All Forum Posts by: Adam Melon

Yes, you read that correctly! Tap your equity, and have zero liability for up to 30 years! To learn more, please PM me. Minimum credit score is 500. To get the best deal possible, all you need is a 600 credit score! You can also view our website below. If you're uncomfortable clicking the link, just google "Point". This is a legit program and I've personally helped 100's utilize this program. I'd be happy to explain the nitty gritty details as well. 

https://welcome.point.com/adam-melon

Hello All!

So here's my situation: I'm under contract for a triplex (my first property!), but I am worried about having been laid off during Covid  (April 2020-August 2020). I'm an accountant and have more than 2 years of experience in the industry. I've been gainfully employed since I Graduated college 3 years ago except for last years pandemic. My employer that originally laid me off in April, rehired me in September. When I originally applied for the loan in 2020, they asked for 2019 W-2s and paystubs which reflected I worked the whole year, so I was pre-approved. But since we're in 2021, they want my 2020 W-2, which is 4 months light of my normal income. I'm worried they will inquire why my W-2 is a little light and then i'll have to say I was unemployed for 4 months last year. I'm still employed with same employer that rehired me in September. In a practical world I feel I have nothing to worry about, but I'd like some reassurance  from BP world without having to open a can of worms with the lender. 

@Lamont Chen Yeah, that's on my to do list if the buyer accepts my offer tomorrow. It generates income as is, so I'm ok If I cant. The basement already has a gas line, and a full bathroom. So getting a kitchen in wont be too tough. May have to do a few things to get it up to code, but again not really a day 1 project since its generating income.

Deal facts:

1. Purchase price 925k on a triplex in Westchester County, NY

2. Rental income in other 2 units is $4360. I can probably bump it to even $4500 between both.

3. Basement can be converted into a 4th unit. Right now being used as storage and generating $825 per month along with 2 garage spaces.

4. 3rd garage space is generating $165 a month

5. Total rental income that is being inherited is $5350.

6. My intention is to convert washer and dryers to coin operated. Figure another $100 a month of income.

7. PITI is going to be roughly $5100. When the taxes get adjusted, roughly $5600.

8. Financing through a VA loan.

9. Other 2 units are turnkey. Unit im living in can use about 30k to match other 2 units.

10. The basement can be converted to a 4th unit. Would generate at least $1200 a month. When I move out in 2 years (always stay 2 for extra tax benefits) the unit i lived in will probably generate an additional $2300.

11. 3 units will eventually generate $7100. Basement $1200, and garages $500. Totaling $8800. With the PITI at $5600, and variable expenses roughly at $2200, looking at a future cashflow of $1000.

Any issues in my analysis? Comments? Should I go for it? Would be my 1st deal.

@Wendell Butler Yes, goes on your schedule E. I'm also a tax accountant if you have questions about that. Understanding real estate tax is very critical as you can do something completely innocent that costs you 10s of thousands in extra tax.

@Wendell Butler Some lenders dont care about landlord experience at all. I thought the same thing as you about VA lending guidelines. But here's a valuable life lesson - lenders are salespeople lol. They're going to say what they have to say to get your business.

Since you have 1 year landlord experience (has to be on your taxes), its not necessary to find a lender that doesn't care if you have landlord experience. Just need to find one thats ok with 1 year of experience.

You don't need tenants to leverage rental income the units would generate. The lender is ok with the property being vacant. They'll use FMV instead.

@Wendell Butler Triplex, and make sure you find a bank that will let leverage rental income in the underwriting process with zero landlord experience. Also make sure they allocate 75% of the rental income the units generate. If the units are vacant, they will take the FMV rent rates.

Also be prepared to put something down. Not sure how competitive your market is, but if others are offering 50 100k down, their offers will be more attractive.

You can also go higher on list price than non veterans because you have no PMI expense and also may have a veterans property tax exemption %. But that depends if MA does that. NY does. I get a 15% property tax exemption as a veteran. Would be 50% if you separated with a disability.

Happy to discuss if you have any further questions.

Good luck!

@Ruth C. You may be right. But thats not clearly detailed in her initial post. She said she bough the property this year. And if there was an eviction process underway back in March (when Pandemic took off in the US), then I'd imagine she inherited a property with a nonpaying tenant. Would seem unlikely the tenant would've been paying the whole time and stopped as soon as a new landlord took over. Seems more likely she inherited a bad tenant and didn't do due diligence. Not here to add salt to her wounds. I'm pretty sure every investor on here has had their fair share of bad tenants. Just apart of the business. Just need to tune up the systems and she'll be ok. We live and we learn.

Sorry to hear everything you're going through, but may I ask for a little background on why you bought a property with nonpaying tenants during COVID? Were you aware of this issue before closing on this property? Did you request bank statements from the seller to prove they were receiving regular rent payments? You should never have signed a contract without getting more information. Yes, there's always a degree of risk inheriting tenants. These are the kind of horror stories that make people not want to be RE investors. My advice is don't let this deter you from growing your RE portfolio. Yes, it sucks right now, but its also a valuable life lesson. When this is all over you will know how to better handle inheriting tenants and all the right questions that need to be asked. Inheriting tenants without leases is always scary. But something as simple as asking for proof of income will be something you never forget to do again. Best of luck and keep your head up. Your story will help others not repeat them down the line.

@Bill P. Agreed. When those interest rates start creeping up, there will be a day of reckoning.