All Forum Posts by: G. Brian Davis

Hi Joshua, that's a very conservative plan. There's nothing wrong with that, but it will take you a lot longer than it might otherwise.

With a rental property loan, you can typically count 75% of the market rent toward your qualifying income. So the math will inherently change, as far as DTI goes.

If you're bringing in private investors, why do you need a mortgage? Or vice versa? Seems redundant. 

I would personally consider moving your time horizon up some, and getting an 80% LTV loan. You'll still avoid mortgage insurance, it's a reasonably conservative LTV, but you can get started a lot sooner. Just an idea.

Best of luck!

Brian

No problem De'Anton, best of luck!

In addition to PITI, mortgage insurance, and HOA/condo fees (if any), plan on maintenance costs, repairs and capital expenditures, a vacancy rate, property management fees and a few hundred dollars a year in extra accounting costs.

De'Anton it doesn't sound like this is the right deal, just based on what you've said on this thread. There are a lot more costs to being a landlord than most people think! 

We go into some depth with our students about setting investment standards very carefully, and calculating cashflow accurately. It's critical to success in this business.

If you set the right standards and keep hunting, you'll find a deal that DOES make sense. Keep at it!

Best of luck,

Hi Brian,

Either he should buy his equity, or you should leave this property as your own. I'm not following the logic as to why he should receive any equity otherwise. It's your property. 

Best of luck!

What expenses are you accounting for?  

Make sure you're including maintenance, repairs, vacancies, CapEx, accounting costs, and property management fees even if you're planning on managing it yourself.

Costs always end up being higher than you think.

Either put down 20% to avoid mortgage insurance, or put down the bare minimum (e.g. 3.5% with an FHA loan on a 2-4 unit). For most investors, cash on hand is the biggest limiting factor. As the bottleneck, that means it should be a priority.

I would definitely not put down any more than 20% if you have a choice.

Best of luck!

Hi Daniel, it's not common, but it can happen in limited circumstances. You'd be better off going conventional though for the second property, where the rules aren't so rigid.

Many cities have good online directories of residents as well. You can try looking up the owner's phone number based on their name and address. 

If you send a letter, the envelope should be handwritten, so they don't toss it as junk mail. 

As for what to say, just tell them you saw their property is boarded up and not being used, and you'd like to make them an offer on it. Emphasize that you can settle quickly.

Best of luck!

If their criminal background check was nationwide and is clear, I wouldn't go any further with the criminal aspect of tenant screening. To be honest, the two more important background checks to run are credit reports and eviction reports. And of those, eviction reports are the most important. Just make sure your screening service runs a nationwide eviction report, not just a state report. 

Also verify income, and talk to their direct supervisor at work about what kind of employee they are. How reliable, how responsible, etc.

Best of luck!