All Forum Posts by: Alan Russell

@Thomas S. I would not necessarily jump to the conclusion that the renter would be lazy or not a good renter.  There are several reasons that I can think of that the parents (mother in this case) might pay the rent.  For instance,  Possibly the tenant has some type of disability (down syndrome) where they are highly functional but wouldn't necesarily meet the criteria or possibly they would and the parents just want to help them live a little better.

Not sure obviously about this particular tenant however, if the mother is willing to go on the lease and she meets the criteria then I would not necessarily turn them down for just having her pay the rent.

if I was in this situation and was worried about the appraisal coming in a little lower than the "cash" offer I would counter that I would accept the cash offer with no stipulations - meaning no inspection, no appraisal (as is) and see where they land.

@kariann Bowles, First home was purchase using 401k loan.  Paid that back over 3 years however, since the 401k loan doesnt show up anywhere it wasnt an issue to refinance it.

Not sure about your job situation however, if you have a 401k you could possibly borrow against the 401k for the rest of what you need in down payment.

Jacob,

I purchase properties through my LLC like this. I purchased the first home and remodeled it for rent. Once rented I took a LOC on 80% of the equity. I used this to purchase and fix the next property. After the second property was repaired I refinanced it (cash out) and paid back the LOC. Rinse and Repeat. I have had no issues with refinancing properties however, I am very particular about cash flow. if I can not make $300 per unit I don't buy it.

My banker (not sure about others) allows me to utilize 70 percent of the rent as income thus every property I purchase works to offset my debt to income.

Seems to me as long as I am not doing negative cash flow deals they would have no reason to deny me on a "debt to income" basis.

also to Adam Drummond's point about refinancing for the max amount in order to have extra cash or to use a lower amount....I purchased a property last year for 12k cash invested 15k cash for rehab and rented it out. Then instead of refinancing it to pull my money out....i did a HELOC against it for 80% of appraisal so that I can keep using the equity in the property as i needed to purchase and rehab others. (its rented tor $800 a month BTW)

Andy,

I am in a similar situation...Have a full time tech job and use a GC to do most of the work with the exception of Electrical (I used to be an electrician)

I also have (currently) 2 units and I am growing.  I use www.simplifyem.com.  They are free for 1 unit and then costs $9.95 per month for up to 10 units.  You can create an account and look around for free so you can see if it will work for you.  I think Cozy will also work I just prefer the look and feel of the Simplifyem website better.

purchase my first rental with 401k loan and Lowes credit card.  paid cash for the house with the 401k loan remodeled the house with the lowes credit card (did the work myself), rented the house after remodel then refinanced and paid off the credit card and 401k Loan

Sarah,

My business model involves purchasing properties for rentals and remodeling them to increase the equity. I have a bank (small local bank) that has set me up with a line of credit in my LLC's name so I purchase and rehab the property with cash and sometimes using the Line of Credit (depends on repairs). Then i refinance into a fixed loan and rent the unit out.

Most banks want you to wait for at least 6 months and sometimes 1 year before refinancing however, because of my remodeling this bank is working with me.  They will however, only let me refinance 75% of the appraisal value so I end up with equity in the property after closing the loan.  Sometimes this allows me to pull all my cash out and sometimes I end up with a little cash invested at the end of everything.  It really depends on how much below value I can purchase the home and how much I can boost the value with the remodel.

Hope this helps