All Forum Posts by: Ryan Mancuso

As I'm sure you know, areas in the mid-west tend to cash flow well but appreciate poorly, that being said, the cash on cash return seems fantastic and can help you start to build a bigger portfolio.

As other members have pointed out, the desirability of resale (exit strategy) is always something to consider. Is it close by shopping, parks, a noisy street, etc. Make sure to take the long term view when considering the purchase.

Do you live in the area? Do you know it well? You put in their 10% for managment so I'm wondering if you are investing out of state?

Hi Jarret,

That sounds like a great deal! I would ask for the appraisal to make sure and I would work with an agent in your area who is working for YOU (not your friends agent) and will run a comparable analysis in the neighborhood to confirm the deal you are getting.

If that is the case, then YES! House hacking/rent by the room is a great way to go. Make sure to have tenants give deposits and have leases so everything is clear and clean. And if they are students, having a parent as a co-signer would be a grat idea. 

Also, check out what the dorms are renting for per semester at Marshall. Usually they share the room so you can charge almost the same because you can offer a room by itself (although the convenience of being on campus is lost).

Then after a year, refi out, rent out the room you were living in and do it again.

What a great start! 

I think the best way would be to conintue "house-hacking" (with multi-fam or single fam) every year. Buy a new primary residence and rent out units, or stay in it for one year and then turn it into a STR.

That way you keep as much capital back as you can while building your budding real estate portfolio. As you grow, you should consider what the best use of your time is. I know you can save money cleaning/landscaping etc, but if you can use that time at work and make a better return, I would do that and have someone else do that work for you.

As you scale, you need structure in place to make sure it stays solid.

Good luck!

Hi Shikirah, Welcome to the BP community!

Something else to consider when you are using an FHA loan is to find something a little more rural and be able to find or add an ADU (additional dwelling unit) over time. This could become a "duplex" and you can supplement your income by adding this way.

Something else I would look into is some conventional loans will only require you to put 3% down so this might alleviate seller's concerns. I would discuss the options with your lender or even call other lenders to see what the possibilities are. 

Remember: Ask HOW can I get this done, not CAN I get this done. There are creative ways to do it!

Good luck!

Welcome! I know, they don't teach the real life stuff in school. But this will only help you grow your tools that you use to help yourself and your clients!

The seller pays the commission anyway out of their pocket, so that should not be your concern. Regardless of how much money you put down. That is an agreement already made between the listing agent and their client seller!

Short Answer: 

I am going to answer this assuming you are not using a Realtor.

In Arizona it is the responsbility of the seller to pay their agent the commission and I would assume it's the same in Michigan, so really this shouldn't be your problem.

I don't know the specifics of the Detroit market, but where I am in Arizona, as a Realtor, I have access to a form called an "unrepresented buyer."  Therefore, if I represented a seller in the sale of their home and a buyer came as you did, I still have recourse to get paid my commission. 

You can always talk to the agent directly about this. They will really appreciate that you want them to get paid.

I would start with who you use for car insurance. If you don't like their rates, then I would move to an independant insurance broker local to your area.

I would also talk to other people who own homes in the area (neighbors, friends, family, etc) and see what they pay. Maybe it's more in your area because of the heightened risk of natural disaster.

If it's your primary residence, it shouldn't be more than $100 a month. I have a 1500 sf home and its about $60 a month. It also depends on the cost to rebuild it, and any upgrades to the plan you have.

It will be more expensive if it is a rental home, but $1900 annually still sounds high.

Good morning!

I am not a lawyer so any legal advice should be in conjunction with the advice of a lawyer or property manager in your state and local area.

With that being said, I was in property management for 6 years and managed over 300 doors at a time, so I understand your frustration. 

I would get them to sign a new lease. It's cleaner and holds them to a clear standard. If you are worried about them moving out, you can probably find another renter in no time and increase the rent (if your area is like most and rentals are in high demand).

I would also add in the new lease that you will do a mid lease inspection. This way you can keep them accountable to the conditions of their lease.

They don't have to be the best housekeepers while they live there, its when they move out eventually that matters and to cover yourself I suggest the following verbiage (again, this is only to be taken as advice, and not legal counsel). Also, for future reference, I would have them do a move in inspection sheet so that the condition upon move in is known and is a reference point for whenever they move out.:

The property must be returned in a clean and undamaged condition acceptable to the LANDLORD. The move out calculation (their deposit minus any cleaning and repairs you have to do to get the property back to "prior to their move in" condition) will be returned only after deducting charges for all required cleaning and/or repairs. Depending on your state laws, you ususally have 2-3 weeks to return the deposit to them.

SECURITY DEPOSITS:

I would just have one security deposit on file and make them work out who owed what. With all the transience of these tenants, you want to make sure you put the onus on them.

For example. Tenant A,B, and C that live there give you a check for the sec dep and if C moves out, then A and B have to figure out how they want to handle it, but that shouldn't be your problem. You should only disburse funds once they all (or the last remaining tenant) moves out.

Please reach out if you have any more questions! I am happy to help.

Investment Info:

Single-family residence buy & hold investment in Prescott.

Purchase price: $169,000
Cash invested: $34,000
Sale price: $450,000

A 3/2 I bought to house hack. When I bought the property, I put 5 other friends in it (I shared a room so I could charge more for the master bedroom). They paid the mortgage for me and I netted $150 per month, slowly fixing things as they came up. Living in it and being a landlord and friend was a hard balance,

What made you interested in investing in this type of deal?

I had friends who needed a place to live and I could live rent free and cash flow.

How did you find this deal and how did you negotiate it?

Through the MLS, I used an agent as I was not licensed at the time

How did you finance this deal?

Conventional

How did you add value to the deal?

I slowly changed the interior over time (paint, flooring, cabinets, baseboards, shower

What was the outcome?

I

@Bob Okenwa That is great advice. And the same advice that another agent gave me who is up here. I will look further into the property and see if there is room for negotiation. Thank you.