All Forum Posts by: Casity Kao

@Joe P.  At first glance the deal sounded solid but it looks like this is an all inclusive lease and 1060 a month for a 2 bedroom unless they are tiny in metro philly seems super low.  I don't think you need to factor in maintenance as 8% and capex of 10% unless you are covering lawn maintenance and snow plowing which if that is the case I would not estimate it but actually call around and get actuals.  I personally don't like those numbers but I feel you are also being conservative and those numbers could be higher so if that is the case I would definitely consider this property especially if there is an opportunity to force appreciation.  What I don't like is the cash on cash return if you no appreciation, because it's going to a long time before you can buy more property if you keep having to put 31k down and taking years to get it back.

@Charles Campbell  You may be able to find 25-30 year terms but rates are not going to be great.  If you are looking at investments 1-4 units I would recommend buying 3-4 properties on conventional loans then bulking them to one commercial loan to get better rates and terms. Alot easier to get good rates if borrowing a million versus 250k or less.  

@Natalie C.  Should be 100% as you are residing in a single family home but you should have a trusted CPA to ask these questions.  A good CPA will provide more than enough value to pay for what they charge and if you are using TurboTax or another service you are probably missing deductions you don't know of.

@Sitaram Koppaka Try asking at your local REIA because your best commercial lenders are going to have a good grasp on the local area and talk to the commercial real estate agents listing apartments and multifamily as they will have lenders that have helped them close deals.

@Amir Vahab Are you trying to be a broker aligning private money with investors, or are you trying to line up investors to fund your deals?

@Justin C Huggins  Check with the city you can do it based off of zoning, if it is not separate metered how much will that cost, how much more in rents will you get for the property as a duplex vs a single family and how much will it increase it's value.  Size is really not a consideration for us as we run comps on the square footage as a single family vs two separate units, and whichever is greater return on investment is the route we go.

@Jennifer Rysdam  We generally don't spend a lot of time asking the tenants question rather we just give them the facts.  It's too difficult trying to qualify each prospective applicant and also remember who they area, as many of our rentals will get 60-80 inquiries.  We simply let the tenant know the details on the property with also the pros and cons, tenant screening process and cost to move in.  For example something  my team would say to the tenant is "Hi this is Casity.  You had called us on a 2 bedroom, as 123 main street in Main City, USA.  The property is still available if you would like to see it.  It is located right next to middle school in a quiet neighborhood, and sits on the second floor so there is a flight of stairs to climb.  Did you have any other questions about the property?  Great, once you see the place if you are interested in moving in there is a $40 screening fee, which covers a background check and credit check.  If one tenant is able to qualify alone on their credit, then we only charge a $25 background check for the rest of the adult tenants who will stay at the property.  There is a $100 cleaning fee, and one months rent of $650 and a $650 security deposit is needed to move in.  Did you have any other questions about the screening process?"

At this point if they are not a good tenant they will start asking a lot of questions which will help you qualify them.  If they tell you it's not nosy versus you asking them.  Normally once they realize that their is a legit screening process that will eliminate a lot of your poor renters, and then we go to our second level which involves an in home review of the rental agreement. At this point we go to the prospective renters home to see how they live.  We offer this as a service to the prospective tenant so normally they don't think it is actually part of the screening process, but really we want to see if they trash the place they currently live in.  If it's trashed we move on, if it's clean we move them into the last step of the process.  Hope this helps!

@Michael Peralta Not my area so can't help you but I would suggest joining to as many local REIA meetings, join local message boards, and read as much as you can to overcome the fear of investing. If you are scared to invest that should go away with being better informed, otherwise it's going to be an uphill battle if you feel like you are in the dark.

@Mitch Moore For sake of time, this is way too complicated for one property. It almost seems like stepping over bills to pick up cents. Why not just refi 204,000 on 30 year at 4% (80% of LTV) 973.93 house payment plus 335ish taxes and insurance it sounds like and then cash flow $387 dollars a month. After you pay off all the underlying debt of 181,700 you have 22,300 to play with for free so your cash on cash return is infinite because that $387 cash flow is assuming you get all of your down payment back plus a 22,300 payday, and then you can stop trying to keep track of what loans to pay.

@Buddy Holmes Dmitriy is absolutely correct.  However, what you can do if you want to purchase a property is use a nonrecourse lender to purchase a property, or if you have a Solo 401k you can take a loan within certain parameters.  @Dmitriy Fomichenko actually blogged this post a year ago that is pretty helpful.  In the future, instead of asking can I, try asking how can I?

https://www.biggerpockets.com/blogs/2810/50272-list-of-non-recourse-lenders-for-self-directged-ira-and-401k