All Forum Posts by: Brendan Miller

Hi @Nick DeLuca, awesome job getting started so early and identifying that you want to be in real estate. I'm curious how you landed on California to go school? The main downside of CA is that it's a high barrier to entry for real estate, whereas other midwestern or southern states would allow you to acquire property while you're in school. Not saying it's not possible in CA, just harder due to the upfront down payment requirements.

A couple recommendations:

1) Find a mentor, whether it's a family member, friend, local real estate agent that you ask to shadow for free, etc. You'll have the ability to learn a lot if you're able to hustle when you're young

2) Take advantage of the free resources you have to learn, such as BP, local REIAs, talk to your college's real estate or business student chapters, etc

3) If you have the opportunity, try to look at buying a property to use through college. Assuming that you're going to a 4 year college, you could buy a primary residence for 5% down and rent out bedrooms to roommates and live rent free while paying down your loan over that duration. You'd like need to have partners or have a parent co-sign the loan with you since.

4) Work through college - I worked through college full time and was able to pay off my student loan debt only 2 yrs after graduation. Student loan debt is a big hurdle preventing some people from being able to even get into real estate.

Good luck, you're in a good spot at 18!

Hi @Yoselin Pearce, I'm from Iowa originally and have heard a lot of great things. I have a few friends that live there currently and there is a lot to do. If you are flexible in location, then I'd recommend looking at a few different locations and then doing a comparison on the different criteria that you're looking for (i.e. work, outdoors stuff, schools, cost of living, rent to price ratios, etc). Once you've landed on a geographic market, then I'd start doing the same for sub-markets or neighborhoods. $450K will go a long ways in a lot of different markets (except for CA!), good luck!

@Michael Opper I'd say it depends on a few different factors, but I'd say yes.

1) Are they a good tenant and do you want them to stay long term? Since you just inherited the tenant, you probably don't know this yet. If they are a good tenant that takes care of the property, doesn't cause headache for you as a landlord, and still pays rent at a rate which gets you the return you are looking for, then I'd say keep it where it's at

2) Look at your underwriting numbers - if you bought the property based on the current rents, and those rents get you the return you are looking for, then that is a great position to be in.

3) Communicate your plan in advance to them - if you do decide to raise rents, then I'd communicate your plan in advance to them and give them ample time to decide and find another place if they aren't OK with the raised rents. Raising rents in increments might be easier for them to accept rather than immediately raising them to the top of the market rate.

4) Local market - a lot depends on how hot the rental market is in your area. If you tried raising rents, and your tenant ultimately leaves, are you able to find a replacement tenant at market rent the first day it is listed or would it take a couple months to rent the unit.

5) What was the previous landlords history of raising rents, and what is the tenant used to? I.e. did the past owner raise rents annually, never, etc.

Hi @Marcel McDonald, congrats on getting started and thank you for your service in the military. As I'm sure you are already aware, you should take advantage of the VA Loans that are available for veterans which offer very low down payment requirements. Welcome to BP!

Hi @Han T., I actually just did one on a new primary property that I purchased. We purchased the property and then negotiated a month to month leaseback with the seller. I think it's pretty typical for short term durations, however not as typical for long durations where the seller is becoming your permanent new tenant.

Your specific state should have a specific leaseback form, so I'd recommend starting there. The main things to look out for are 1) identifying a fair market rent rate, 2) making sure you document condition of the home prior to you taking ownership, 3) holdback fee - this is a fee normally 2x the rent amount to discourage the leaseback tenant from staying in the property after the leaseback expires.

Hi @Mike Kerber. I don't have a recommendation for you, however I just recently went through this myself and can share some advice. I initially started off with a Northwestern Mutual FA and purchased whole life. A few years later I ended up wanting to change my strategy and cancelled the policy and switched FAs. I utilized a Dave Ramsey recommended FA which they vet, you can search these at www.daveramsey.com.

I'm currently with Capital Choice. They did a good job assessing my financial status, putting together a plan, switching my Whole Life policy to Term Life, setting up new ROTH accounts, setting up Non-Qual Brokerage account for my real estate down payment fund, etc. I think it's important to know if the FA you are interviewing has investment products in house or not. If they don't have products in house, they'll be slightly less biased in my opinion, however all FAs will get commissions on the products they sell you. 

I would recommend finding a few different candidates that you like and then interviewing them separately before making a decision. Hope this helps.

Welcome to Biggerpockets @Ryan Haack. I would also recommend trying to job shadow someone (or multiple people) that you know that is a real estate (family, friend, etc). Some of the best experience that you'll gain is on the job training. 

Hi @Stephanie Smith, I'm sorry that you're going through that situation. Each state has different landlord/tenant laws, so I would start by researching Minnesota's laws related to Holdover Tenants. Normally if the sale is conditional on the tenant moving out, then I wouldn't recommend actually closing on the property until that step occurs, however it appears from your post you have already closed on the property so that's not helpful advice at this point. 

Below are a couple of options (in order):

1) I'd recommend trying to communicate with them directly if you haven't already (i.e. in person, phone call, etc). I know you mentioned that you served them notices already, but sometimes actual dialogue can go along ways in helping to communicate both parties sides more clearly. 

2) Cash for keys - this is a tough one to swallow for someone in your situation, but sometimes incentivizing the tenant to leave either financially or with assistance with moving can avoid eviction, and may be cheaper than the actual eviction route. The formal eviction process will hurt the tenant with being able to find future rental properties, so they should equally be motivated to avoid that. That's why direct communication might help to talk through this option with them. It can also be a slippery slope, so set an initial amount (i.e. one months rent, $500, etc) as a one time offer and then stick to it.

3) You could start the formal eviction process if you current lease indicated they'd move out by close of escrow. Again, double check what your lease says and your specific state's laws

Hope this helps. Best of luck

Hi @Noah K., I believe these requirements recently changed this year. If you go with a typical Fannie/Freddie conventional loan, I believe that a higher down payment is required even as a primary residence for 2-4 units. 5% is still the minimum for 1-unit, but I believe it scales up to 15% for 2-unit and 25% for 3-4 units. If you search Fannie and/or Freddie 'eligibility matrix' you should be able to find the underwriting requirements for conventional lenders. The other option would be to look for local credit unions or portfolio lenders that don't have to use the Fannie/Freddie underwriting criteria. 

Hi @Jose A Perez, I've never used it myself, however you could research the FHA 203(k) loan since you're a first time homebuyer. This loan allows for a borrower to finance both the purchase and the rehab at a 3.5% down payment.