All Forum Posts by: Michael Doherty

@Ratna E. The short answer is yes. But the banks will want to see that you've had that money in your account for a few months prior to obtaining the loan. 

@Alexander Ball I just recently went through a similar situation. I purchased a 2 family using a 20% down commercial loan and 10k of friends money towards the down payment. The reason I went with a commercial loan is because I wanted to purchase in an LLC and their lending requirements are less stringent (just look at debt service and income the property produces). This is important because they do not ask for bank statements ect.

Furthermore, my lawyer set up a formal promise to pay agreement between myself and my friend (easy for a lawyer to do). Because of the low amount borrowed their was no collateral being held or 2nd lien on the property. However, I suspect at higher amounts borrowed friends and family are going to want some sort of collateral perhaps as 2nd lien holders. 

I structured this private deal as a monthly principal and interest payments as there is not any value add to refi and this property is a buy and hold. So essentially I am using the cash flow from the property to repay my private debt. If you plan to buy and rehab and either refi or sell- you could structure your private note as a balloon payment with interest only payments. Hope this helps.  

@Alex Romano I currently own properties in New Britain and Manchester. I am looking for more cash flow and have found these areas are better suited for that goal. Areas closer to you that can cash-flow I would consider cities like New London and Norwhich and some areas in Groton if cash-flow is your goal. 

@David B. I am actually going through this as we speak (contractor was there yesterday and today). I would 100% call or text and be upfront about everything. I would make it a point to let them know that you will do your best to coordinate a time and date that works well with their schedule. At the end of the day you are making their living situation better by addressing the issue and they should appreciate that. I think you would get a phone or text in response addressing your letter, it is unlikely they will take the time to mail you a letter back. So for those reasons I would just call/text in the first place. 

@Alex Romano Depending on how you financed your current house I would look for a low down option to finance the fourplex if that is your end goal (If your okay with living in one of the units for a short time). Depending on how much equity you have in your current house you can use a HELOC or refi and use the proceeds to use as a down payment on a larger Mutli-Family. In addition, I would start looking to network and possibly partner with other local investors in the area. There is a local REI group in south eastern, Ct I would recommend going to. I grew up in the Stonington area, are you looking to invest around there or other parts of the state?

@Tyler Hespeler I grew up in New London County (Waterford) to be specific and know that area well. Like Ryan Deasy, I currently invest in the New Britain area because of the cash flow. It is also surrounding expensive towns like West Hartford and Farmington. In New London- like New Britain, you really have to be careful on what streets you invest on, it really does vary street by street. 

From a quality perspective, I think you will find better tenants in Groton and better parts of Norwhich but your cash flow will be better in New London. I think it makes sense to focus your time on connecting with local investors in southeastern Ct and look to other parts of Ct (perhaps Central area) before devoting time and resources out of state. 

@Kiersten Vogt I actually just went through this last month during the closing on my duplex. In a perfect world you should be credited their security deposits per each tenant and pro rated rent. In my particular case it was anything but normal. 

1. At the closing the seller only credited me one of the security deposits because 'he only collected 1 floors security deposit. '. When I took ownership to confirm this with tenant, I found out that in fact he took her security deposit because she owed back paid rent. She apparently signed off to this but I was never made aware of these terms nor was I given the proper paper work that outlined this agreement. I am still in the process of getting this 'agreement' between the previous owner and tenant. It is important to get this in writing because when she moves out (without that document) she could technically say I owe her a security deposit. 

2. I was credited with the other floors security deposit but it was my job to go collect the pro rated rent (shouldn't of been the case). Come to find out the previous owner only collected half months rent because that's all the tenant had at the time and it was my job to go collect the rest. The real kicker in all this is that, he completely wrote the leases backwards (1st floor tenant is really 2nd floor and visa versa.... each with different rents specified). The only saving grace is that the tenants are actually nice and respectful and I don't think would do anything malicious but I am stuck with these leases until March when they are up. 

3. Moral to all this Kiersten is, have your lawyer specify everything up front. No question is a stupid question. If the closing takes 2-3 hours because items are not spelt out for you, so be it. It's better to know all the info than piecing everything together afterwards.

@Elias Hibbard Exactly, my plan is to mow the lawns for now and hire out the snow removal. This will save me a couple bucks and cost me only a few hours a week of my time while still building a network and the experience of hiring and firing people from the standpoint of snow removal. 

@Alvin Sylvain I actually wrote a post/question on this exact topic earlier. The overwhelming decision from many and I agree, is to not lie. If they find out (and many don't) but if they do and lets be honest, they really could if they wanted, it would cause more headache down the road. If you can't have a backbone in this industry, perhaps its not one for you. That does not mean be a hardass... but be very upfront and honest about everything. 

@James Clark @Max T. In my area, it is very uncommon to have Multi-Family tenants take care of the grass or snow. Very common for tenants in single family homes to do this however. One problem I can see building this stipulation into a lease  in a duplex or triplex is... how do you decide which unit has to do the work? Does unit 1 get reduced rent because they are in charge of the grass?

@Brandon Hicks Very well spoken. My 'Why' is financial freedom. For that reason alone it makes sense to build a network NOW of people to do the lawn care and snow removal. 

@Max T.

@Bill F. @Matthew Paul All good points. For those reasons, I will leave the snow plow to someone else and handle the lawn care for now until it becomes too much work. 

@Jim K. @Steve Vaughan you both hit the nail on the head right there. I do enjoy working outside and fixing things that I am capable of. My ideal job would be to manage and maintain these houses full time. My 'Why' is for financial freedom from the corporate world. Unfortunately I am only at 2 properties so I still have to work full time. With that said, I am at a roadblock because I like doing the work but wondering if it will become too much while working. 

I also live somewhat close to the properties so it is hard to justify to spend X on work I can very easily do and don't mind doing. On the other hand, I don't want to live to work and have to think about cutting the lawn every weekend or waking up extra early to plow the driveway before my 8am corporate job....

I am leaning more towards hiring out the snow removal because it is variable in New England, I can write it off and not have to worry about it.  And taking on the responsibility of the grass and yard work because it is at my leisure, and hopefully wont be too time consuming.