All Forum Posts by: Tom Valichka

@Erik Nordgaard Congrats Erik! I just completed my first SFR buy and hold last year so i can't speak to mutiplexes, but i will give a brief on what i experienced. Are you going to live in one of the units?

1. Run every potential renter through a full background/criminal report and check credit (sounds like you already have good renters? is that right?) and make them pay a $20 application fee. You'd be amazed how a $20 application fee weeds out most people who wouldn't have qualified anyways.  I was thankful to get some good renters on my first try (knock on wood).

2. Getting the home ready to be occupied was more than i expected and i am doing all of the maintenance on my own. it's just a lot with the cleaning, i replaced a toilet, painted, replaced screens, fixed concrete, so forth. But it was fun!

Other than those 2 things, my experience has been good thus far!! Good luck to you! 

@Freddy McCloud  Sorry it has taken me a couple days to answer, and I must have missed it in your answer about the repeat part. I wasn't sure what your next steps were.

Concern #1 -  example you paid cash $100k for home free and clear, you cash out refi the bank is going to go to what... 80-85-90% maybe? So you get maybe $90k back. Then you only have $90k to spend. You pay cash for a $90k property and cash out then at $75k.. so on so forth. Your cash you get back gets lower and lower as you go.

Overcome concern #1 - You insert more of your own cash as purchasing power on your next investments.  As long as the terms and rates are in your favor it sound fine to me.

Again, I have not refied out, but this would be my understanding of it.

Thanks

Tom

@Susanna B.  I can't tell you about the beach because i don't have experience there.  The construction company i work for builds second homes in the mountains for folks from ATL and they justify the purchase by renting the home out, AIRBNB or VRBO (especially in prime seasons summer and fall).  My only concern with the beach is that it may only rent in summer seasons.  If your looking in Florida you will be year round renting.

In your case i would say still look for a deal and still make it a home you would live in if things went wrong. Just make sure the numbers work. Know exactly how many days/month you have to rent it to cover your costs. Or if you don't mind paying on it some months then making money on it others, that is fine too. Just depends on your objective for the home.  Definitely a smart play if you are looking for little to no cost vacation spot of your own.

@Andrew Syrios  thanks for the wise words Andrew!

How is the agreement worded? Does it specifically state the deposits are due at signing or before the tenant can move in?  I agree with @Kim Meredith Hampton about checking the laws on this.  I would just be very up front with this person saying you can just give him his money back and you can both move on. 

I had a similar situation happen like this in my first deal where the renters wanted to paint EVERY room in the home.  Before we signed the documents I wrote specifically in the agreement the renters were responsibly for hiring a licensed painter at their expense and I had to approve the colors before they painted. It was also to be done in a certain amount of time before they moved in.  That was the only way they could change the colors. They agreed and it was great from there.

Put it all in writing :)  And yes, there are just some people you don't want to do business with.... 

@Robin Boyer  Awesome Robin! Glad to hear you are getting traction on your office building.  I have not found anything i can sink my teeth into recently. I am focusing on my day job (construction) to increase cash and worked to reduce some debt so i can borrow more.

Vacation rentals in the appalachian mountains are a great investment. especially in the north georgia, western north carolina mountains. I attended college in that region. the beauty of it is that you can rent it out and have it cover the mortgage when YOU want, then you can enjoy it when you want to get away. Love that idea. I have the same goal of buying and renting a mountain home of my own down the line. with VRBO and airbnb you can't go wrong. a couple of my friends just rented an airbnb for a wedding in north carolina mountains. cost $500 for 2 days. I bet that almost covered their mortgage in 2 days.... people want to get out of ATL and get in the mountains...

Is this a fixed price contact? or is it cost plus?? Also, if this is going to be a high end home, the appliance budget is a bit low for appliances that will align with the over all high end design (just coming from another contractors perspective!)

@Freddy McCloud

Freddy, with my business we deal a lot with regions out of atlanta, they are a pretty big institutions there. I haven't had bad experiences with them. 

Cash out refi is great if you can get a good rate and keep the liquid moving right into something else. Just make sure you have an exit strategy after you take the refi and buy something else. North Atlanta is an incredible market right now.

@Robin Boyer keep me in the loop! Would love to look at some deals you come across in Cali. With interest rates at historical lows and debates on interest rates going up more this year, It makes sense to me personally to keep my cash on hand and get a fixed rate loan (as long as the numbers work and you can get 8%-10% cap on the unit).Personally I am also more concerned about cash flow than value of the property so this option works for me. The only downside to that is you can only borrow so much which is what i am running into right now.... I am open to having my viewpoint challenged as well!

Tom

@Robin Boyer

Thanks for the reply Robin.  Being that was my first deal, i dont have a great amount of advise for getting into buy and hold. This first deal of mine has gone pretty good thus far, but I would like to see my formula repeated to see if i get the same results.

The main thing i made sure i did was find the right market, a good deal, and the right home.  For example, i searched for over 6 month, looked at 50-100 homes before deciding to go with the one i found. BUT once i found it i had it under contract in a day because i knew it was a deal.  I also relied on my local agent who was on the ball checking comps, rent rates, etc. 

The numbers absolutely need to be right on the first one if you want buy and holds to work for you.  The last thing you want is to have a couple hundred thousand dollar loan on a property only flowing positive $100-$200.  At that point its worth just keeping your cash... I know this seems obvious, but you would be surprised how many forget that.

Hope that helps!

Tom