All Forum Posts by: Rafael Floresta

I am in contract in a short sale with a seller who bought a house before he got married. 

He is now deep underwater and wants to shortsale. He is still legally married but separated. He doesnt work, he is a veteran and his wife claims head of the househould.

I just spoke with his current wife/ ex wife and she is reluctant to give the bank their W2. 

I recommended her to check with the short sale attorney if there will be any repercussion on her credit from providing that document. The bank just wants a proof that the guy doesnt have money. 

Any tips and tricks to help this situation better or should I just walk away?

I have this property I recently remodeled, and went very possibly over remodeled. 

http://www.biggerpockets.com/forums/223/topics/142...

Now I get a call from a prospective tenant that says she is willing to pay a whole year in advance. 

It seems tempting to know I wont have issues collecting payments, but I am assuming he/she has bad credit. 

Does this normally happen? Do people pay whole years worth of rent at move in? Is this a bad setup for the second year?

@Kyle Kovats I contracted most of the work. I should have contracted 100% of the work. 

My main mistake was not to have a GC. Trying to sub it all out was a pain, contractors played the pushing blame game, and I was left with the short stick a couple times. 

I took plenty of risks, from buying from a foreclosure auction to not knowing how the refinance works after you buy a house cash. There is too many paths you can take, and if you are in Jersey, I'm down to meet and have lunch/coffee and give you my best advice. 

@Bill S. I will be careful. My plan is to hold the HELOC for maybe 6 months to 1 year only. No closing costs seems the perfect loan to have during seasoning period, and they lend on ARV, they said. I can even pay 100 bucks to lock a rate for some time, almost like a mortgage. I will make sure to make another post when I have more accurate information.

I am not big on the conversions. I don't like to manage tenants relationships and SFH or a 5+ units is what I look for. Duplexes to Fourplexes are not what people "like", but are ok with it for a cheaper price. I am looking for the best possible product for the tenant.

I only have one rental, but I have been analyzing this market carefully, so take my information with a grain of salt.

West Philly is the new hip place to be, and there are plenty of cheap housing around. Lots of students or "young and in debt" graduates moving there, creating a strong rental market. 

Also South Philly has some great places, more specifically Point Breeze and Newbold. I am eyeballing a property in Newbold that fits the 70% ARV rule.

Philly, contrary to the rest of the big metro areas still is in a buyers market. I used to live in a similar place in San Diego, CA, which today has 2 months inventory. The zipcode I follow closely has about 3 months of inventory, which is one of the few parts of Philly with a better market. 

I started marketing way too early. I started marketing in June and only had two showings. It was a construction zone, we were on the studs and insulation in the attic, the bathroom was just rough plumbing. I showed them my color palletes, the tiles I bought and how I designed them, the appliances I had already ordered. I explained how I paid more than double to have closed cell spray foam insulation in the attic so the room becomes as comfortable as the rest of the house. 

 The tenants move in this Friday. That happened thanks to a contractor that was over a month late. My original goal was July 15th to be ready. The tenant has been great, since they had some flexibility with their lease. 

I certainly over improved for the area, but that was one of the selling points of the house for the tenants. They bought into my plan and saw the work get done. 

In a area where others fight for section 8 vouchers for 1200 for a 4 bedroom, I got 1300 with tenants with 750 credit score. 

It is easy to fill a rental, but I believe the money is made when the tenants stay for an extended amount of time. I don't think I have it all figure out, and I can't say they will stay, or even pay, their full lease, but I certainly did my part into setting them up for the outcome I want.

Maybe I am not getting the most amount of rent I could, but they are very happy with the deal they have and I got what I originally planned for. :)

HELOC with TD seems a limited road, since they are doing a lot of income/employment verification on myself. They are also requiring paperwork from my primary home, so they are trying to calculate my DTI ration. I should be fine for this deal, maybe another one or two, but I expect to ramp up more rentals before I can prove income in a full year of rentals on my W2.

The HELOC seems attractive for me because I can have a 0 balance until I actually use the money. If I want to use it like a mortgage eventually, I do have the option to get a fixed rate. It certainly isnt as low interest as a conventional, but I am also not paying closing costs. In a lower value deal like this, it almost evens out over 7 years, the average life of a 30y mortgage.

Landlords and homeowners pretty much. The market there isnt that bad. The current tenants expressed interest in doing rent to own or lease option. 

I figured the 81% AFU boiler I want costs for 1500 from a local supplier. Chimney liner runs for 200-350 labor 250-350.

I have been getting 90k-100K range BTU, conventional and direct vented, most of the time the HE is 1500 more. 

My best quote from trustworthy contractor is 5200. 

If you have someone you trust, maybe they are not too far from me... I'd like a recomendation.

Those are the before and after:

https://medium.com/@rafamvc/before-and-after-of-12...

It took 4 months. My main contractor had major issues with scheduling and delayed us by a whole month. I am also new and it was a learning experience for me.  It could have been done in 2 months.

I am looking for a lender, have talked to a couple banks that will do 80% - 85% ARV, but I don't believe until the funds hit the bank. Plan B is to season for 6 months and plan C is to season for a 1 year. Currently my best bet is TD bank, who does a HELOC at 5% based on my own credit for 8% of ARV. Going back and forth with paperwork with them. Their benefit is also that I don't have to pay the montlhy payment until I buy and use the money and I can lock it from a variable rate to a fixed rate for 100 bucks. Their closing costs are also very low compared with a convetional/portifolio mortgage. Only about 700 dollars total for the transaction.