All Forum Posts by: Peter M.

Yes if you owner occupy you will qualify for an FHA or conventional loan. Most of the time conventional is the way to go as long as you have 5% plus closing costs in your bank account. It is what people on this site call house hacking.

I have thought about charging tenants a pro rata share when it is not possible to sub meter due to the existing piping. I usually end up coming to the conclusion it is not worth the extra work to track it and bill back the tenants each month. In theory it is simple enough but then you run into issues like move in/ move out dates not lining up with your billing cycle, tenants who complain they don't use as much water as others, notifying tenants and collecting payments etc. I just include it and keep an eye on the usage. I also have verbiage in my lease that would allow me to charge extra if it drastically increases. 

I have done rent reductions for things like that in the past but it depends on the situation. You say they are struggling to pay rent, then it may be a deeper issue than the AC problem. When I gave a rent reduction it was to a tenant that had been with me for a couple years and never had a late payment before or since. Just depends but like a lot of people have said, this is a business and as much as I hate saying it, we landlords need the tenants to make the investments work so you gotta have a little compassion without getting walked all over. 

You can't control the weather or time the market precisely  (real estate or stock or any other). If you limit the times you buy deals based on something you can't control, you'd never be able to buy anything. Like @Russell Brazil said, mitigate the risk of winter vacancy by expecting it to happen and that way if it doesn't you are that much richer and happier. If the deal doesn't work, pass until the next one. 

Is there any fencing from the street? Families, like your wife, will have a legitimate fear of kids running into the street to chase after things like balls. Is there at least a fenced backyard? If it is a good deal it could be worth it. After living there yourself you can decide if its better to keep it or sell it. 

No I don't see anything. I don't pay for the pro membership because I have my own calculator. 

You say you don't have 20% for a traditional down payment but HML also require down payments, usually 20-30%. If you have a HML that is only going to charge you 3 points with no down payment PM me his info ASAP.

Honestly doesn't sound like a great deal if it needs a lot of work to reach full value. I don't know Tennessee but any property that has a duplex and a mobile home on it together are not going to be valued much higher than 128k

First use it to build a reserve fund for each property-enough for at least a new HVAC system, just like a personal savings account. Then I would use it to reinvest either in existing properties or for new ones. I have paid down principles in the past but ended up refinancing to get more money anyway. Would have saved myself some of the refinance fee if I had just been holding onto it. Honestly, the tenants are paying the mortgage so I would rather put the money towards acquiring more. 

@Linda Forrest Here is the problem I see. A HML is a short term solution and even if he finances it, you will be making interest only payments which at 7.5% come out to about 1400/month. If you do 3k/unit in repairs plus all the closing costs you are looking at your cash needed for this deal to be close to 100k but have only 75k in equity. And that is if you can actually get 900/unit rents for 3k in repairs. It will take you at least 2 years to transition old tenants out/raise rents to those levels so vacancy will be higher than normal. And through all this time you will have no principal paydown. If you have 100k to put down, do a conventional loan but even then it is not a good deal. I attached a screenshot from my analysis spreadsheet so I hope you can see it. If its too small you will at least be able to see that most of the metrics are red or yellow. I put in expenses pretty conservatively (about 20k) and assumed you would do PM. My advice, don't buy it. 4-plex prices are super inflated in north texas right now. 

Veritex bank did a SLDT LOC for me recently.