All Forum Posts by: Aaron Millis

Hi BP,

This actually is not something I thought about until reading a recent popular forum about private lending scam artists... but does anyone have any advice for vetting private money lenders for first timers? Any big reasons to run away from a potential lender? What information to expect them to ask for? What upfront fees to expect, if any? etc.

Thanks

@Christi Hawkins

Hi! I don’t really have anything to compare it to because I don’t have any other rentals yet, but I love it. It’s very profitable renting by the bedroom vs the entire house. I know the typical cons of college rentals are - high turnover and possibly more damage to the property, but turnover is something you just have to budget for like any other expense, and the damage/wild part factor can likely be eliminated just by tenant screening.

My place in Auburn is a pretty nice place a few miles from campus. My mortgage is $730 and I ask for $425 per room ($1700 total) and I don’t have really any issue finding good qualified tenants. The rent closer to campus is outrageous so people love my pricing even though I though I set it a little high haha.

I was really hoping I’d be able to get some “daddy’s money” kind of tenants and that’s exactly what I got. All my tenants have their parents as their guarantors and all there parents have plenty to lose. I manage my own place and I use Venmo (a money sending/receiving app on my phone) as my means of accepting rent. I love that because the “chasing checks” thing doesn’t sound very fun.. and pretty much every college kid has Venmo or some money app anyway.

It’s still pretty early but highly doubt I’ll ever regret buying my place in Auburn. The biggest thing for me at the time as a noobie investor was I was terrified of vacancy, and I figured no matter what happens with the housing market kids are gonna keep going to college!

@Thomas S.

Thanks for your reply man. If I were to construct my lease that way^ to where they are all on the same lease- what would happen if he stopped paying and I needed to evict him? Wouldn’t that mean I would have to evict the entire group of 4? That was my reason for not wanting to do it that way. It seems easier to get one bad egg out and keep the others in house so you don’t miss out on allll your income.

Hi BP,

I am screening tenants for my college rental that will be available in the fall. I have a 4 bedroom house that I rent by the bedroom. I'm looking into 1 of the 4 potential tenants and see that his income comes up short of my '3x the rent" rule. I told him he could use a guarantor which is common here (typically the parents). He said his parents make plenty of money but they recently filed for bankruptcy and asked if I could still count them as guarantors. 

I asked him how recently this happened and I'm still waiting to hear back. But this is my first time running into something like this so regardless of his answer I'm not sure the kind of weight "recent bankruptcy" has. 

Any advice or opinions are welcome. Thanks.

@Michael Warinner

You’ve got like 1000 replies so I wasn’t gonna bother putting in my 2 cents until I read a few people telling you to finish even though you said you’ve decided to drop out.

Those were responses from people with much more RE and life experience than myself so take this however you want..

I think you should drop out if you want to drop out. I was roughly a junior in school by the time I decided to drop out. (1 year traditional- years worth of online classes in the military, and 1 semester after the military). Towards the end of me being in the military is when I discovered BP and knew that this is what I should be doing. How I knew that is a long story but I knew it. And based off how you worded your entire post I’d say it seems like you’re at that point now.

I’ve only been investing 2 years and it’s been amazing and more profitable than I imagined it could be. Like you hear the podcasts on here with guest talking about making $100,000 on a wholesale deal.. and you might think “Oh they got lucky, that’d never happen to me” but I didn’t take it that way.

Hearing stories like that in the podcasts was enough for me to decide to go for real estate full time. I started in March 2017 with about $25,000 (my savings from the last several years) and no assets. 20 months later I’ve got $115,000 in equity, $10K in the banks, a cash flowing rental in an awesome town that will likely never be vacant, and most importantly I’m HAPPY as hell because I love what I’m doing and I’m not taking classes about pointless BS Ill never care about. Even if I had some disaster money sucking deals to begin I wouldn’t let that stop me... because AGAIN I’ve heard countless stories in the podcasts/forums about people starting terrible then recovering and thriving. I’m not saying this like I’m invincible or like I’m amazing because there are much better stories on the forums/podcasts... I’m saying it to reassure you that this stuff really works and it can work for you.

But hey, I’m just a 26 yr old dropout. What do I know?

@Andrew Postell No problem, 

1) One is now an investment property. I am moving out of it because I just bought house #2 to live in flip/rent a year or two down the line. House #1 has renters in it now though (4 bedroom house hack) and my income covers my mortgage. $1275 rent $910 Mortgage+ HOA

2) House #1 Worth: $168,000  House #2 Worth: $124,000

3) House #1 Debt: $104,000    House #2 Debt: $79,000.

Thanks in advance

Hi BP,

So my situation is that I have a good bit of equity in my 2 homes, but I cannot really access it. I would like to do a Heloc for one or both of the homes but my DTI ratio does not meet the 45% that banks require. The main reason for that is that a good chunk of my income is coming from my rental property. I have not been renting the property long enough to have proof via tax returns (they always ask for them) that they produce income. This will be my first year filing as a landlord so that will help down the road, but not now. Also I thought about just getting job to increase my income but most banks won't count money from basic jobs (like bartending) as income. They want me to have an actual career doing something.

My question is, is there a technique/strategy people use to get loans using their equity in RE as collateral? I feel like my options are basically wait, or find a private lender that cares mostly about the deal and is okay with using my assets as collateral..

Thanks.

@Georgie Sampang The property in the condition it's in would not qualify for a VA loan. I may refinance with one down the road.

@David Biederbeck

You’re absolutely right about me probably being able to get a better deal. Even When they told me I was in a bidding war I was 90% sure that was BS. Just from a logical standpoint what I knew was that it had been on the market for a long time- and also when I had the structural engineer come out and inspect it he told me that he’d never inspected the house before.

So that made me assume nobody ever really even got close to buying it- not that the structural report was a necessity, but I think any smart investor would check it out just to be safe.

I basically told you all of that^ just to now say I didn’t care and I wanted the house so I didn’t try to go lower. I was basically in the I NEED a deal phase and not the I WANT a deal phase. I was finally financially ready to buy my next house and I was itching bad. The 10% chance that there was another buyer was enough for me to just give them what they wanted. So I probably could have gotten a better deal, but hey at least I’m self aware of my faults! That’s gotta count for something:)

@Daniel S.

I wrote the jist of all my issues in a response to someone earlier in this thread. I’m not trying to be rude but it took a while to type so if you just look ^ you’ll find it!