All Forum Posts by: Ashly B.

We put an offer on a 4 plex. It meets the 2% rule, has a great cap, all units are rented and honestly needs minimal work (although it has great potential to increase rent with a few upgrades as its in an up and coming neighborhood). When we initially looked at it there is one unit where we were less than pleased with the way the tenants were keeping the place - garbage every where, pets and pee, etc but ultimately we decided it wasn't a deal breaker and when we got the opportunity, we'd raise the rent enough to make it worth it to keep them and we wouldn't be sad if they left. 

Fast forward to the inspection and the unit had visible cockroaches (albeit not a ton, but I know what they say if you see them in the day time... ). We're writing an addendum to the inspection clause that requires the seller to treat that unit as well as pay for an inspection on the other 3 units, and treat them if necessary. That said, its clearly a cleanliness issue that caused them in the first place so how do I deal with the tenant? 

Did some reading here and saw some great ideas like letting them know if the infestation returns its at their expense, but with it being a 4 plex I don't want them to let it go untreated and cause issues for other tenants as well. Would you tell the current owner to evict them? They do have a lease and the tenant has been there 4 years. I don't want to delay closing if I dont have to but also don't want to cause more issues/expense than necessary down the road. Would love to hear how others would handle. 

Since a few asked for a followup, the deal fell through. After seeing the properties, it was obvious the company who flipped them cut quite a few corners. Wasn't worth the risk.  

Poked around some other SFUs for a while before coming across a 4-plex listed about $15k under value with all 4 units rented (3 of 4 are long-term tenants). We made an offer $8k under asking at 8 p.m. Friday and the seller accepted by 10 a.m. Saturday. 3 of the 4 units are rented under market but even still, it has a good cash flow and there is a mostly finished unused attic that could turn one of the 1 br units to a 2-3 br unit so potential for growth. Currently all 4 units rent for $2k/mo. If we brought them up to market it would bring in $2,300 and if we finished the additional space in unit 2, it should bring in about $2,500.  

With the latest, Going to get this one squared away and then see about picking up at least one more this year. 

Thanks for all the input. 

@Brian Eastman Admittedly, math isn't my strong suit. Why is repaying the 401k with after-tax money any different than repaying any other loan @ 4.5%? I've read the argument that you pay tax on it twice but it doesn't align for me. If I borrow $10k of untaxed money, repay it with taxed dollars and withdraw it, taxed, at retirement age I've paid tax on $20k. If I don't borrow it and instead use say a HELOC at 4.5% I'm still repaying the money with after tax dollars (I don't factor the tax into the cost of the loan) and I'm still going ot pay tax on that $10k I never used when I withdraw it at retirement. Am I missing a piece in there somewhere?

Came across what appears to be a really great deal on 3 new SFUs from a single seller. These will be rentals #s 3-5 for me so I know what I'm getting into. Currently thinking I'm going to finance via 2 traditional mortgages and one though HELOC on my primary. I have the cash for the down payment and have the assets to cover the 6 months expenses but its going to spread me pretty thin. I know its generally discouraged to borrow from your 401k but I have a relatively stable job, we live on 50% of our household income and I could repay the loan within 10 months or less, it would just give me a little more breathing room. I'd be giving up about $300 in interest to make an additional $34k/year.

If its relevant, I'm 29, have about 1.5x my annual income in my 401k and want to build my real estate portfolio to supplement retirement since I plan to retire well before I'm able to draw on my 401k. 

If I don't borrow from the 401k, I might just take 2 properties, which would decrease the annual income to $24k -- still not bad but much less exciting!

Quick background: My husband and I own 1 SFU rental and also rent our 900 sq ft basement apartment for slightly more than our mortgage principal. Both properties were first acquired as primary residences so I have no experience with financing investment properties. We're looking to grow our real estate portfolio by 3-4 units. Since my husband went back to work last year after 4 years as a stay at home dad, we've continued to live on one income while saving the rest. We have 20% in cash to put toward our next investment and mortgages between our two current properties total less than $200k.

Been scouting options to expand for a while. I recently came across a business looking to sell 11 SFUs as a package. They purchased and flipped all 11 houses in 2014 and have then currently rented with rental certificates. I know there is a lot to be gained for doing the flipping yourself but DH and I struggle to find the time to put into them and I'm afraid the amount of time they'd spend vacant would do more harm than the improvement value. Anyway, while 11 houses at $770k is out of my budget, he has prices listed individually on all 11 properties along with its current rental income. Some of them aren't that great of a deal but several fall into the income and cap rate I'd expect. I asked if he would be willing to split off 2-3 and he said he would.

Question: So now to financing. I did a forum search here and saw several suggestions for blanket financing but I don't even know where to start - what lenders should we be looking at who do this? Do we have other options for taking out a $100-150k loan for 2-3 of these houses? Is it worth looking at just doing a mortgage for all 3 separately but at one time? Is that even an option? I feel pretty confident that it won't be an issue of qualifying, just a matter of what type of loan would allow us to do this. We do not have enough equity in our current houses to do a HELOC that large.

Thanks for any insight!