All Forum Posts by: Michael B.

Are you sure it's still a short sale?

I saw this happen once. A seller tried to short sale, but the bank wouldn't agree to a reasonable price. In the end seller backed out of the short sale, sold quickly at a lower price, and brought cash to closing for the difference.

I don't see how this is a problem. They're cutting out a potential problem in getting the bank out of the middle. As long as you get an insurable title who cares what the deal between the seller / agent / and bank is.

In the Orlando market we're seeing a lot of foreign investment also. However not so much South American as other places in FL.

Chinese investors tend to be active in Orlando, as well as various Europeans. I think both groups see Central Florida Real Estate as safer than their home banks. Possibly with good reason.

Hey David: A couple of random thoughts.

I'm in a tiny minority here that thinks transferring to an LLC is a bad idea. Here's my reasoning. The bank has the right to call your loan in and demand full payment right now. They probably won't but they can.

But who's to say that in 10 years when the mortgage interest rate is 9% some aggressive and young VP won't get tired of looking at your piddly little rate and decide to be a hard ***. He can force you to reapply at the new higher rate.

As far as seeing the loan it will always be there.

Good luck.

The vacancy rate is (16/29) or 55%. That's high.

Make sure you understand why that is. Is it because the apartments needed updated? I would worry that something else is going on. For a low price rental that seems like a really big number.

I actually like condos and townhouses (though I've never owned a TH). They tend to be cheaper per sq ft than houses and command more rent / acquisition $.

The big thing I look at in an HOA is financial stability. Don't get in a situation where they're not being aggressive about collecting past due payment. What % of the units are behind on HOA. Is that getting better or worse. What's the age of the average account in arrears? Those are the type of things that will bite you later.

Another piece of this ...

What are your personal assets? Can you self insure a portion of the loss?

For example, if you have a house worth $100k with replacement cost of $160k how bad of loss will you have just insuring it for ACV? Do you have the assets to absorb that loss. The ACV value will let you clean up the lot and get it ready for sale, with a good chunk left over. But if you want to rebuild can you reach into the savings for the difference?

Hopefully you can eventually. That means the carrying lower limit insurance gives you better cash flow each month with little risk. Just make sure you can absorb the risk if it happens.

It definitely doesn't cashflow at the 3.5% down, and I don't think it will at 25% down.

I think you're low on the expenses. You don't have reserves for big things going bad. A better way to estimate the expenses is just to say it's going to take 50% of all rents to make expenses (including vacancy). It may be that this 4-plex takes a little less than that, but don't assume it will.

Using that number that means you're going to bleed (2,900/2) - 2,267 or -$817 / month at 3.5% down. At 25% down you're going to have a cashflow of (2,900/2) - 1,950 or -$500.

Even shoveling $500 into an investment every month will be bad on your balance sheet. This looks overpriced, and even if you're managing it yourself it's still tough.

It's tough being an undercapitalized landlord. You tend to put off maintenance which makes it more expensive in the long run. A single non paying tenant can be devastating. Think long and hard before yo do this.

I tend to disagree with most said here.

Rental insurance has one of lowest claims payout ratios in the industry. Just too much is eaten up with overhead and management of such small premiums and handling such small claims. The low payouts make the insurance a loser for way too many people.

The numbers are pretty bad. The average loss ratio for property and casualty lines (of which renter's is a small part) is about 71% --> companies pay out about 71% of premiums in claims. For renters insurance the loss ratio comes down into the upper 20's --> over 70% of the premium is eaten up by overhead. That's why if you do a Google search of "renter's insurance" you get at least 10 pages of companies offering it. It's just so profitable.

I don't tend to encourage my tenants to pay a 'poor tax'. I'd rather they stay away from pawn shops and payday loans. And renter's insurance fits in that category.

I'm guessing that you won't be able to make this work.

A HELOC of a very cheap condo is tough to make work. Just not that many banks willing to play. Some don't play in investor owned properties, some don't play in condos, and some don't play in very cheap properties. You've got to find a bank that will play in all 3. And do it multiple times. Good luck with that.

Not saying it can't be done. Just make sure you understand your bank's guidelines before you start the process. Else you're likely to end up paying cash for the first one and stopping the plan there.

Don't know how quickly then can do it in NY, but HOA's have been pretty stretched by non payers in the last few years. They have to provide basic services to all tenants (lawn and building maintenance, etc.) even when some aren't paying. Training people to pay on time every time is part of the HOA DNA now. And absentee landlords are frequently late or non paying.

So the obvious solution is to pay on time. Being a successful investor is getting the small things right with little effort. Move it up the priority list. You expect your tenant to keep the rent at the top of the priority list; keep the HOA payment at the top of yours.