First multi-family property bought!!

[Bud Evans]

Ok, I don't want this to be long so here it goes.  Ask was 196k, offered 174k, purchased for 179k.  3 tenants already in, one moving out, one changing apartments - downsizing.  Plan - close in September, renovate the empty and ask for an additional $70 from that one, an additional $50 from the one downsizing and remain the same on an efficiency.  Also, a shed in the back houses lawnmowers for a landscaper paying $75 a month.  

Looking for a property manager and have requested quotes from 4 bidders in my area. Have a local bank providing the loan, have my son moving into the lower level so I got an FHA 3.5% loan and the property is valued at 220k. No PMI!! What did I miss? Used the rental calculator and I'll net about $400 a month with a 21% cash on cash value. For landlord insurance - just go to like Allstate?

Thanks,

Excited and scared to death!!

[Natalie Schanne]

Bud Evans - Congratulations! Save yourself the 10% of rent and Skip the PM and have your son do it. You seem to already have a good plan with rents. He’s on site and it’s not that hard. Nobody cares about your property as much as you do. (Minimizing vacancy, maintenance costs, etc.) Make sure your ownership vs your son’s ownership is clear. Everyone is happiest at the beginning of the biz relationship. Get it in writing. Who is paying for capital expenses / rehabs / tenant turnovers? Who gets the money left after the mortgage PITI and water bills are paid? Set up a bank account for rent and another for the security deposits in escrow. Get a (joint?) credit card for business expenses only. Make your accounting easy on yourself. Money in minus money out for bills = profit. Don’t commingle these accounts with personal bills. From the profits, pay yourselves. If you’ve put the money down for your son’s house purchase, make sure he’s agreed to some amount of “effective” rent so he’s incentivized to collect from everyone else so his share of profits makes his living cost closer to $0. Good luck!!!