All Forum Posts by: Chris Pflum

I know this is an older thread, but any Florida lenders on here?  I'd like to discuss a similar situation.

@Ken Nyczaj as @Kath Marie and @Brian Ploszay have both indicated, the tenant has rights and is not trespassing just because ownership changed hands.  My recommendation would be to do just as Kath suggested, offer cash for them to vacate.  It's quick, easy, and a win-win for everybody.

I would do this in the form of a written notification.  Give them 30 days notice to leave (since they've been month-to-month), and offer them cash for completing their move-out on time (or even by an earlier date).  At the end of the 30 days, if they haven't moved out, you can initiate eviction.  

Make sure you send them the first notice, giving them sufficient time to move out, and then follow the appropriate process for your state or municipality to initiate the eviction if they don't. If you don't do this properly, and you have an uncooperative tenant, you could dig yourself a hole quickly,

It's been my experience that cash for keys is very effective. So do that, and you probably won't have anything else to worry about. 

Good luck!

@Patrick Mortenson, I'm in agreement with @Randy Thomason here. Do the PMI part first, but you're going to need an appraisal. As @Andrew Postell shares, this could be a no-brainer for you based on how much you'll save. 

Make sure you're confident that the property will appraise for what you think it will before moving forward, else you'll just be throwing money away on the appraisal. Of course, if the tax appraisal has over-valued your property, you should challenge that so you don't over-pay on taxes.    

While I get the idea of having a HELOC as an emergency fund, is it worth the cost of another appraisal? Maybe just throw the money you save from dropping the PMI into a Money Market fund and save yourself the expense? That's probably a six of one, half dozen of the other type thing, but a HELOC will show as available credit on your report, which could have other impacts down the road.

@Danielle Clarke all licensed realtors are able to assist with property management, you just need to find one who’s willing to do the level you’re looking for. I imagine there’s a broker involved in the transaction, do they have any recommendations?

It’s interesting that you’re talking about a non-vacation property in a market that is so tourism dependent.  Make sure you do all of your due diligence on this, including reviewing past rental history. 

@Armando Roses this can vary a lot from property to property, depending on the amount of work that needs done and price point of the house. 

A very light cosmetics-only rehab may cost well under $10k, but also might not give you an arv much higher than that much over the purchase price. Whereas a rehab the requires some foundation repair might cost closer to $50k, but give you an ARV $100k higher than the purchase price.

The amount of equity you can build through a rehab is strongly correlated with the amount of work that needs done. So what you’ll need to do is find a property that gives you the right balance between what you’re comfortable doing and how much you want to make in attained value. 

@Michael Lambert congratulations on your decision to invest in real estate.  Done right, it can be a tremendous builder of net worth and income.

I would strongly caution you against making your first investment out of state.  Things can go wrong in a hurry, and it's much easier to maintain control if you're there to oversee everything. Get your feet wet managing a local rental property, learn the ins and outs, and then start looking at other markets.  

@Marc Gleason I'm in agreement with @Michael Krotchie on this in that you should probably be setting up the LLC in the state you are doing business in. Even if you set it up in another state, you'd still have to register it in the state you're doing business in, which just makes it cost ineffective to do it in another state.

Your best bet is to always talk to your accountant first.  They'll help you pick the best structure to minimize your expenses, and especially your tax liability.

Those are some good suggestions @John Warren.  @Armando Roses you have other options you can consider as well. For example, find a property that is in need of rehab/renovation, fix it up, and then refinanace it to cash your down payment back out (BRRR). Then you've got cash that you can use for your next investment.

@Shaun Morgan a Commercial Loan can refer to a broad category of loan products that are out there.  Some of those products are going to work better for you than others, so don't get discouraged if you haven't found one that makes sense yet.

If you've got a large portfolio of properties, the typical retail products just aren't going to work for you anymore.  What you need to do is develop relationships with local credit unions, or small banks.  These are the types of entities that are going to be most likely to be able to develop a custom loan product that will serve your needs.  

They've got to find solid stable investments to put their customers money into, and real estate portfolio lending can be a win/win for them and you. Talk to some loan officers from local institutions like these, share your goals with them, and see what they can come up with. 

If they can't help you now, they can at least tell you what you need to do to get your real estate business to a point that they'd be able to work with you.  The best thing is you're going to get very straight answers working with lenders like this, which you just can't do working with a larger financial institutions as a small business.

Yikes- the first two sound like textbook "Turnkey", but the third sounds like anything but...  

I think @Ray Johnson and @Jay Hinrichs are spot on about leveraging the property manager you've got a good relationship with.  

Sounds like you've got possession now, which is a great first step. Next step is get this property under control quickly, including making sure it's secure.  You also don't want to compound your problems by having pipes freeze or other issues that you can prevent.  

I don't know the detailes behind what you were sold, or promises they made, but it sounds like they're not doing anything to make this right for you.  Get a PM in there that you can trust, get the property performing, and then go back and review everything from the original deal with your attorney.