All Forum Posts by: Mahendra Karthik Vepuri

Hi Guys, I am trying to fill in a 1 bedroom apartment in a duplex (Lincoln, Nebraska). Some of the applicants I have are students without much of a credit history. when the parents are willing to cosign, whats the procedure to do this? Do I need to add them to the lease? or do they fill out a seperate form?  I know I need to screen the parents too. I am sure some of you would have done this before. Please guide me if you could on the legal way to do this. 

Appreciate your time!

Thank you,

Kar

@Scott Houin in my opinion most of the management companies try to fill the units by keeping the rent low. This is mostly because they don’t want to market the units again. Checkout RentOMeter and see how much the rents are in 1 mile radius. If the average rents are way higher your property manager is lazy, he is not essentially working for your interest. It’s sometime good to have same tenants for long time, it doesn’t mean that $25 is going to make people move. There are lots of bad property managers. So look for one before firing this company.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $75,000
Cash invested: $20,000

It is a small multi family. A typical Midwest 4 bedroom home, that was converted in to a duplex. Its a 100 year old property, which was well kept up. A management company was running this place when I took over.

What made you interested in investing in this type of deal?

I have probably looked at 40 properties before this, but the biggest problem is I did not like the way the house was kept up. I also ran into meth heads. This was the first place I felt like I can live in, if I have to. Moreover its a duplex so even if one of the unit is vacant the other unit can pay for the basics (Mortgage+ Insurance + Taxes + Water). So I was interested in this property.

How did you find this deal and how did you negotiate it?

My realtor forwarded it to me through MLS. She also sent me the details of the rent it is bringing in. The list price was $ 85,000 and it was bringing in $1,025 per month. it was a 1.2% deal based on asking price. I looked up the rents on Rentometer.com and average rents are almost $300 higher. Anyways, I went in to this expecting not to raise the rents too much and my criteria with the numbers is at least 1.5 %. I asked it for $72,500 and seller countered for $80,000 and we settled at $75,000.

How did you finance this deal?

Put 25 % down. Financed it through a local bank.

How did you add value to the deal?

I knew that the owner is from out of state through county website. A simple google search gave out a little bit of information about him. He owned quite a few properties here and is trying to sell them off as soon as possible. I was able to negotiate and close with in a month at $10,000 below asking price. Win win for everyone involved.

What was the outcome?

Inspection revealed a few issues like Joist damage etc. Which was fixed for $600 and I had to pay for it. Rest of the house was in a good shape cosmetically and structurally. But I anticipate having a roof issue in a year or so. So I will be saving up all the money for that for now.

Lessons learned? Challenges?

Its very important to lookup the information about the house on county website. It will give you a lot of information regarding the motivation of the seller. Its a challenge when you adopt tenants, but its important to choose the properties with good tenants in them if you have to adopt them.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I would recommend working with a local bank, they are way easy to work. Also Find an agent who is an investor. They can understand your way of thinking easily.

@Riley C. If you can find a good deal where some one can pay your Mortagage don’t wait for any downturn. My parents house hacked when we were little and I could see them retiring wealthy after seeing a couple of downturns in their time. The most important thing is run your numbers and try putting offers which make sense to you. Find a good realtor who is an investor.

@Andrew Neal my first deal was a duplex, the main reason is I wanted someone to pay my mortgage+insurance +taxes even if one of the door is vacant. I was able to find a near 2% deal if I increase the rents close to market price in the area so this made a lot of sense. I don’t think it matters if you pickup MF or SF as long as you have multiple doors to cover your mortgages even if lot of things go south. With people always predicting the next crash it’s probably a good idea to keep yourself prepared no mater what. More doors can reduce risk if you can pick them up right.