All Forum Posts by: Phaen Pittman

Hey BP,

So first let me start by saying this is 100% my fault for hiring the cheap guy.  I knew it was going to be a calculated risk, but due to the cost savings I was willing to roll the dice.  Heres the scoop.

I have already given the Drywall/Painter a down payment of $3200.  I have a singed contract with both of our signatures on it, a copy of the check used to pay him, and a "Receipt and Waiver of Mechanics Lien Rights" singed by him.  I am going to spare the long story about everything going wrong so far.  But now I found out that the employees he has had working on my property are not getting paid.  The work has come to a stop because he cant afford to pay anyone and they are all walking off the job.  There has not been enough work done to justify my deposit check, but I am not too concerned about that part.

What I am worried about is my liability here.  Has anyone dealt with this before?  The property is in MN.

Thanks for any advice/input.

Hey BP,

So a friend of mine called today asking for some advice that was well above my pay grade. He works full time as a college professor, owns his own auto repair business, and also owns rental properties. He ran into DTI issues with his lender when he was looking at a new property. I will spell out his situation as best I can. Here it goes

Hey owns 2 rental properties

1st Rental Property-  Payment is $500/Rent is $750

2nd Rental Property- Payment is $700/Rent is $1550

His primary residence- Payment is $1200

His business mortgage "built a new shop"- Payment is $1540

His annual salary is $85k and his auto repair business generates 250k per year.

Is there a way for him to move some debt around to free up his DTI? Like renting his shop back to his business? Or any other creative ideas?

Thanks for all your input!

I have been watching the MFR market seriously for a little over a year. We are also watching for seller finance options. Those are pretty rare around here from what I have learned. About 5% of the deals I guess. Even with the seller finance option from what I have found is that the properties still won't cash flow. It's starting to look like these markets you really need to be focused on appreciation rather than cash flow. If I could afford to service them in an absolute worst case scenario I would feel way better about it. I think we could afford it but I don't want to be cash strapped for the future if I want to buy another property.

Hi Bob,

I appreciate you taking the time to respond.  Looking in different markets has come up a couple times.  I guess to me it seems like a bigger risk if we don't plan on living there.   And I also would like to stop paying rent at some point.  The good thing is that my rent is stupidly cheap, I only pay 1200 for a 2 x2 that's only 4 blocks from the beach.   Since our rent is cheap I'm not in a huge rush to get out.  

Hi Everyone,

I have been an avid listener to the Podcast and am super grateful for all of the free advise.  For all of the reading and listening I have been doing I have yet to come across someone in this high of a market yet.  

Here is my situation, my wife and I want to buy our first property.  We are both 34 with very reliable jobs.  

Household Income- 130k

Zero Debt

Credit Scores in the Mid 700

Down Payment - 100k

We are looking to buy a TriPlex or FourPlex that we can owner occupy.  I have a very good mentor who has also been my landlord for the last 12 years.  Between him and my mortgage guy, almost every deal we look at they say that the rents wont be strong enough to support the loan.

So my question is this, with our current financial situation and income is this market just too expensive for us to get in?