All Forum Posts by: Rick Albert

There is so much advice to give, I recommend asking specific questions to each stage.

I would also look at your short term and long term goals. Where are you based out of?

Generally speaking, using the VA loan to buy multifamily is likely the way to go. You gain more doors (which allows you to spread risk, generate bigger cash flow, etc.) I would also get roommates on top of that. Keep in mind putting 0 down on a property isn't likely to cash flow. Otherwise general investors putting 20%-30% down would outbid you.

Real estate is a long term game and a lot has changed in the market. Be patient and go for the base hits, don't wait for the home run.

Hey Heather,

I did the extensive FHA 203(k) loan for my second house hack. Here are a few answers to your questions:

1. You can start talking to an agent now just to get the lay of the land. The market may change but this way you can ask questions. I've had clients talk to me for two years before buying. You can also have the agent set you up on automated listing alerts so you can study the market yourself.

2. If there is a tenant in place, then why do any renovations other than health and safety? It's not like they will pay you more for the space. Wait until they move out and then do the renovations. Otherwise you are putting in new finishes that are getting used for no additional income.

3. You can outside of health and safety. So if there is a failing roof, the lender will likely want you to replace it. If there are unpermitted structures, then the lender may want you to prioritize it. It's generally the cosmetic work that they are more flexible on.

@Matthew Porcaro is an expert in the FHA 203(k) space and knows his stuff.

I would say it depends. As James mentioned, it isn't a big deal if it is in good shape.

If you are thinking resale, then you have to compare the home to others that sold with a septic tank. For some potential buyers it is a non starter as long as they have options.

For example, I was looking at some horse property for myself here near LA. It was on septic. But I knew that all the homes in this community were on septic so it wasn't going to be a problem going forward. Conversely, in the Hollywood Hills, it is a hit and miss. So some buyers may prefer one option over another. 

So far, 99% of time I see people who have difficult times with tenants, it could have been prevented during the screening process. Never make an exception because frankly, you don't know if they are lying about their situation to cover up a past eviction, etc. I'm not trying to mean, but it's a reality. 

Typically when I have college students as potential tenants, I just have their parents as guarantors. So far it has worked out really well. 

I could make an argument that if you give exceptions that IS discriminatory because you aren't giving exceptions to others.

The disability one is interesting if it is physical and obvious and they are not working. I would consult an attorney on that one but my hunch is they will say that you still vet but not necessarily deny them because of something related to it. 

Congrats on getting your first house hack! 

Yes, you need to have a lease in place. There are a variety of sources online that can provide them, including AAOA, etc. I would also add an addendum with rules for living there such as quiet hours, laundry use, etc. It is important that if everyone is living together, there should be ground rules. 

In terms of collecting payment, if this is your only property for now, just Zelle or Venmo is likely fine. As you build out your portfolio, that's where things like Tenant Cloud come in handy. Just make sure you track your income and expenses for tax time. 

Good luck!

Can you move in? That way you can refi into an owner occupied loan?

Also, the photos aren't great. Higher a professional photographer. When I took a look I couldn't tell that it was remodeled. My guess is that it looks better in person.

Unfortunately this is part of the risk with flipping condos. You mentioned you can't go any lower but at $602/month that eats profit pretty quick. You may want to sell at a loss and move on. 

 Absolutely. That's the law. It's not up for debate.

Plus you have to protect yourself. Everything needs to be in writing, including a lease. 

Also, in case you are wondering, yes you need to report all rental income on your tax return. I'm not a CPA but that is tax fraud to not report it.

Umbrella insurance is good as you scale. It also isn't expensive. Just keep in mind it is liability insurance that will only cover you AFTER your main policy is used up. So if your main insurance won't cover the liability, then neither would your umbrella policy. Confirm with your insurance agent.

In terms of renting by the room, typically you have separate leases for each one since they tenants are not renting together. I would consult a loan officer on how you would handle the leases for future loans assuming you buy the next property before you can show the income on your tax returns.

Good luck!

The best thing to do is to look on sites like Airbnb, VRBO, FurnishedFinder, AirDNA, etc. 

I also recommend talking to Jake Gomes. He is a Realtor/PM out of Nashville but is familiar with the area. If you want his contact info, DM. Tell him I sent you. 

A couple of things:

1. You are assuming that there will be a discount for representing yourself. That isn't always the case. 

2. If the property is represented by an agent, they will likely need you to submit the offers on the applicable forms. You don't have those forms. The agent does.

3. I would interview a few agents and see their track record for negotiations. Ask them open ended questions to get honest answers out of them.

4. In most states it is a buyer beware situation. That means if you missed something, it's your fault. It doesn't hurt to have a second set of eyes on things. 

I understand you had a bad experience, but not all agents are created equal.