All Forum Posts by: Mike Dymski

Congrats and good luck.  Any idea why they would sell at a 9 cap if the market is 5-7?

32% is a little lean on expenses depending on age and condition.  Seeing tax returns though helps confirm it.

I'd recommend talking with a commercial real estate broker for non-bank financing...20-25% down, 7-10 year fixed, 25-30 year amortization, lower rates, non-recourse.  I ended up with bank financing because my property was below $1mm loan and non-bank financing was not available.  http://www.alinecapital.com/home.html.  Not sure if they cover out of market deals but Scott is a good guy and may have a referral.  My property is in SC and I ended up with a bank in IL...25% down, 25 year amortization.

Congrats, time to recoup the reno cost. Yes, tenant covers yard maintenance for SFH (or you can charge higher rent and cover it for them but never had a tenant accept that arrangement). PM does regular inspections to ensure the property is maintained.

 Nice work. I'd be interested in hearing about the lender if you care to share.

I just accepted an upfront paid in full tenant today and had a BP post yesterday related to it.  I received similar feedback to not do it.  That feedback has a lot of merit depending on your tenant's situation.  My situation involved a tenant with 760 credit score, 18 years with the same company, six figure income, engineer and other good qualities and he just wanted to see if he could get a discount for paying ahead of time.  I've had other prospects propose advance payment over the years but they did not qualify and that's why they proposed it ahead of time.  You will want to understand why they want to pay in advance and their qualification and go from there.  If you don't understand why, it may be best to take the feedback you and I are getting in these posts.  Sometimes, it's the right reasons and qualifications, many times it is not.  Some landlords take a hard line and that is not wrong either.

Really, REALLY bad idea. At best you should keep that money in your own savings account and use it up one month at a time.

What if you have to kick this guy out? I know you don't think that will happen but nobody ever does. Now you will have to refund him 6 months of rent you already spent.

What if he dies? You'll owe his estate rent back also.

DO NOT spend the money before your tenant does, even if you are holding it for him.

 reimbursing him should an event like that happen will not be problematic

You can be respectful to your existing tenant by lining up showings together at one time.  The prospective tenants will understand and respect that as well.

Find another PM. We show occupied units all the time for the exact reason you mentioned....quick turn...not to mention, many show better furnished. You will pay a lot more in vacancy than you will in PM fees with that PM. I have had 1 day turns before when the new tenant was fine with the cleaning (and lock change) happening after they moved in.

Good question.  If rates are that high, it will be due to very high inflation and your rents and property value will increase as well...maybe not proportionally but directionally.  Many investors diversify into real estate for this exact reason...inflation hedge.  If you invest this money in the stock or bond market and rates increase to this level, you will get pummeled.

A contingency plan would be to make sure you purchase a cash flowing property and if interest rate increases outpace rent increases, put your excess cash flow towards debt repayment during the fixed period to reduce your exposure (within prepayment penalty limits).

Regarding non-bank financing, I believe that starts at $1 million and up from there but not certain.

Actually did 3.5% discount rather than 5%...5% was proposed.

Financial advice from an unlikely source...

"I asked for money, I got advice. I asked for advice, I got money twice."- Pitbull