All Forum Posts by: Andy Webb

Let's see if she is out in a week as planned...

@Kimberly Ashkenazi  One question first:  you mentioned that the sellers say the units cashflow nicely; what do your own projections say?  I would be wary of what the sellers tell you.

Is the $2k of work something you can do with the tenants in place? - that way you still have the cashflow going to support the cash out of pocket.  Let them know they need to clean the places up, and if they don't give them the boot.  I would bump the rent up to market as well, as that may move them out the door anyhow.

Andy

Just jump in and get your feet wet (e.g. take on your own buy-and-hold).  You will learn - and re-calibrate as you make mistakes and compare your latest experiences with other landlords around you. 

Andy

Not an outright restriction per se, but the lease does require the tenant to clear any construction or contractors through us.  when we do the initial walk through with them, we usually ask their plans, and if they plan on satellite, we let them know our preference (e.g. pole mount in yard).  We are also clear that any damage resulting from installation on the house directly will be their responsibility.

Stumbled across this on a local municipality's site - gave some good info on door locks that I was unclear on with regard to Texas Property Code.

https://www.youtube.com/watch?v=MWGQTcB7SAQ

Andy

@Charles May - the best thing to do is talk to whatever bank or broker might do your refi.  Depending on the type of financing, the refi lenders can get pretty finicky.  Some are easy, some are headaches.  On some refis I have had to demonstrate where the funds came from that I used to close on the purchased property - they wanted to see that it was my money.  With this in mind I can see where the depositing a personal check might be an issue, unless it is more than 2 or 3 months before the refi (our lenders usually only look at 2 months' worth of statements).  Of course proper documentation with the private lender may remedy that sort of thing.  Just guessing now.

Good luck!

Andy

That is the model we currently follow, for the most part:

1.  Buy distressed properties using a hard-money/private loan at higher interest rate

2. Rehab property

3.  Refinance out into a conventional 30-year loan at lower rates and pay off hard-money loan.  (As quickly as possible)

Of course, you cannot get traditional Fannie Mae financing in an LLC...so you may have to look at other options for the refinance.

The 20% rate seems high to me, but you did not mention whether there are any other fees or not.  For example, we often pay origination fees - typically 3% - which are a fixed cost up front.  After that interest is paid monthly.  I would expect a private lender to be lower than my local hard money guys.

I assume the 20% is per annum, so you won't necessarily pay $14k to the lender, rather approximately $1100 per month, for each month you are in the deal.  So if you refi out and pay back after 2 months, you have only paid approx $2200 total interest. At least I hope that is the case!

Andy

Not sure how evictions work in California, but I am picturing the state being pretty tenant or even squatter friendly.  Can you talk to the local county judge that would potentially handle the eviction to see what to expect?  If not the judge, then certainly a local RE attorney.

Also, is there adequate documentation on the part of the seller regarding the non-payment of rent, or could this be a he-said she-said type situation?  If no contracts, was there any sort of security deposit in place to consider?

Andy

I would expect title to pay the taxes at this point - they should have discovered the past-due taxes.  I had a similar situation here in TX where a prior year's taxes were left unpaid at closing.  I got a payment request from the county, forwarded it to title, and they paid.  I did have title insurance.

It is a great resource!  Welcome!