have enjoyed receiving owner finance as the buyer but that too has had its issues. 

Just thought I share but in no way want to discourage you as there is always a way if their is a desire. 

Best of luck 

@Salvador Santolucito

I use to use a broker who charged me a flat fee like $199 to list my rentals. I had to still pay the tenant/buyers agent (1/2 of first months rent). I found the MLS brought more quality tenants than Craigslist and yard signs. In the last few years I have built my own process and now use Trulia, Zillow,Hotpad etc. They have really come up and have been successful in renting to quality tenants in short period of time. Try using Zillow to find a prospective tenant. Most tenants/buyers are savvy and know to search other sites, apps to find prospective home. PM me if you want or need recommendation to credit/background checks services, etc so you can do it on your own. Especially if you have time to respond to emails and take calls to schedule. Best to schedule all showings on same day with 15-20min separation. This will help if you have no shows.

Best of luck

@Michael J. Finnegan

Having a 5 yr balloon can have your monthly payments go up if the rate at that time is higher. The other thing to consider when buying. At the 5 yr the bank doesn’t have to renew. Best to start talking to the lender in the 5th year to discuss your options and what bank is wanting to do. Once you have created a relationship with the bank they usually continue holding the note with a modest rate increase. Best to have a checking account open with money in it to show banker you are more than just a loan.

Best of luck

@Meg K.

I see where you are coming from. If your cashflow per month is say only $300 that amount nearly wipes that months income. I learned a while back ago you get what you pay for. If this contractor did a good job best to give him his asking pay because you never know when you will have that job that will be out of your budget but he can help you and come down on his price to help you fit project within your budget because you have given him lots of work and paid him on time. Sometimes best to give versus negotiate. If you negotiate on every project he will either start giving you higher prices in anticipation of you negotiating or just send your calls to voicemail. If you grow your RE business and he keeps doing the work you will great a team member who will do more than your paying. Your success will be in his favor.

Best of luck

@Kyle Mitchell

As many pointed typical information seller should be willing to give or have ready are written leases, T-12, copies of utilities if owner pays,Estoppel (signed by each tenant).

Another trick that helps when you walk the property while it’s be inspected have a form for each unit and if tenant is there ask, rent they pay, when it’s due, issues they like to see fixed. Having one on one with a tenant gives you so much information that can help with negotiations or willingness to close. It also helps to say your the property manager on behalf of future buyer. That allows tenants to relax and treat you as one of them. If you say your the buyer looking to buy it makes them nervous like a teacher student relationship and thus they will not be as open.

If seller doesn’t have any financials that’s a possible goldmine or money pit. When going into a deal have mindset the seller is not your friend and will screw you when they can if it will benefit them. Taking everything they give you and look through it inside out. Just like you would with a prospective tenant’s application and paperwork.

@Christian Scully

First thing you should do while you live in the property is to contact your lender. As owner occupied you might be able to remove PMI just with an appraisal. I think you have to be around or under 70-80% value. It's been a while since I house hacked but was able to remove after two years just by getting new appraisal.

Now if you are going to try doing a BRRRR the best thing to do is rent third unit with a written lease. To maximize rent roll you should get a competent realtor to give you market rate for your unit. Take that to a lender so they can use rents to help with appraisal to get you highest price. Calculate total you would need to payoff debt, cash for next property and take out only that amount to help maybe give you a lower LTV thus better rate.

I no longer use traditional lending do commercial but I like that you both stuck with it and now trying to get to next property. I’m sure getting your hands dirty on this one gave you a lot of experience so that next project you aren’t taken advantage of and know what to look out for.

To become a landlord and BRRRR effectively, use the numbers to figure if a property will cashflow after expenses, rehab, mortgage,etc not just purchase price and ARV. Banks will look at different factors including DCR (debt coverage ratio) to see if property can cover its own debt to protect themselves from refi on a property that can't pay its own expenses.

All of this with assumption that when you buy next property it will be for you to move into and house hack during the rehab then rent out and refi.

Best of luck

@Nathan G.

If landlord is listed as additional insured on policy it will be covered. I personal have had experience in this and have had a few other investors that gone through it. Renters insurance covered the cost. Tenant was the one who committed suicide.

@Jennifer Rysdam

Renters insurance covers more than just liability. If a person trashed your property and or leaves it in pig style after moving you can file under their policy.

Another benefit that most landlords don’t realize until it happens to them is that renters insurance protects from property damage caused by your tenant. An example that can be costly is a suicide inside the property. If you have high deductible it can really cause a dent in your cash flow.

As others said if it’s in your lease be aggressive to enforce it otherwise take it out. Once something happens it’s to late. Just bc they signed lease doesn’t mean you won’t be left holding the bag.

Also best to be listed as either additional insured or certificate holder so this way you get renewal sent directly to you from insurance company.

@Latimer Luis - That particular deal I was pissed but I ended up doing the deal not knowing I can tell them to **** off. My realtor, closing agent were not supportive. Remember they get paid if deal closes so their best interest is sometimes focsued on themselves not the client. BUT I took it on the chin but to be honest that house has done really well for me. After you get to the point where you have more than 20 properties you will run into things that will not even phase you as this one did. 

 I just bought a house last week that was 200 sq ft smaller than what was listed on tax and listing. The survey pointed that out. I had no contingencies just the 3 days if survey shows something wrong. I did not even stress. I went back to seller and asked for a credit. We came to one that was acceptable to both parties. I bet you if this was my first deal I would be crapping in my pants. Did I mention I was going to do a complete rehab including adding an additional 500 sq ft lol. So the survey was helpful in getting price down and the shortage didnt matter since it will have a different foot print and new sq footage for tax and survey purposes. 

The longer you do this the more you will come across....just go with the punches and remember your WHY to help you get over the hump.

L

@Daniel Pitner I use my local MLS which is called HAR.com here in Houston and look at College Station area. For areas like Vegas or CA I look at Realtor or Zillow. They are not always accurate with updating listings but helps to find areas that have potential for cash flowing deals or using BRRRR strategy. I learned from Rich Dad Poor Dad to analysis using price per sq foot. That is not always right method but has worked for me thus far. Helps me to not waste time on properties near market or other peoples flips. I like to find run down properties or properties in which you can tell landlord or seller just got tired and gave up.

 I strategy that you might be able to make work if you find a property that needs rehab is to have the seller do a short term owner finance like 1-2 years. This give you breathing room and helps you buy properties that you might not have been able to with traditional financing and not having to use hard money.

The deal you are looking at sounds like its a knowledgeable investor. Find a seller who wants out of the landlord business or their situation requires them to get out. This would hopefully give you better terms without this pre-payment penalty that your deal has.

Best of Luck and hope I was able to help in some sort of way to play this game we call real estate.