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All Forum Posts by: Ken Breeze

Ken Breeze has started 102 posts and replied 419 times.

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Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Chris Hanisco:

Update! I saw the other side today. It wasn't nearly as nice as the first side and had a different floor plan upstairs. The tenant's son is giving my son a hard time, sending him nasty messages on Snapchat. Also, the seller is trying to get me to take possession even if he can't get the tenants out. I refuse to do that. Between all of this and repairs I'll be need to make, I think I'm going to have to skip this one. 🙁

 Great experience, great journey, good call. It takes courage and strength to let it go. Next.

This will happen more often than not. Get used to it. But then, when the good one turns up, it will be really great. You did a really good job. Keep moving forward. We have your back ;-)

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Casey Powers:
Originally posted by @Chris Hanisco:
Originally posted by @Casey Powers:
Originally posted by @Chris Hanisco:

So, I found out today that I won't qualify for 10% down conventional, as my broker had thought. (My FICO is on the better side of fair at the moment - thank you, ex-husband... NOT.) He's looking at 15% down now. 

If your credit card usage is above 30%, the quickest way to boost your credit scores is to pay down the cards to below 5% of available credit. Keep it there. This could possibly get you better loan terms. 

 Nope. My utilization is fine, except that I don't have enough credit. Every time I even put something small on my card, it shoots my utilization up. I'm fixing that. I also had a collection, but I settled it earlier this week and it should go away. 

 If you aren’t paying the CC balance down below 5% before the statement/ reporting date, that is at least part of the problem. Pay the balance down before the statement date and see if that doesn’t help your scores. If you have low limits you have to really watch the CC spending and payments etc, to keep the REPORTED utilization down. You can spend on the card like crazy as long as you make sure the balance is paid down by the reporting date. 

Re: collection. Did you get a pay to delete agreement? Because settling doesn’t make it go away unless they are also going to delete it. 

@Casey Powers, I love your company name and thanks for the "pay to delete agreement" tip. Good catch.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Chris Hanisco:
Originally posted by @Joseph Walsh:

FYI, an FHA loan's PMI is only for the life of the loan with <10% down. Otherwise it's 13 years. Also, as you will be living there, I would seriously consider getting the current tenant out, so you can do you're own screening of the people you'll be sharing your kid's back yard with. They may be wonderful people, and encourage them to apply, but then you can vet them yourself with your own criteria. Plus you don't carry over any bad habits, and get to establish the tenant landlord relationship from square one (which is easier than "retraining" a tenant)

Finally, put the offer in now if  you like it, just make it contingent on financing and inspection, so you don't lose it figuring out the loan.

Good luck.

 This is great advice. Thank you! My offer was accepted.
There is a snafu that I didn't mention. The tenant's son (13) is schoolmates with my son. They are somewhat friends. (Although he was bullying my son for a while in elementary school.) I think he (their son) is thinking we will be living next door and he's excited. I'm not sure how to handle it. I have to remind myself that it's a business decision, and I don't think they would want to (can?) pay $500 more a month. Plus the whole experience of not being let in put a bad taste in my mouth. Plus the yard is a disaster. Plus they have 2 big dogs. But I feel some guilt! Maybe they are wonderful people. I don't know. This is another post, really. :(

I sense too many red flags, and guilt is a terrible advisor. To quote a famous Shark Tank line: "I'm out" or the current tenant needs to get out. These are all signals screaming trouble. People don't change. The messy garden is just a taste of how their lives look like inside. Never make emotional decisions when doing business, especially when you're living in the middle of it every day.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Chris Hanisco:
Originally posted by @Jassem A.:

@Chris Hanisco

Have you looked into USDA loans? Could be another option if it's rural.

 None of the mortgage professionals I spoke to mentioned that as an option, so I'm guessing we're just not rural enough. Thanks!

There are way better loans out there - keep asking lenders here on BP. We had a local mortgage broker and almost used a 3% FHA loan on a four-plex in Phoenix. They are out there.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Chris Hanisco:

@Ken Breeze

So much great info. Thank you! I will check out all of those books you suggested. Right now I just want to get through this purchase. My offer was accepted today! 
BTW, I was just in Phoenix last month for a trade show with my employer. Nice area!

 My pleasure and yes, Phoenix is a magical place ;-) Imagine though, we evaluated dozens of properties ranging from 11 to 562 units, made offers, most declined, some accepted and ran two on due diligence - none of them panned out. Four months of focussed work and no pay-off. The market is greedy, so saying no is often what will save you in the end. The tables will turn, be ready when they do.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384
Originally posted by @Chris Hanisco:
Originally posted by @Ken Breeze:

@Chris Hanisco

Generally speaking, house hacking is it’s called these days, doesn’t have to be a bad idea staring out. The uncooperative tenant is a red flag.

Get the rent roll from your broker and check out when the tenant’s lease is up, you might need to let him go, especially since you will want to rehab your entire duplex to force appreciation and increase rents to market level. Then you can choose which apartment you want to move into and you can also choose your next tenant.

Monthly cashflow is the most important factor of all. Don’t bank on appreciation, this may or may not happen in the years to come. Cashflow is king and the value you create to increase your equity and thus standing with the banks which will allow you to acquire your next property.

Which brings up the question why you are not going all the way in the non-commercial field of purchasing a fourplex? It’s the same work but more cashflow.

Send me a colleague request and DM me with more questions if you like ;-)

I would buy a 4-unit if I could but there are exactly 3 multi-families in our school district on the MLS right now. One is the duplex I'm discussing, one is two little cottages on one lot, and one is an expensive huge house with a little apartment attached. There are very few fourplexes here in our little towns.
Thanks for the advice!

 I thought so much... once you've closed on this one I suggest focussing on commercial size MF - not just in your zip code - to scale faster. It's the same work and might give you more choice ;-)

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384

@Chris Hanisco I agree with @Ben G. To a certain degree. “The Richest Man in Babylon” makes the case of paying yourself first. So factor in PM fees for yourself as you would need to for others. The day will come when you will have to. Might as well get real now.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384

@Chris Hanisco I'd also try getting a short interest only bridge loan from the same or other bank and refi whenever you rehab is done in 3 - 6 months. Since your increasing value, you'd "magically" create wealth and equity for yourself out of thin air. You can now take a HELOC for your next multifamily acquisition. Rinse & repeat. All this in the same year :-)

Again, always provided the numbers pan out. Don’t buy into the inflated prices of the current market. You really need to find that diamond in the rough. It’s tough but a great learning exercise in so many ways.

Post: Single parent - Should I buy this duplex and live in half?

Ken BreezePosted
  • Investor
  • Phoenix, AZ
  • Posts 485
  • Votes 384

@Chris Hanisco

BTW, Bigger Pockets has a great book on property management. So go for it :-)