All Forum Posts by: Travis Beehler

 Debt to Income won't be a problem, but if I remember correctly, you're only allowed to have either 10 loans or 10 properties.  I can't remember which at the moment.  Once you hit that, it doesn't matter how good your Debt to Income is.

 Thanks Julie!

Yes, I've found that if I treat my tenants as customers (I have a property manager, so I rarely talk to them directly), they tend to take care of the property MUCH better.  That being said, there is also the underlying notion that I won't be taken advantage of. :)  I always try to find the win-win situation in everything, so we can all build up each of our lives higher.  They get a great place to live, I get my retirement funded that much further. :)

Hi Roger!

My time to shine!  I was in your exact situation as well when I bought my first rental.  I kept hearing about debt to income ratios, and loan limits of 10.  What worked for me was commercial financing for residential properties.

It's not common at banks, so you may have to search around to find that one bank that works best for you.

However, there's a few things you should know about commercial financing.

Most, if not all, banks will want you to set up an LLC. This is fairly inexpensive (a few hundred bucks tops), and easy to do. I did mine on Legal Zoom.

You will absolutely need at LEAST 20% down plus closing costs, plus 6 months worth of reserves.  Some banks require 25% or even 30%.

Get a property manager.  Banks feel a lot better when you have one.  It shows they are dealing with someone with experience.  Just a personal preference and what I've seen in my experience.

Say goodbye to 30 year fixed mortgages. All banks I've seen do 3-5 year terms, amortized for 20-30 year, with a balloon at the end. As long as you're making money above the level they set (usually 1.2 DSCR), then they will happily renew you for another 3-5 year term, and adjust the interest rate if applicable.

Hope that helps!

Travis

I personally would, especially if something goes sideways, you can't be sued for you personally.  That being said, I would highly suggest you talk to a CPA/Real Estate Attorney to find out all the implications of such a decision.  State laws vary. :)

I've got a bit of credit card debt as well, and I found a website called Ready for Zero.  It basically is like Mint, but they take all your credit cards, and you tell it what you can pay per month, and it creates a plan for you that will help you get out of debt as fast as possible.  It uses a combination snowball/avalanche approach, and after I read through it's plan for me, it made perfect sense.  Hope that helps!

I usually say the 1st, so it's easier.  HOWEVER, and this is a big asterisk, if the person gets paid on the 10th and 25th for example, I may adjust the date due and prorate it.  I only do this for two tenants.  The first one was habitually late, and when I finally asked her why, she mentioned her pay dates.  I told her if she had told me that in the beginning, I would have adjusted for her, prorated things, and she would have saved a ton in late fees.  I greatly appreciate a tenant who is proactive in not only telling me that they will be late, but following through with when they will pay me.  They are customers, and will get treated with kindness and respect, BUT, I expect the same in return.

The second tenant I do that for because I just bought the house he is in, and I offered for him to stay.  I mentioned that I did this for another tenant, and would he prefer the 1st of the month, or a different date?  I noticed on the rent rolls, he was constantly paying on the 11th, when the rent was due on the 1st.  I asked him about it, and he said he gets paid on the 10th and 25th.  So, I told him I would happily make the rent due on the 10th, late on the 15th.  HOWEVER, I won't budge on late fees because I'm cutting him a break on adjusting the due date.

So far, it's been a good decision for all involved.

 you bet!

 hi salvatore 

Sorry for the late reply. 3 year term amortization of 30 years with a balloon at the end. However, if I pay in full and on time they renew for another 3 year and another until paid off. 25% down plus closing costs. Hope that helps!

Do you guys do commercial lending for SFH's?

Is that commercial or personal loans?  That might lie in the difference.  I have mine done with commercial lenders so I don't have to worry about debt to income ratios, 10 loan limits, etc. :)