All Forum Posts by: G. Brian Davis

Hi @Erik Orozco,

As mentioned by other replies on this thread, you can't use rents or security deposits toward the down payment. You don't even receive the security deposits from the seller until settlement. 

Besides, the lender will be looking at your accounts and will ask where all the money is coming from.

If cash is tight, one option is to negotiate a seller concession. That can cover your closing costs, but not the down payment. 

You will need some cash for the down payment. You can accept a gift from friends or family to cover the down payment, but it can't be a loan, it must be a gift. The lender will ask for a signed letter from the friend or family member, saying the gift does not have to be repaid.

Feel free to PM at any time, and best of luck with your first rental!

Hi @Tina S., 

I would recommend not worrying about the advanced stuff like asset protection, trusts, legal entities, etc. right now. Focus on the fundamentals of finding good deals, building a strong team, understanding how to calculate and forecast cash flow accurately, and so forth. 

Later on you can get fancy, but when you're first starting out, there are so many new things to pay attention to that you want to concentrate on what's absolutely necessary for success.

Please don't hesitate to reach out by PM at any time!

Hi @Andre Strickland, congratulations on the first property!

I agree with @Jordan Grimstad on this one - get this first property under your belt before worrying about more advanced stuff like asset protection. 

My experience has been that LLCs are actually not very much protection anyway. 

I highly recommend you focus on the fundamentals at this stage in your rental investing career. Stuff like LLCs are distractions from the fundamentals, when you're first starting out. 

Please don't hesitate to PM me any time if you run into questions, and best of luck with this first property!

Hi @Gregory Schwartz, and congratulations on your first rental purchase!

I wouldn't think in terms of "higher cash flow" from managing it yourself - it doesn't change the cash flow, it changes who gets paid for the labor. Labor is an expense no matter who does it. If you managed it yourself, you're accepting a part-time job basically, for a certain amount of pay. Whether that pay is worth the labor is up to you. 

On the one hand, managing your first few rental properties yourself is a great education. On the other, if you're moving away in a year anyway, the continuity of having this property management company stay on may be worth sacrificing the education you'd get. 

I'd probably keep them on if it were me, while continuing to educate myself elsewhere.

Please feel free to PM me at any time, and best of luck!

Hi @Juan Salinas,

Those numbers seem a little tight. Have you fully calculated out the property's cashflow? Make sure you include expenses like vacancy rate, property management fees, repairs and CapEx, etc.

As for whether you'd be approved for the loan, I would guess that you would be. Keep in mind you can use rental income to help you qualify. 

One thing that could be the difference maker here is whether there are any inexpensive updates you could make to the property, to get those rents closer to $500/month. I'd brainstorm some ideas and look at other rentals in the area.

Feel free to PM me at any time, and best of luck!

Hi @Mohammad Haidarasl,

There's nothing wrong with going conventional on your first deal. House hacking is a great way to get your first property, but it's certainly not the only way. 

If you have the 20% down, and the cash-on-cash ROI and the monthly cash flow both make sense, you'll be in good shape. You'll also avoid PMI, which is awesome.

Feel free to PM me any time, and best of luck!

Hi @Miko Lee,

Demanding tenants, even otherwise qualified ones, are bad news. If they're making demands now, before they're even approved, just imagine how much they'll nag and complain once they're all unpacked in your property.

Tenants who are never happy will make you miserable too. They're also more likely to move out as soon as the lease ends, which means another turnover sooner rather than later.

Tenant screening is the most important action that landlords take, aside from actually buying their properties. Don't accept any tenants who won't be quiet, regularly-paying long-term renters. To do otherwise is to court trouble and costs.

Feel free to PM me at any time, and best of luck!

Thanks @Shirley McLean, hope you enjoy your stay in Maryland!

Hi @Michael O Sullivan,

House hacking is a fantastic route to get started, and you get much better financing than a hard money lender would offer. Check out this example of how one new investor did it:

https://www.biggerpockets.com/renewsblog/newbie-ho...

You can use FHA financing and put down only 3.5%. Combine that with a seller concession and you're in great shape with little cash.

Feel free to PM me any time,

Hi @Jimmy Edwards,

I would worry more about cashflow and scoring a good deal, than about total mortgage cost. Just make sure you set aside enough cash to cover the whole mortgage payment, if you do have a couple months when one or more units are vacant. With a proper cash cushion you'll be fine. 

If cash is a little tight, but you find the perfect deal, there are always places you can find some extra money in an emergency. Friends, family, credit cards, P2P loans, etc. But it'd be better to have enough of a cash cushion. 

Feel free to PM me any time, it's what I do!

Cheers,