All Forum Posts by: Tyler Hodgson

Thanks for the input everyone. 

We intend to allow the bimonthly payments, amend the lease, and adjust the rent up slightly for the added risk and admin work. 

Thanks for the response @Account Closed.

I definitely do not want to create a bad relationship with the tenants and potentially entice them to move out.

I think the lease addendum is the way to go.

Currently they pay on 1st of Month X for all days of Month X. If we switch to bimonthly they would be able to pay on the 1st of Month X for days 1-15 of Month X, then pay on the 15th for days 16-30 of Month X. I think it will take a couple of months for them to be able to get ahead by the extra payment. 

Hello everyone, I would appreciate some feedback / suggestions:

Tenant wants to make rent payments bi-monthly. Current lease states rent of $1775 due on the 1st. They want to pay $887.50 on 1st and 15th. They said they have so many bills due on the 1st that it would help them a lot if they could delay some of the rent to the 15th.

- Inherited tenants; property acquired in June 2016.

- Self-managed rental

- Two year lease effective Sep 2016 - Aug 2018.

- Lease calls for late fee after 4th day.

- I have sufficient reserves and cash flow to cover payments without worrying about getting the full rent on 1st.

The nice guy in me wants to help them, and it doesn't seem like a big deal. The business person in me doesn't want to be soft landlord and let tenants start walking all over me. (give an inch they take a mile)

Should I amend the lease to allow bimonthly payments? Should I keep the lease, and just allow them to make to make the bimonthly payments for a few months? Should I stick to original lease agreement and charge late fee if they do not pay by the 4th day after the 1st of the month?

Thanks for your help!

Originally posted by @Morgan Winslow:

This question may be suited for a separate post...but I'm still a bit curious as to when the risk might be worth it in a similar situation. 

Ignoring all previous conversation, it's hard for me to think of a situation where worst case scenario I wouldn't be on the hook for close to ~50% of my income (Rent + mortgage w/o tenant). Is this the norm for investors starting out? I realize there is always risk but I'm trying to understand what an appropriate balance might be. The following are the options what I currently see 

1) Purchase quality property for rental and worst case I will be paying Rent + mortgage (~50% of income)

2) Purchase a much cheaper property...but not feel comfortable with its quality (~35% of income in worst case)

3) Wait a couple more years to get mortgage much lower. Or accumulate larger nest egg for worst case. I'm still young so this is definitely an option...But I'd enjoy starting sooner rather than later

 Morgan - don't let the % of your income scare you. You are going to be counting on that rental income. If my units went vacant right now my 3 mortgage payments would equal about 80% of my W-2 income. There is definitely some risk there. (and the next property I buy will put me over 100%) I mitigate this risk by purchasing properties that are in very desirable rental areas and in good condition. I vet my tenants to make sure that when I do get a lease in place I can "count" on that rental income. Unfortunately, even that is not guaranteed. And don't even get me started on the unexpected repairs and maintenance. You must be prepared for all this. You need to make sure you have enough money in savings to cover all of those payments for about 6 months before you dive in. If my units went vacant I have enough savings to make those payments for 6 months. I am confident I can fill those units with new tenants in less than a month...so I have a pretty good buffer there.

Read through some more forums and blog posts and look at some other BPers deal analysis on rental properties. Make sure your analyze all the numbers and have a strong deal with strong cash flow. And again, have some savings in your emergency fund, just in case that friend decides he doesn't want to live in your condo anymore.

I hope this helps!

Welcome Eric!

Good luck with the new baby! It sounds like you will be on the right track for building a future and a legacy for your family.

Is there a particular reason you are going to dive directly into multi-family before single-family? What are your plans to get your first deal?

I'm a local DFW investor, loan officer (conventional financing), and accountant (soon to be CPA). I am currently house-hacking my primary residence, and I have 2 single-family rentals that are currently performing well. I want to venture into multi-family as well. I'd like to try out a few 2-4 unit properties before jumping into some 5-15 unit properties. And some day I will hopefully find some partners for some large-scale apartment complexes, and commercial deals.

Hey Michael! Welcome to the game! I think it is very wise to get your team in place before you start investing. 

I'm a loan officer for a small local lender. But we don't do hard money. Mostly conventional lending. We can help you with any Fannie Mae investment loans for the permanent refi on any of your deals. 

I have 2 rental properties and my primary in DFW. I have a good realtor I work with name Daniel Hernandez. I can send you his contact info if you'd like to connect with him. 

Contractors - the hardest thing to find. I've used a few for various jobs. Some I'm satisfied with, some I'm not. I'd be interested to see who other BPers can recommend. 

Good luck with your journey!

Diego,

Try not to get discouraged. Lewisville (and surrounding areas) are really hot right now and very low on inventory. I was looking for my primary residence in Lewisville back in the spring and it took me at least 20 offers and 3 months to finally get a place. 

Keep putting offers in. More importantly make sure the numbers work for the price you are offering at. Don't get frustrated and just throw more money at it. You will regret it. 

Anyways I'm a mortgage loan officer and I work in Highland Village. And I know some good realtors. I have a guy I use for all my investment searches. Let me know if you want my help with the mortgage / pre-qual or if you need a new realtor referral. 

Good luck!

If you are "locked" in then don't expect any adjustments in your interest rate...hence the term locked. The lender isn't allowed to raise your interest rate unless your lock expires, and I doubt any lender will cancel your lock and relook you at a lower interest rate, especially two days prior to closing.

Check out https://www.therealestatecpa.com/

This is Brandon Hall's CPA firm. He only services Real Estate professionals. 

Logan Wray how much is tied up in your first VA loan? You can have simultaneous VA loans if you still have remaining eligibility. If you have some eligibility remaining but not enough to finance the whole new property then you have to pay 25% of the excess in the form of a down payment. Using round numbers below for an example: VA loan amount eligibility: $400k (this is how much the VA will guarantee for you) 1st house: $180k 2nd house: up to $220k with 0% down. This will use up the remainder of your $400k guarantee. Let's say the second house (duplex in this case) costs $320k. You can still hold your own VA loan and do a VA loan on the new property. 2nd house: $320k sales price - $220k remaining eligibility = $100k excess. VA will require 25% down on any excess of your eligibility, in this case that is $25k cash. So you are now getting a $320k house with $25k down payment; a little less than 10%. Check your county VA loan limit. This will let you know what your remaining eligibility is. Feel free to reach out if you have any questions. Long story short you can probably hold both on a VA loan, lock in the low interest rate on both properties, and save yourself the hassle of refinancing.