All Forum Posts by: Brian Volland

@Matt W. Thank you for the feedback! 

I can understand the car cleanliness qualifier being an odd one. I highly doubt that we'll be able to see into each tenant's vehicle but I've been trying to consolidate a lot of what I've been seeing on here in a lawful way. That being said, I see your point and I'll pull it from the scorecard. I'll also drop the asking for upgrades. I was trying to weed out the overly needy and everything is an emergency applicants but I'll see what I can do to narrow it down.

Other PMs on here toss of lines like, "He smelled like cat pee; application denied." Well, you can't really do that unless you have a policy in place beforehand stating that applicant odor is a factor.  I would truly love to find out how folks are pulling off stuff like that. You see it a lot on the Tenant Applicants Say the Dumbest Things thread.

As far as the 5-10 points difference scenario, the point of the scoring system is that we do not have the option of taking the lower rated person. It is more work to use a scoring system, but it's the only idea I've heard of so far that quantitatively shows why an applicant was chosen over another. It's protection against potential lawsuits.

I do like the idea of a pass/fail with an increase to security deposits. My concern is that you have to be really on point with your minimum requirements. Set them too low and you get crappy tenants. Set them too high and you get no tenants. If I was looking at class A properties then it'd be another story but I'm looking at your average blue collar worker. 

tl;dr Soon to be newbie self managing. I'm scared to death of lawfully having to choose a borderline acceptable tenant over a highly qualified one. Made a scorecard to pick most qualified; pick it apart.

So as I start closing in on my self set date to buy my first residential multifamily, my biggest fear is with tenant screening. I've read through many of the books, blogs and threads regarding screening tenants and picked up a lot of good info along the way. 

My biggest fear overall is getting an applicant who meets our minimum criteria and has paid for their background/credit check but I KNOW will cause me a headache. Or have one applicant be significantly better than another, they both meet minimums, but the lesser of the two turned in their application first. Some of you make rejecting or picking the better applicants look easy. From a legal standpoint, I haven't been able to find a way to do this, but I did pick up the idea of having a "scorecard". 

Keeping in mind that this will likely be a class "C" property (A-E scale), we've tried to lessen the risk of getting bad tenants or having to pick a worse tenant just because they turned in an application first by making it policy to only show on weekends and implementing the below scorecard. Hopefully this will allow us to legally "rate" all tenants who turn in paperwork on a given day.

If you have any tips, I'd love to hear them. If you have the time to be able to do so, please look over the scorecard below and let me know what you think.

Minimum Qualifications

• qApplicant MUST be 18yrs or older
• qApplicant Must Have A Minimum Credit Score of 580 From All Three Credit Reporting Agencies
• qApplicant Must Have Verifiable Income and Make At Least 3x Rent Monthly (Joint Income if Married) (Proof of Income Required)
• qApplicant Must Have Good Reference from Current/Past Landlord(s) (or Supervisor if previously Owned Home)
• qApplicant Must Have NO Current/Past Evictions, Judgements, Collections, Or Liens from Current/Former Landlords.
• qApplicant Must have valid, non-expired state-issued photo ID
• qApplicant Must have A Social Security Number
• qApplicant Must Possess an Open Checking Account
• qApplicant Must Not Have Been Convicted of Felony/Violent Crime/Drug Related Crime Within the Past 7yrs
• qApplicant Must NEVER Have Been Convicted of A Sex Crime or Be On Sex Offenders Registry
• qTotal Occupancy Must Not Be in Excess of 2 Persons Per Bedroom

Disqualifiers:

• qRuns a Business From Home (Online Sales of Art/Crafts exempt)
• qNo Employment or Employed Less Than 2 months
• qSection 8
• qIncomplete Application
• qIllicit Drug User
• qHas More Than Two pets
• qHas Exotic and/or venomous pets

Positive Qualifiers

• q(+5) Has Credit Score between 580 and 619
• q(+10) Has Credit score 620+
• q(+10) Has Rental History of 1 year and Landlord Had/Has No Issues/Complaints
• q(+15) Has Rental History of 2-4yrs and Landlord Had/Has No Issues/Complaints
• q(+20) Has Rental History of 5yrs+ and Landlord Had/Has No Issues/Complaints
• q (+10) No Late Payments Over Rental History
• q(+10) No Broken Leases Unless Health/Safety Issues [Exercising Military Clause Okay]
• q(+5) Same Employer 1yr
• q(+10) Same Employer 2-4yrs
• q(+15) Same Employer 5-9yrs
• q(+20) Same Employer 10yrs+
• q(+10) Current Manager/Supervisor States Only Good Things About Applicant
• q (+5) Has Checking and Savings Account
• q(+10) Will Pay Online
• q(+5) Will Pay Via Money Order
• q(+10) Has Renters Insurance
• q(+10) Has Total Move-In Funds Available Today
• q(+10) Positive Valid References
• q(+10) Vehicle Interior and Exterior Clean

Negative Qualifiers

• q(-5) Is a smoker
• q(-10) Currently Owes Back-Due Child Support
• q(-10) Currently Has Delinquent/Negative Accounts
• q(-20) Has Filed For Bankruptcy Within Past 2yrs
• q(-20) Current Employer Raises ANY Concerns
• q(-20) Asked for Upgrades/Changes/Modifications Prior to Acceptance
• q(-20) Has Lied to Prior Landlords/Property Managers
• q(-20) No Prior Rental History

@Hans Rodvik, I just moved from Anchorage after living there for the past 3 years. I'm curious if you've looked at Eagle River at all or, as you mentioned, Muldoon. I only ask because from a long-term viewpoint, there is no way property can be built into the Turnagain Arm unless they start leveling mountain tops. Eagle River is already established as one of the nicer Anchorage areas and I'd expect development to move in that direction. I know there are a couple 100+ unit complexes already up along the glen in North Muldoon. As bad a rap as the area gets, North Muldoon it does have direct access to the glen, is relatively close to a hospital, very close to base (if you are targeting military tenants), and puts in directly in the path of the only direction development can move for the city (aside from in-fill). It's also where the newer theater is along with the nicer shopping there. 

As far as off-market 4plexes, I started learning in about real estate in Anchorage. There is a a whole heaping mess of mom and pop 2-4 unit properties scattered all over the city. Just look at craigslist or the automated housing referral network and they are immediately noticeable. I had a lot of good luck verifying that the owners lived in one of the units and just knocking on the door and asking to talk to them about the business. It might be a good segue to ask if they are looking to sell? All-in-all, with the turmoil up there right now, I'm guessing folks are buckling up and preparing for bad times.

They circumstances are set by the VA (since they are the ones backing your loan). The most common circumstance is that you PCS from one location to another. You can always call your regional VA office and they should be able to fill you in on the criteria information.

benefits.va.gov should point you in the right direction to get a hold of the nearest regional center.

You have to owner occupy for at least 1 year. As far as the remainder, if you use your VA loan then pay it off, you can reuse the entire entitlement. If you use the VA loan and want a second one, there are only certain circumstances wherein you can access the remainder which is known as a "second tier" VA loan.

There is a massive amount of information that you'll want before moving on that property. With the market in Phoenix the way it is right now for multi-family, either the owner is severely distressed or the property is. I'm going to go ahead and guess the property just based on the area it's in just because that's typically a class D or E area. If you're looking for the often repeated "class 'C' property in a class 'A' area." then just walk away. Even if the numbers work out well, based on google maps street view and aerial photos, you're looking at a slum situation. Especially with the property being directly on a main road. 

I looked up the listing broker because she didn't sound familiar and there are no property listings on her website so you'd have to contact her directly to get the info you need. Basic stuff like, how many Br/ba? Avg rent? What numbers specifically were used to arrive at that Cap Rate (taxes, insurance, maint, vacancy, cap ex, etc)? It's listed on LoopNet as a 7-unit, so why are there only 5 doors? Why are there only 5 evap coolers? Why does my primary MLS site mention that those evap coolers aren't in use? Why is there only info on the MLS for 2 of the, I'm guessing 5, units?

Numbers, figures, formulas, and metrics are your friend; they never lie.

Last thoughts, if you're looking to buy low, fix it up, bump the rents up, and sell, maybe look in to it. If you're hoping for a low maintenance Buy and Hold with no hassle, run away.

@Diane G., the 100% occupied is likely true for most of the properties, however, there are a few things to keep in mind that might make sense of why that is:

1. There is an expectation from buyers to be 100% occupied because it presumably means that the property is generating as much cash flow as they are calculating. It looks better to the buyer and the seller wants to be able to show that vacancy isn't an issue. Kind of like most of the MLS blurbs state that "this property is almost never vacant." or "This property is NEVER vacant for long." It's a marketing strategy.

2. This is the important one. How long have the tenants been living there? Because 100% occupancy is expected when selling, some owners/property managers will let their tenant criteria slip just to fill the vacancy faster. It's why you see "all long-term tenants" on a listing. Long-term presumably means that there haven't been issues between the tenant and landlord so it's safer to assume that you will reliably get your rent each month. 

So just keep those thoughts in mind. Are all of these properties 100% occupied? probably. Were they 2 months ago? Maybe, maybe not. 

I hope this helps some.

No one?

I'm looking for recommendations for smaller lenders who can process a VA loan for residential multifamily properties. So, if you know of any local lenders or credit unions and the like that have worked well for you, please let me know. Thanks!

tl;dr Why are property taxes so high in Youngtown?

So I came across a 4-unit MF in Youngtown and the numbers were just okay but I hadn't seen any other MF so I started to dig a little bit. I get down to verifying taxes and they're a whopping $3k. It took me completely off guard. So much so that I re-verified the parcel ID and the tax search. 

So now I was curious about this and searched Youngtown taxes. Come to find out that Youngtown is having issues just staying up and running and that it used to not have a property tax at all. That's about as much as I was able to find.

So, can anyone fill me in on what's going on with Youngtown in general or why it's tax rate appears to be so high? Bonds?

Thanks in advance.