All Forum Posts by: Alexander Zurn

@Ashish Khera I think the biggest potential downside (which really isn't that big but worth considering) is any potential deals you may miss out on while your cash is otherwise held up in the property.

For example, let's instead say you're going to put 20% down on this deal (so $20k instead of $100k to make it simple), which can arguably get approved for a loan pretty quickly these days (around a 40 day turn time for the lender assuming your good credit, DTI, etc.). In the time you're getting approved or even after closing, you could be leveraging the other 80% (or $80k) you would have used to purchase the property all cash on another deal!

I am a proponent of leveraging as much as possible but this is due to my own investment strategy. Of course some personal aspects come into play as well (i.e. how leveraged you currently are, how much time you have available, are you seeking more deals, etc.). Just some thoughts here but I think with your experience you can't go wrong in either scenario.

Best of luck!

@Brian K. in Trulia search engine, once you're in the map section you can actually show the school districts that are available in the area. I believe they populate as apples on the map next to the green dots reflecting homes for rent. Putting your mouse over the apple shows you the school, its rating, and a few other noteworthy items. Hope this helps!

@Eddie Aracena I suppose the biggest question would be how big is your business? My greatest use of being a pro (last year) was utilizing the calculators as much as I wanted. I analyzed a great number of deals many times over. There may be some new features since I last used it but that was my favorite aspect. Also, it does provide excellent PDF reports on your rental properties - this could greatly help your business.

@Kevin Jones let's start from the beginning! What type of strategy are you going to use? i.e. house hack, buy & hold, flip, wholesale, BRRRR. Once you've ID'd that, which I'm sure you have at this point, you can start taking the next steps.

Regardless of the strategy you are using, the next step would be to analyze deals and watch your market (wherever it is) to get to know it like the back of your hand so you're ready to make an offer when the opportunity strikes. "Getting to know your market" means a few things. Study the following: price of homes with 2/3/4+ bedrooms, RENT for homes with 2/3/4+ bedrooms, days properties are on the market, difference in sales prices for MF & SF homes then start looking at the actual neighborhoods: crime rate, unemployment rate, wages, any growth aspects. Understanding the economics drivers of the market can help you understand the type of people that are looking to rent in your market (i.e. pay you rent once you buy a property).

After knowing and understanding your market & analyzing deals on a regular basis, you'll begin to understand how the process works of making an offer. The team you need in place (agent, lender, contractor, etc.) to actually buy a house. After conversations with these people you'll be even farther along and have learned quite a bit from the actionable steps you have taken. Now it will be a matter of actually pulling the trigger and buying a home.

It starts with the learning that you appear to have done quite a bit for. I'd challenge you to not spend another dollar before making an offer on a place. All of the information you need is right in this site, I know because this was my guide to purchasing my first MF property.

You're in the right place, ask more questions! Good luck

@Benjamin Aaron Parr there is always a case to be made for purchasing then renting out of state. A lot of it has to do with your own REI strategy, which you will discover in the coming months upon reading the aforementioned guides you referenced.

The best thing you can do in starting out (in addition to reading and accumulating knowledge) is analyzing deals in potential markets that you feel you want to invest in. This could be your neighborhood, your county, your state, neighboring state, or anywhere you want! The focus will be on finding good deals and this craft will develop with the more properties you analyze.

Say you have analyzed deals and you determine the best place to invest is out of state. There you'll start researching how to purchase property out of state. You'll begin setting up a team in that area (i.e. real estate agent, contractor, lender, inspector, property manager, etc.) to become even more familiar with the area and soon enough, that market won't feel like it's out of state anymore because you'll know it so well.

There are many things to consider but I think it first starts with your knowledge and experience of analyzing deals. Determine your investment strategy and I think you will have more answers come to you.

Best of luck!

@Valerie Copeland yes, perhaps that is a "wiser" decision for the reasons you listed but I do not think you should be deterred from analyzing and (possibly) putting offers on properties strictly due to the fact that either it was no tenant or has a bad tenant. Part of the REI mentality is that you can create your business - your business being rental property management, which is contingent on stable, good tenants.

For example, say you purchase a property with a bad tenant. Ok, in analyzing the deal you may have realized that if you can get this tenant out due to them not being a "good" tenant, them not paying enough rent, or whatever the case may be - you could really make the property a good deal, while making the neighborhood better for it too. While you're able to gauge a how good a tenant may be, you should purchase the property based on what it could be - not what it is - with or without a tenant currently in place.

@Sam P. I feel like it would depend on what you're using the basement for. Is it livable space? Rental I assume? A flip? Depending on the function of the basement, you'll want to consider how both will look, the cost of each (you may be surprised here at how close they are), & finally the finished height of the ceiling in both circumstances (be sure it is up to code).

The benefit of the ceiling tile is obvious, being able to move tile to tile looking for an issue as they come up, but the same can be done using drywall. If the problem (for example a water leak) is not immediately identifiable you ( or contractor) can cut a square hole in the drywall, take a look up there using a flash light to locate the problem, then once it is fixed, patch it up, paint over it and it will be good as new. It's really not as much work as it seems, just a little more than moving each individual tile.

One thing to be sure of if you go ceiling tile and it's a rental, make sure they set up the grid correctly. A funky looking grid helps nobody and can happen more often than you think. It will likely lead to it being redone at some point. I fell into this issue in one of the kitchens in my duplex. Ended up replacing it will drywall as it's a small kitchen the cost was minimal and no need to manage the grid that was set up horribly wrong for future tenants.

Good luck!

@Aimee Brundage you'll want to check the lease you have with the tenant. Depending on where you got it, it should state when/if a late fee can be charged and how much it will be. If it is not in the lease at all, it would be tough to hold in court if it gets that far.

Disclaimer - not a lawyer, just have had this experience with a tenant I inherited.

@Richard Busker I am in the midst of that exact plan now, just am preparing to move out of side. Great strategy!

Something to keep in mind is to take advantage of living at the property for the first year. Take the mindset of a tenant and recognize both the good and the bad of living there so you can prepare for any and all complaints or, better yet, make the repairs needed to ensure top market rent.

As far as being out of state, of course the distance from your rental will come into play. If close enough, you can self manage. If not, you'll look into property managers - factor this cost (10%) in when calculating the numbers on the subject property so you're prepared for it. By the time you're actively looking for property managers you'll have already had experience with a real estate agent, loan officer, home inspector, & likely a contractor, workers whose livelihood is based upon clients like you, so you'll know how to manage your interactions with a potential property manager and how to assess whether or not they will be a good fit in providing the services you're looking for.

Good luck! Keep asking questions on here.

@David Tate I'm sure more insurance savvy people will have a better answer but in quickly researching this, I think the key words you want to search are Tenant Vandalism insurance policies. It appears that standard insurance policies cover the residence of where the homeowner resides or lives in. So I guess the question is, are you also living in the house? Or is it a pure rental?

If solely a rental, you want to ask for dwelling fire policy coverage. This apparently covers intentional damage by a tenant - you'll want to confirm this with your insurance agent. Also, I'm seeing that in order to get proper support for a vandalism/intentional damage claim - a police report would need to be filed and charges need be pressed.

A way to feel a little more comfortable if something like this were to happen is having strict security deposits rules for the tenants to abide by.

Curious on the other answers here. Good question!