All Forum Posts by: Mike Aschettino

Why not try west of 495? I'm invested in Clinton MA and looking into Fitchburg MA. The prices are more in your range out there. For the price range you'd need to finance it yourself your going to have to make a trade off. Going a little more west for a B or C neighborhood could be an option.

Hi, 

Have a meeting with my lawyer shortly but hoping to get some advice on the forum in the short-term. 

My wife and I transferred our properties to an LLC we started back in January. We are 50/50 owners of the LLC, there are two properties total in the company.

We both still have personal loans on the properties (she has a loan for one property, I the other). We are very aware of the Due-on-sale clause and the associated risk. 

The issue we are running into is that we realized that neither of our properties are technically insured because the existing policies are written to us personally. When I contacted my insurance company to add the LLC as an additional insured they said that it wasnt possible because the LLC consisted of two owners with multiple properties. Additionally, they said that they can no longer insure me and that I had 10 days to notify them with what action I'd take (Cancel the policy, transfer the property back to my personal name)

My question is this, how do I insure the properties without sending red-flags to my lender considering they pay insurance in an escrow? I think the right thing to do is to get a commercial insurance policy but I doubt there is a way to get the lenders for both houses to split the cost of a commercial property in escrow. At this point I'm thinking about dissolving the LLC and transfering the properties back to our personal names. What a mess!

@Steven Zagaris  I've done a recalculation taking into account a lot of everyones advice. The numbers here are much more conservative. I included a 10% management fee and upped my maintenance to 20% to help cover things like turn-over and eviction on months that I don't need any maintenance and can save this in an emergency fund. The numbers still don't look bad.

BP is awesome. You guys have tons of helpful advice and ideas. I hope to pull the trigger on this property soon. Ill give you an update when we close.

@Wayne Brooks 

Good call. The yearly MIP is factored into the principal monthly payment. The upfront MIP is factored into the loan balance and closing costs would be payed for by seller.

Thanks for looking out Wayne.

@Kyle H. 

Great point. The numbers you see above are with me NOT living there. Thats how I like to look at my deals because in the long wrong I wont be living here. You're right though, Ill run the numbers again to see what it looks like without one unit's rent. Ill be there for a year under the FHA guidelines and then I'm on to the next investment.

Hi Michael,

Thanks for the reply. I will be managing the property myself. The electrical and heating systems are newer and so is the roof. I've budgeted $20,000 for cosmetic repairs. 

Steve,

Thanks for your comment. It's a legal four family! You touch on a good point. I'd say this is a B- to C neighborhood but the rental market is strong here. I agree, Im a little nervous about jumping from managing two tenants to five (I'll be living in one of the units in the 4-plex if I purchase it) but I have to do it at some point if I want the empire to grow.

Mike

Hello BP!

I could use a little advice on a deal I'm getting into

This will be my second buy and hold investment. The first one I purchased was before I found Bigger Pockets, I did minimal analysis but luckily it still cash flows. This one will be different, I've done my due diligence and I want to make sure you guys agree this is a great deal. 

A little background:

I am financing with an FHA loan, I'm putting 3.5% down. Because I already own a multifamily in the area I'm pretty confident in my rent, tax and water bill estimates. I'd have to put about $20,000 into the place to get it tenant ready/my rental standards however there are already two units that are occupied. My tenants will pay their own Electricity and Heating utilities, the house has separated gas and electricity meters. Haven't done any price negotiation yet so there may be room for improvement. Here's my analysis below, ANY feedback what so ever would be great:

@Sihao Cao, I have found very good tenants to fill my units, but you bring up a great point. The most important job a landlord has is to fill their investments with quality tenants. Otherwise you can kiss your cashflow goodbye. I suggest signing up with a tenant verification site such as tenantverification.com. They require you to confirm that you are a landlord but after you are all set up you can perform intensive background checks, credit checks, and criminal history checks to ensure that people are who they say they are.

The other part of the battle is pricing your unit right so that you draw the people you want in, and setting up good tenant criteria and not bending on those rules. Be picky with your criteria! if they dont match then dont allow them to rent the space. Thats how you avoid the tenant nightmares.

I make the tenants pay for heat in all my rental properties. These are the type of stresses that I'm trying to avoid. What is the advantage to paying for heat for your tenants? More expensive rent to offset the costs of heating the apartment for them, but do you make a profit on it too? What if they blast the heat all winter long and keep the windows open?

Im just interested in how you make it work, thats all!

Mike