All Forum Posts by: Scott P.

If this is how the laws work there, it appears you live in the wrong sort of state to own rental property and a lot of folks there are voting for lousy representatives.

I'm sorry....I know that thought doesn't help. 

I feel lousy that this would happen to anyone, especially someone who is thoughtful enough to share the story with us.  So, maybe we can learn from it.

The problem I see with cash for keys with the 2nd group/squatters is:  what keeps another set from moving in as soon as these are gone?  In Connecticut do you have to physically move in  yourself to prevent random strangers from breaking the locks and moving in and say they've been living there?  What if you moved in and the squatters said you're squatting in a place they've been renting since November?  Based only on what I'm reading here, there could theoretically be no end to this cycle as long as some person gets into the unit - one way or another.

I assume your lease allows for subletting without your approval?

I must be missing something....

Maybe you could fully rent out the property you're currently hacking and then move into one of the 4 four-plex units and hack it with a mortgage that you could get more easily as an owner occupant?

That's a good question.  I've always used the combined income.  I admit that has caused problems when there has been a divorce or a roommate leaves, etc.  

I'm not sure if I understand your question but I can tell you I spend maybe 1 hour every 3 months per door unless I'm working with a tenant leaving and replacing with a new tenant in which case my time spikes up obviously.

It's not uncommon at all in my area.  Lots of laundry/kitchen combos.

This is only 1 factor but in my experience, poor credit due to bankruptcy actually helps me because now that the potential tenants debts are gone they can afford to rent.

Visit banks and ask, and let them know what you mean by "bad" credit.  They'll give you some initial responses.

In my area, a bank that is interested if working with you to earn interest by loaning you money will have you apply for the loan and pay for an independent appraiser from a long list of approved appraisers, to estimate the value of your SFR. They might also have you pay an application fee. In my area, on a rental property the banks I've worked with will loan 70% of the appraised value. So if my paid for rental appraised at $100,000 they bank would loan me $70,000 either all at once as a re-mortgage or as I needed it from time-to-time as a HELOC.

I've done the re-mortgage/cash out as well as the HELOC. I tend to favor the HELOC unless I've identified my next property and I know I want all the $ at once. In my experience the rate is lower on the HELOC but it can change/be variable while the cashout/refi/remortgage can have either a fixed or variable rate, whichever I prefer.

In my experience you will indeed need to get approval from whoever has jurisdiction for planning and zoning.  They'll decide if you can subdivide, what the requirements are, and what the zoning can be.  If you can submit plans, likely sealed by an architect or engineer, and get the official approval before buying, that would be safest.  I get the sense you already know this though.

As far as the mortgage goes, that has been a simple process in my area.  

1. Subdividing and/or increasing the zoning up from R1 (typical classification for SFR) only increases the appraised values in my experience. So usually no complaints from a bank on that aspect unless maybe you're at a small Savings and Loan or Credit Union.

2. In my experience, the lender doesn't care what I do on the lots as long as I pay the mortgage.  When it comes time to sell one of the three though, in my experience, I would need a "partial release of lien" if I still have a mortgage.   The Buyer wants his lot without my mortgage being attached.  You'll want to know ahead of time that the bank will do this.  They may not.  They'll likely want you to use the money you're making on the sale of the lot to partially pay down the remaining mortgage since it will be for a smaller remaining amount of property which makes sense to me from their point of view.  Now with all this said, your mortgage broker and underwriter are telling you something different and they certainly have the final say.  Perhaps check with other banks.

I've done new rentals and "used" rentals and new and existing houses. There are a lot of advantages to new.  Currently though in my area, the cost for new is much higher than existing or remodeled.  (There was a time in my life when remodeling cost more than new.)

Owner occupancy gives you a financial advantage that pure investors don't have.  For example, your interest rate should be lower and you don't have to bear the full cost of housing yourself somewhere else after the new rental is complete.

I recommend you talk to lenders though before deciding on a prefab.  In my area, prefabs, even on permanent foundations, don't appraise for as much as traditionally built homes.

If you can make new construction happen you'll probably be better off in the long run but it will be a huge learning process, likely including a lot mistakes that cost you $, if you've never hired a builder and built before.

Best wishes!

I admit I've never had that, that I know of.  I'm assuming it's electric/battery operated.

I suppose I'd remind them that I'd treat any damage from it just like any other damage.  Perhaps the wheels would rip vinyl flooring?

If possible, let us know in a year or so how it works out.  thank you,