All Forum Posts by: Luis Montanez

Hello Fellow Landlords,

I am in the middle of renting my first house in the US and am in a rush to put my contract together for a prospective tenant.

Currently I am working with the "Strict Rental Agreement" template downloaded from BP (thanks BP) but I want to add a claws that talks about automatic 2% upward Rental Adjustments every year.

I found the following claws but I think it is too complex, I am hopeing to get a plain language example that is currently being used by one of the landlords of this great community.

My Complex claws example:

Rent Adjustments. Commencing on the 1st day of January next following the Rent Commencement Date and on each January 1 thereafter (each such date a Rent Adjustment Date) the Minimum Monthly Rent then in effect shall be increased [or decreased] by a percentage equal to the percentage increase in the CPI Index.

CPI Index shall mean the Consumer Price Index presently designated as the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index for all Urban Consumers, U.S. City Average [or for the local region], (Base 1982-1984 equals 100), for the month which is four (4) months prior to the Rent Adjustment Date compared to the Index published for the month which is sixteen (16) months prior to such Rent Adjustment Date. In the event that the statistics are not available or in the event that publication of the Consumer Price Index is modified or discontinued in its entirety, the adjustment provided for herein shall be made on the basis of an index chosen by Landlord as a comparable and recognized index of purchasing power of the United States consumer dollar published by the U.S. Department of Labor or other governmental agency. [Additional clause specifying precisely how the increase is calculated.]

source: http://www.contractstandards.com/document-checklists/lease-agreement-analysis/rent

Thanks for all the help

Luis A. Montanez, MAFM

“Goals in writing are dreams with deadlines.” –Napoleon Hill,

“Dreams can inspire you, but goals can change your life.”

I recommend that you follow Sharon Vornholt http://www.biggerpockets.com/users/svornholt in her blog you can learn everything about probate

@George P. congratulations on your accomplishment. In what period of time did you acquire all of your 10 houses and what was your strategy to come up with the 10% to 25% down payment and remodeling cost?

Anthony Gayden: The title of the house may be or can be transferred to the LLCs, but will the mortgage show on your credit report? If so, your personal assets are at risk in case you default on the payment.

If they are telling you that the down payment will increases after 4 (max num for the 10% down) then they are under your personal credit. Other wise, the work around will be to have one LLC for every 4 properties.

Originally posted by @Jon Holdman:
thanks for the advice, I will call and ask the right questions before moving forward, I am just an "in person" type of guy. Currently my plan was to buy this Fannie Mae Homepath 10% down houses under my own name and then find a way to transfer the title of two to four of this houses to an LLC and put all this mortgages under one commercial loan so that are off my credit and I could repeat the process. This is similar of what B to R financing is doing (Blackstone) but they require to have 4 to 5 houses with a current market value of $500,000.

This is a 20 year buy and hold plan but the faster I get there the better ;-)

·Pool Location/Size – Pool properties are identified by Fannie Mae and are grouped into sub-pools based upon their location. Sub-pools will usually include properties in multiple states and on average contain a minimum of 25 properties. We cannot help you with pools that are city, county or zip code specific. Most properties are in non metro areas. Investors must purchase all properties in a sub-pool. Custom pools and buyer select pools are not available.

·Property Condition – Properties are sold in "As Is, Where Is" condition without guaranty that insurable title will be conveyed, and no proration of real estate taxes or fees. Properties are in the bottom 15% value band for the state in which they are located. For most of the country that means that they are below $50,000. in BPO value. Average property value is around $25,000. Many properties are in poor or distressed condition. All have been on the Homepath site and the MLS for over 90 days without sale.

·Resale Restrictions – properties purchased in a pool may only be re-sold to owner occupants or rented during the first 90 days of ownership. No sales to investors are allowed during this period. After 90 days, only 20% of properties may be sold to other investors. After 1 year all restrictions fall away.

Investors who want to participate in a Fannie Mae Pool Sales must be approved by Fannie Mae before participating. Eligible buyers must have a proven track record in acquiring and managing bulk real estate transactions and have a minimum of $250,000. in available funds. All pool sales are for cash.

If you are not interested in this program, please respond back to us. We would like to know why it won’t work for you.If you are interested in discussing this program further, please provide the following information:

• Name of Organization
• Proof of Available Funds (Bank Statements or verifiable letter from Bank or other financial institution)
• History and Experience in purchasing and managing bulk transactions.
  • Target Geography

@Jordan Thibodeau: It this time I am taking a real systematic approach of going to the FDIC website getting the info of all the local banks and setting a goal of scheduling a meeting of one bank per week to present them with my 5 C's binder and ask for the line of credit or for the rap loan under my business name for my current properties. So far, on one bank it took like two months of paperwork but they did give me a $15k unsecured line of credit on this one they just straight up said NO... hope fully I will have success on the next one.

@Wendell De Guzman: that is really impressive, I hope to get to that momentum, since I just started my real estate professional company this year, it has been hard getting anything that it is not backed by my own credit. All that I did get. $15k unsecured business line of credit and several business credit cards ( with a personal guarantee).

Unlike your goal my goal currently is to buy 4 houses a year (currently going on number 2) but I don't find a way to transfer this properties out of my name (since I am currently doing Homepath 10% down to buy and hold) I will be hindered when I have to put 25 to 30% down instead of the 10% that I can currently manage.

Thanks for your response and I wish you success on your 4 per month goal.