All Forum Posts by: Sarah Shockley

@Billy Maloney

If you find one, let me know!

A few years ago I was in this situation and contacted over 10 banks trying to find someone who would do a cash out with less than 6 months seasoning....... no dice. Actually it took me so long to find a lender that by the time I found one it had been six months - lol.

Hi @Blair G.

I have a duplex, a triplex and a quad in Riverside; two houses in Murray Hill, and a house in Avondale. (I live in one of the houses so 11 rental units.)

So far this year I've only seen a handful of deals on multi-family properties that had the potential to be profitable buy and hold investments. Inventory is low and prices are high, so good deals are hard to come by. Also in riverside, avondale and springfield it is a popular thing to buy a multi to convert to a single family to flip.

With that being said, even in this market good opportunities still pop up every so often, and the constant vigilance pays off. I was SHOCKED to see THREE murray hill houses hit the market under $60k in the last two months (on the good side of MH), and actually were in pretty decent shape for their age. Heck I would have listed them at $90k since murray hill is so hot these days.

I bought my riverside duplex last winter, and am closing next week on a 3-unit in avondale. Ironically both of those properties I found on craigslist. I am a licensed Realtor so I did the paperwork but don't feel the need to pay myself a commission. The sellers were so excited about selling off-market and avoiding realtor fees, they didn't realize how much of a higher sales price they could have gotten listing on the MLS in a hot market. I'm fairly certain the "off-market discount" exceeded 6%.

It sounds like you're a fan of the same neighborhoods I love  :)

@Brenda Whittaker

You can usually get a conventional loan for a 4-unit property. 

It's properties with 5 units or more that would normally require a commercial or portfolio loan product.

The interest rate you can get is influenced by your credit score, and also by the market, which fluctuates over time. Also if it's a property you won't be living in, that would increase the interest rate slightly as well. 

For example I bought a 2-unit last year as an owner-occupant at 4.7%. 

The year prior I refinanced my 4-unit (non-occupying) at 5.2%. 

Right now I'm under contract on a 3-unit (non-occupying) at 4.8%.

I'll recommend Zillow, but mostly because you can make one ad on their website, and have it sent out to multiple others - Trulia, Hotpads, and Craigslist- which is awesome. Lots of visibility and only one ad! Works for me!

@Wade Garrett Some things you gotta learn through experience - for everything else there's BP!! lol

Also @Account Closed brings up a great point - you need to familiarize yourself with NJ landlord tenant laws. Florida where I operate is pretty landlord-friendly and we can make late fees basically whatever we want. I don't know if that's the case in Jersey!

@Account Closed That's a great question!

Florida landlord tenant law does not specifically cover late fees - so it's whatever you put in the lease agreement. However the law does give tenants 3 days before rent is considered late. Also if your lease agreement does not mention late fees, you can't charge any.

If you aren't familiar with state laws, I'd recommend doing a google search for "florida landlord tenant laws" and read up. It's very important to know the law and make your policies accordingly.

Hi @Wade Garrett

I feel your pain!

I hate the anxiety with the late rent payments - which is why my late fees are rather high.

I'd recommend letting her ride through the holidays (but keep charging the late fees and etc.), then giving her that 30-day notice to vacate in February or so - get a good tenant in there.

My other suggestion is raising your late fees, so at least you're being property compensated for the hassle. What are your current late fees?

I charge a flat 10% of the monthly rent, if it's late by any amount. Then an additional $5-$10 PER DAY until it's paid. 

Most of my tenants pay on time.  

:)

Hi @Art Maydan

Good luck with your new investment property!

Like @Bryce Wong mentioned - how much to charge for your security deposit, and whether to charge last month's rent up front is usually dictated by local custom, so you need to know what policy other landlords in your area are going with.

I recommend looking at other rental listings on Zillow, Trulia, Hotpads, etc in your neighborhood - usually those terms will be included by the more professional property managers/landlords.

Another consideration is the total cost. For example if the monthly rent is only $500 - yeah, I'd probably ask for last month's rent in advance. If the monthly rent is $2000 - that's a very different class of property, so you might be ok not charging last month's rent in advance. Food for thought.

Hi @Eric P.

I'm a buy and hold investor with 11 rental units in the Jacksonville area, and also a licensed realtor. I've used the "BRRR" strategy to acquire the majority of my properties.

To answer your questions - the Jax market is pretty hot right now, but every once in a while a good deal will come along. One benefit of the market being "up" right now is it makes the BRRR strategy easier in that you can usually get a higher appraisal in future months - making it easier to pull out the cash you need.

Do you own any properties currently? Any investment properties? One thing most people don't realize with the "BRRR" strategy is your current income and current debt load are a huge factor in whether you will be able to qualify for future cash-out refinance loans.

With an investment property the bank will usually only credit 70% of your rental income towards your debt to income ratio - so the property needs to be SERIOUSLY cash-flow positive for you to qualify for the cash-out refinance. Alternatively you would need to have a high enough income from your "day job" to qualify to take on the additional debt load, without including the rental income.

I agree that the best opportunities (generally) pop up in "B" and "C" class neighborhoods - but reality is, there is no neighborhood where every house is automatically going to be a profitable rental property. So what I do - I keep an eye on a handful of neighborhoods across the city where I'm able to identify what a good deal is, price-wise. Then I'll go look at the properties near that price point to see what renovations are needed. Once I know the renovation costs I can then determine what the actual ROI would be.

Personally, I think turnkey is for suckers, because renovating properties gives you the highest rate of return in the long-run, and that's what has worked for me! 

@Mitchlyn D. Yes, you still need a permit. However if it's for your own residence, you can pull the permit yourself - that's what I did. 

The permit cost less than $100, but the city wants to verify that the new windows you're installing are up to code. You will need to bring the product information with you to the permit office downtown.