All Forum Posts by: Nik Corbaxhi

 @Jonathan Greene great read. You and I have been following the same trend. 

I personally feel that for a brand new investor, it is always good to invest locally, get to know the business from close up, experience the rewards and challenges that come with it, understand what being a landlord/property manager means, dealing with tenants and issues on a regular basis. And only after you have done all of that, feel free to test the waters out of state. Doing it locally would definitely help you understand, appreciate, and know how to deal with situations as they arise.

I don't know anyone in the business that has not had the "Oh Crap...." moment as a landlord when they first started, regardless of whether it came within a few months or the first 2 years. being in state is stressful as it is. Being out of state might be unbearable or not being able to get a handle on it. 

Final thoughts, first investment property, out of state? -  tough sell for me. (Unless you have someone that is doing everything for you for a margin of the profit (cant be much), and you will never get to understand the true meaning of being a landlord). 

Then look into the credibility of the agent you are working with. Have you worked with him/her before? are they trustworthy? do you know someone else that is doing this in the area? have you done research to see how many houses are available in the area, what they go for, how long do rentals stay in the market for? 

I don't want to sound pessimistic at all, just making sure you are well informed before you take action. The more of this you do in the front, the better prepared you will be for any scenarios that come your way. 

@Ali BenAyed, if I understand correctly, they are using the dishwasher rack for drying purpose but not the dishwasher itself. Are they actually using the dry option of the dishwasher or are they letting the dishes just rest there and dry on their own? Could it be that every time they wash the dishes and just hang them in the rack, all of the water that goes off of them ends up in the bottom of the dishwasher? This might seem significant but overtime, every drop adds up to quite a bit of water, hence giving them the smell. Here is what I would do:

1. Go give the dishwasher a full cycle run. If it works and drains properly, then you know there is no problems with drain pipes and garbage pipes...etc. Inform your tenants that they using just the rack to dry the dishes, 

2. If step 1 gives you a problem and you see that the dishwasher is not working, it could be that the dishwasher needs to be changed. Unless you can make a connection that there was intend from your tenants to break the dishwasher, there is nothing strange about the request. Just because you used the dishwasher on a regular basis before with no issues, does not mean that it is their fault that it broke once they took over. 

Good Luck.

 @Adam Leitman Bailey, interesting questions. I am half way there and the investment properties take quite a bit of my time, in addition to being a family man as well as having a full time job. Cant truly speak what it would be like to become full time in property management, but I can assure you, it is with a lot of sweat and pain, especially to hit the point where the investment properties can now support your lifestyle 100%. 

Also, keep in mind that there is another twist to this. There are the ones that slowly build their investment portfolios,  the ones that are given the "keys to the kingdom" one day from their parents, and everyone else in between which would be a hybrid. you will be getting different answers on how their life was affected from each of those groups. 

@Mami Asakawa, I would have to agree with @Jonathan Greene. I have not personally invested in out of state properties for all of the reasons that Jonathan mentioned. You have to have a good feel and be connected with your properties at all times, which to me means close proximity to the property and being able to know the properties and upcoming expenses for each of them. I would also be  very cautious/worried about why these properties are still available, with cash flow of over 30%? If these 2 properties were such good deals, they would be gone by now from the in-state investing gurus out there. (Think about that for a second and reverse the roles. If you had a great investment opportunity locally, which would give you 30% return, would you jump on it? or let it sit and have an out of state investor come and take it over). Seems like too good to be true and you don't have enough information to answer your questions. 

@Account Closed, seems like you got your answers on how to go about it, however you keep referring to perfectly qualified tenants with no applications filled out. I would encourage them to fill out an application and go through the screening process. 

As of the $100 loss, depending on whether the unit is available or not, you could do a couple of things:

1. If they were planning to move in Feb, you can ask them to move in Mid-January, and this way they can pay rent for half a month. (half of 1900 is 950, which makes up for 9+ months if you had to charge $2000)

2. Try to see if there is any other services that you can put on them. For example, have them do landscaping, cutting the grass, cleaning the snow. Any monthly chores that you can justify and can hopefully make up for your losses. 

As it has been reiterated here, be aware of treating all applicants equally and make your decisions solely on income requirements, background/credit checks, references...etc. 

In your scenario, seems like you are 5k short for the flip. 

1. Refinancing means that you would have to pay back the interest on the amount over a fixed period of time (unless you decide to pay it off early). HALOC has no penalties if you do not use the money and would only pay interest on what you are using. Look at the interest rates for both and see what makes more sense for you.

2. think a bit longer term. Is the goal for you to continue investing once this is done? Will you need additional money in the near future do do the same? which of the 2 scenarios gives you the most flexibility to get the money in your fingertips? 

Personally, I like the HALOC because if you are not using the money, you dont get charged for it, but it is there in case you need it. Most banks allow you to close the account after 2 years with no penalty. Refinancing is more streamlined and you have to pay back the interest regardless. 

I hope this helps and good luck. 

A few things to consider in reference to the "properties with promise" in out of state properties:

1. how is the area? You will need local help for this if you are not familiar with the good and bad areas of the town/city. Might not make the return you are looking for if there is no promise. 

2. Get a contractor's commitment on how much it would cost to fix. This will help you avoid running into the same situation as you did with your friend and you will have actual solid numbers to calculate your ROI.

3. If it is too good to be true, most likely it is. (Everyone is looking to capitalize on flipping homes. if a property looks too good, why is it still available?)

4. Run comparable properties and see what they sell for. This can help you to identify actual selling price rather than what you would want to sell it for. 

5. How many times do you have to go there in person? (This can add up when you have to travel far or fly multiple times to manage the contractors/workers) 

6. familiarize yourself with local laws/rules. You don't want to find out you cannot sell because of some state law that prevents you from doing so. 

Good luck. 

I would agree with @Jaysen Medhurst. I have seen this many times. The family member will also decide to leave for whatever reason later on and now you will have 2 dilemmas to solve:

1. Good luck trying to buy him out or figure out the numbers. (I would say do everything in writing and seek legal advice, so in case you want to go your separate ways, it is clear what the course of action will be, especially with family).

2. If he decides to stay with it and for whatever reason you are not renting the rooms as you intended, that also becomes a nightmare because now you will both be chipping in to cover the payment. (Side note, are you sure you wan to rent rooms separately? seems like a bad idea because you will get short term renters and your family member will very soon become annoyed of the 5 different people that dint know each other living there.

I don't mean to be biased here and ruin this deal for you. Just thinking of what could go wrong. Personally, I would stay away from this if I could help it. If it means a bit lower of income for you because of the higher interest rate, might be worth it as long as it makes sense. 

I think there have been a few different flavors of responses here, which if you add them all up, it would give you some sense of direction. Based on your question, I would agree with the rest of the group that it is hard to give you some solid direction without knowing more details and actual quantifiable data.

Below are the questions that I think you should ask yourself:

1. What is the debt interest vs. interest from investing and does it make sense at a first look to even consider it?

2. How risky of an investment would it be for you to get your 8-10% return, which would net 3-4%
(assumption) taking out your student loan rate?  Keep in mind that every investment has risk, and don't take the 8-10% guaranteed. 

3. What stage of your life are you at? (single, engaged, married, kids?). Although this might seem not related to the topic, it does become relevant when life changing events get thrown in the mix. 

4. What is the amount you owe and how long would it realistically take for you to pay it off with your current situation vs. if you had another 8-10% from an investment? this should give you a sense of how long it will take oyou to pay off and whether you want to go into the investing world.  (keep in mind that the 8-10% return would also require you to invest upfront, so consider that money gone in your analysis). 

5. if you decide to invest, are you experienced and competent in the area you are investing or will someone else manage the investment for you? (Be cautious of certain investment choices because they dont always work out the way you want them to. Form experience, if you have never dealt with Real Estate, things in real life dont always turn out to be the same as on paper. Seek advice form someone that has been doing it for a while to avoid surprises). 

Regardless of what you choose, good job thinking ahead and trying to figure out how to maximize your returns while paying your debt down to 0. I hope this helps. Best of luck.