All Forum Posts by: Christopher Stanis

Hi BP community, Anyone here have experience renting out rooming houses? My brother and I are purchasing a 99 unit portfolio, which happens to include an 11 bed and a 13 bed rooming house. Both are zoned and permitted as rooming houses, and both are currently vacant (mostly in rent ready condition though). Are there any suggestions for renting these buildings out in a way that would minimize management time and expense? We have several ideas in mind so far: 1. Student rentals, as we are about 4 blocks away from the local college. Since we're closing in January, the buildings might not be occupied until August for fall semester. 2. Gas well drillers: these buildings had been occupied by Marcellus Shale gas workers over the last few years- the buildings tend to have 100% occupancy or 100% vacancy with these crowds. 3. Local charities - foster kids, veterans groups etc. how long ahead might this take to fill? 4. Converting units to 1+2 bdrm apartments. This will cost the most money and will be outside our budget for at least a few years. Thoughts, experience, and recommendations?

Yes, a Home Equity Line of Credit (or HELOC) is given on a home you live in and own. You can take lines of credit on other property that you own, although most banks have a lower percentage of the value that you can draw from (often 75%, and it may or may not have a higher interest rate)

 It depends on the cards. Some cards let you do a cash advance from the card. Others have a neat option that allow you to "write a check" with the card. They'll send you the actual checks in the mail if they have this option. When I used the Seed Cap program, they helped me with a strategy on how to liquidate as much cash as I needed from my available limits. On your personal cards, you may want to call your card company and ask about cash advances/ checkbook services. If you've been consistent about using and paying your card every month, they will often up your credit limit if you ask as well. 

@Jonathan Johnson, 

many banks or credit unions will give you a line of credit for 80-90% of the appraised value of your house, minus any mortgages in place. In NY state, many of our local banks can have a HELOC done in about a month-6 weeks.

And each hard money or private money lender have their own lending criteria and turnaround time. If you reach out to 10, you'll have 10 different types of deals /circumstances that they'll finance. 

Another solid option can be the use of credit cards. I've gone that route with some of my own purchases. You can usually get 1-2 easily online or with your bank. In my area, 10-15k is enough to buy auction property. If you need more than that, you may want to check out a company called Seed Cap. They helped me get over 100K lines of credit, at 0% for the first 18months. Kind of a neat option for a flip. Please feel free to shoot me a PM, I'd be happy to give you a connection if you'd like.  

Ryan Hansen , The company I worked with is based out of Los Angeles I believe. They're called Seed Cap. If you don't mind, shoot me a PM. I'll look up the contact info from my guy there for you. Thanks

Hi Ryan! Glad to have you here. I'm president of the Binghamton REI club, and may be able to help with any market related questions you have in the greater Binghamton area. The previous post was correct- starting off, you'll have to guarantee any loans through your business. Probably the easiest way to establish business credit is through credit cards. I had a company help me get 100k in lines of credit before I bought my first property. Pulled off 35k at 0% interest for 18 months- that was a huge boost getting started. Regarding company set up-LLC are the more common way to set up initially. There are a number of good articles on the forum on the difference between the 2. Let's connect- I'd be happy to help you with any resources I can.

@Alexander Friedman, 

The reality is that there is not a single right way to get started. I purchased my first property 2 years ago, using a number of credit cards (I did pay for a service to help me get the credit to begin with). Now that I have quite a few rental units, I've been considering going for my license, and focusing on the commercial side of the business, as working with investors has more appeal to me than working with first time home buyers. 

The question you may want to ask yourself: what will help you get closer to your goal? What types of networking will help you gain the connections with people that are doing what you would like to be doing? Your day job may provide some of those opportunities, especially if you let all of your sales prospects know that you are interested in investment properties. 

Finally, to address your original question: it's possible that a principle broker may not be excited that you're an investor, if you're not planning to bring in additional business. They may be worried that you would have a complaint filed by a tenant or someone that you'd purchased a below market house from. Not all principle brokers will mind, although I've been told this by a principal broker recently. 

Hi Edward. 

First part of your question:  ask your mom, ask your brother, ask your friends. Offer to pay 2500 back in 6 months, or something along those lines.  Another option- open up a new credit card. They usually let you pull cash off, 0% interest for a while on a new card. 

Second part- in most places, the lease carries over to the new landlord, and the terms and time period remain intact for the tenant. You not only buy the property, but also all lease agreements that are in place on it. If the lease is yearly, you could request they sign an updated lease with you (they're not obligated to). Since it's monthly, you should be able to have the tenant move by providing them with a 30 day notice to vacate. The best suggestion is to speak with the lawyer handling your purchase. Hopefully they have experience in real estate law, and can give you an informed answer specific to your town. 

Good luck!

@Shelby Robinson- have you tried to advertise for barbers yet? If I were buying the property, part of my preliminary homework would have been to advertise the space online, at rates 75% of competing spaces, to see if there is any movement or interest. 

Since it seems like you've already purchased this property, you may want to start advertising now.  I would also suggest putting on a creative thinking cap, and asking "if this property were to generate income in a non-barbershop way, what could that be?" If you're struggling with a solid Plan B, and Plan C, you may want to connect with an experienced commercial real estate broker.  They can give you advice about alternative businesses- usually for free since they'll hope that you use them to help lease it out. Good luck with your new property- whichever route you take!

@David Drew,

Call me if you'd like to discuss it. Would be happy to share my experience

Dave, 

There is a way around this- you sign a lease agreement with the seller. At the end of a time period (whenever their loan is paid off) the lease stipulates that the deed transfers to you. This can also be used as a short term basis if you're flipping the property (any amount from the sell minus the predetermined price goes to you.) Down in my Williamsport properties, we've purchased units with an "Article of Agreement"- where the deed stays in the sellers name. They continue making payments to their bank-providing monthly proof of payments. The article is filed with the courthouse, which then shows up that we have an interest and a claim to the property. It wouldn't be possible for them to either refinance the property or sell it on us, because the article will show up on the title search. 

It allows us to take over taxes, insurance, management, repairs, etc, while not likely to trigger the due on sale clause. I don't know if there is something similar in NY. Check with @Gary Kline.  I've found success with this strategy so far. 

Thanks, 

Chris