All Forum Posts by: Tim Delp

I would find out when the next board meeting is and attend the board meeting or get the names of the board members and speak with them. Any HOA simply wants their owners to pay their dues. Not sure how far in arrears you are (as you mention a payment plan) but there could be other issues where it is beyond the point of a payment plan if the property is going to foreclosure etc but I would speak with the board.

I think one of the issues is that many landlords choose not to seek a judgement. When you are looking at putting out more money, time and effort to get a judgement from a dead beat tenant that couldn't pay odds are you will never get paid on the judgement unless they go to make a major purchase like a home and it is required.

From my perspective not worth the added expense of the judgement unless you have a former renter with some deep pockets thus keeping the numbers low

There are certainly areas that have higher and lower vacancy rates but a good property owner/ manager will either do better than the market vacancy or worse so I wouldn't only base it on vacancy rate. What is the cap rate for properties, what is the potential for appreciation, what are future prospects for the area and more importantly what are your goals for the money you are investing. vacancy rate is just 1 factor among many

I agree that it is generally better to be vacant in spring/summer as more people lookign to move then. I would possibly offer month to month option at a premium let them make the decision. If they've been good renters maybe offer a nominal increase of $25/month if they renew on 1 year lease or if they would prefer month to month offer that at $100/month. If they go month to month for 6 months the extra rent will help offset a little extra time for the new renter. I generally send "early lease renewal incentive" which gives them the couple options as mentioned above with higher rates for each option if they don't renew 60 days prior to their current lease ending.

Steven Hamilton II thanks for your clarifying. If you read my response I said first he should get an accountant and that "I believe" it may be deductible as an expense but it might be necessary for an accountant to make that final determination. It really comes down to when the property was placed in service. He references they find their tenants in January 2013, if he is finding tenants in January I'm assuming that he is advertising the property currently and it is available for rent currently. You can shed your knowledge on this but my "understanding" is that if he is actively marketing the property for rent, has a sign in they yard, has it advertised on craigslist, has it listed with a property management company etc in December than that might change the deductibility of some of his expenses vs them become part of cost basis

Placed in Service

You place property in service in a rental activity when it is ready and available for a specific use in that activity. Even if you are not using the property, it is in service when it is ready and available for its specific use.

I would suggest getting an accountant if you are going to be continuing to add more rentals but I believe you can deduct them in the year you incrurred the expenses. You bought the property to be a rental and if repairs were necessary to get it in rent ready condition they should be deductible. An accountant can assist in determining if these are repairs that can be fully realized in the year you incurred them or if they need to be added to the cost basis and depreciated over the life of the property or on some other depreciation period.

Great comments posted giving you the lay of the land above. I'm in the mortgage business and the above comments are pretty accurate. I would pursue the same route as mentioned above to obtain your first 10 properties. Not all lenders will do up to 10 under these guidelines so it may be a little more difficult for properties 5 - 10. Also if you wanted to you could buy multi family from the beginning and you can do 10 (4 unit properties).

If you do get to 10 financed properties and are still wanting to keep buying you can then look to local banks that will do loans and hold them on their books rather than doing them to fannie mae guidelines. As you are buyin your first 10 probbly worth exploring what local bank might be willing to finance these additional properties for you, might be worth getting to know commercial bankers and starting to build a banking relationship with the bank you feel will offer you commercail loan.

Having your accounts with the bank and being able to establish your cash flow on your other rentals will help in convincing them to consider you for additional financing.

Your roi will increase based upon your cash you have in the property but your risk will increase. Only you can answer that question as to what is best for you.

Generally banks will consider doing a cash out refinance after 12 months of ownership based upon the current appraised value. A cash out refinance on an investment property will typically be capped at 75% LTV.

If you are wanting to acquire more rentals and feel that you can acquire more similar to this than adding leverage sounds like it might work for you. As far as how much cash should you take out, I would suggest you take as much as possible when you do the refinance as you will pay closing costs and would want to take advantage of financing as much as possible on 1 property that you can.

As someone mentioned one issue is many lenders don't like to do these small loan amounts and then you have consider the closing costs will most likely be several thousand dollars to borrow the money. If closing costs are $2,500 and you borrow $25,000, it is costing you 10% upfront to borrow the money. Probably still worth doing if you want to and are able to continue buying more properties just like this one.

I will be looking at similar situation for a property I paid $35,000 cash for at the end of June 2012, hoping to do cash out to take all of my money back out of the property in July of this year.

One thing to consider when considering all your offers is you may not want to just take the highest offer but consider their financing. If you have someone putting 20% down with a slightly lower offer it will be a lot easier for them to make up the difference with cash possibly then someone that is doing minimal downpayment financing. This could backfire sometimes if the 20% is all they have the the low downpayment was just trying to perserve their cash but somethign to consider knowing what you face with the appraisal.

First question I have is you reference $14,220/month or $170,640 in gross rent and then you think management will cost 50% of gross rents. That seems high to me unless you have significant deferred maintenance, assuming they are all rented now I"m assuming they are at least liveable. I would figure you can get a property management company for 10% of gross rents, maintenance and vacancy hopefully should run you no more than 25% even taking in to account to some improvements/deferred maintenance that you take care of.

Next question is that you reference financing. How are you planning on financing 12 homes and 4 duplexes, not too many banks wanting to do a mortgage secured by multiple sfr. If you are able to get financing it seems like you would have pretty good debt service though.

You would need to look at the values from a resale perspective and not just cash flow to see are you getting a discount by buying the bulk package compared to assembling your own purchases individually?