All Forum Posts by: Christopher Giannino

@Upen Patel

Are there general rules of thumb or any kind of specifics in order to pass the "smell test" or is it more lender specific?

@Steve Vaughan 

Congrats on paying off 19 rentals.. I'm sure that's a huge weight off your shoulders.  In your situation that you talk about above, did you pay a certain small extra payment every month or did you just save up enough to put a large lump sum at once and then repeat periodically?  

Maybe I'm confused (or just straight ignorant lol) but I thought by making large lump sum payments it actually impacts the amount you pay in interest more then smaller monthly payments.   I'm only asking to better my knowledge and not to challenge what you say.  

I'm not an experienced investor especially with this HELOC payoff strategy so take what I say as me just speaking complete nonsense but from the little bit of research I've done, it only works well if you're very disciplined and have extra income. Although yes, you can make extra payments on the regular loan with a fixed amount.. will making the monthly extra payment make a significant difference opposed to a large lump sum at once? Even if rates on your HELOC go up, is the interest accruing on a $200,000 mortgage the same as a $10,000 HELOC?

I get your point where in an environment where interest rates are currently rising (especially if they continue to shoot up like how they have been) does it ACTUALLY make complete sense?  Do you actually save money?  Maybe, but then again maybe not.  

Additionally you have to ask yourself, if your paying off your mortgage faster than expected are you really leveraging yourself to your utmost advantage?  A lot of investors on BP love to leverage their investments so therefore this strategy doesn't fit their investing criteria.

@Curtis Rouse Jr

I can't see the images either.  I'm not an experienced investor so I can't provide insight about apartment deals but I deal with financial models all day in my 9-5 job so I wanted to see what you came up with.  Best of luck!

I'm not a seasoned investor but a few things that come to mind..  

1.  How much should I expect for closing costs?

2.  Are there any origination fees?

3. What is the interest rate and the APR?

4.  Do you offer loan rate locks?

5.  Is there a pre-payment penalty?

6.  How much time do you typically need to process and close on the loan?

7. Will you count the rental income towards my DTI ratio?

Hopefully some more experienced investors will chime in as well!

I agree with everything stated above.  I just want to also add that in my opinion, you should be very cautious when accepting pre-paid rent.  I'm not an experienced landlord so maybe I'm wrong here but if you take pre-paid rent I would imagine it would be a complete nightmare to evict if you should have to within the first 3 months.  You accepted payment so therefore they are entitled to living there.  Also what happens after the 3 months... in theory they should pay you on time and be ahead of the game since they have been saving but in actuality it might not be the case because they needed that $3,500 75in smart TV for their new living room.  Not saying this will 100% be the case but just it's just a different perspective. 

@Wenner Nunes

I would say that this is a pretty standard rental application.  I have heard of landlords including a basic questionnaire with their applications with questions like... How long do you expect to live here? How many vehicles do you own? etc.  It's really up to you though whether you feel like additional questions would help you screen better.

As for the application fees question, I think many landlords just charge the amount it will cost for the credit check.  Although it can be a revenue source, I think many landlords just charge an application fee so this way the potential tenant has enough skin in the game.  A lot of times, I see landlords advertise that the application fee will be applied either to 1st months rent or security deposit.   

I think it all depends on your market..  Here in my market, all rental units are equip with your standard appliances and because this seems to be the norm here, I don't believe that a landlord in my area would be able to get away with not supplying appliances unless there was a steep discount on the price.  What are rental units in your area supplying because I believe that will probably determine what you can and can't do.  

I will say that if you somehow can get away with not providing appliances, that would be a huge savings and increase your bottom line.

@Logan Graham

I would say that you hit pretty much all the major expenses but there still might be some other expenses that you would eventually incur such as accounting/legal expenses, etc.  Just as a side note, PM seems a little low but it could be in line for your area.  The first red flag about this "deal" is that you're losing money every month and not actually cash flowing.  Yes, I understand it's only $11.55 but that can easily change...  taxes will go up, insurance probably will eventually go up, etc.  

Now with that being said, the 1st thing I noticed is that your mortgage expense seems to be for a 15 year term.  If you negotiated to extend that to a 30 year term then you would see about $140 more per month (given the same 63,000 and 7.5%)  \which would now automatically put you in the green.  Another thing you could look to do is negotiate the interest rate or purchase price down which again would increase some more cash flow.  Maybe $700/month in rent could be increased to $750 or $800.  These are all some things that could then make this potentially work.  

At the end of the day, I just want to say you should never force something to work and remember numbers don't lie.  I'm not experienced or an expert but I just want to share that it took me about 2 years before I finally bought a property.  I didn't wait because I was afraid to commit or had analysis paralysis, I waited because I couldn't find the right deal.   Best of luck and let me know if you have any other questions. 

@Kevin Zolea

I'm familiar with the area as I work in Trenton and live in Hamilton.  What @Matt Faircloth stated is spot on!  I was looking for small multi-families in the Hamilton, Bordentown, Ewing and Lawrenceville area's and found it extremely difficult...  Either the properties were priced too high where it just didn't make financial sense to me (mostly in the towns surrounding Trenton) or I wasn't fast enough to react and the properties were scooped up ASAP.  Small multi-families seem to be in high demand right now so if you see anything that somewhat sparks your interest, don't wait and go see it as soon as possible.  If you have any specific questions or need any additional help, please don't hesitate to reach out!