All Forum Posts by: Chris Springer

@Ben Mosh

Consider doing a cash out refi. Do the math so you are okay with the new payments and how it affects your cashflow, then reinvest the cash you pull out. Rates are still low.

Discussing end goals (ex. Saving money for kids to go to college) and then finding a way to relate it back to the beginning goal of buying RE (buying RE creates an asset that provides monthly cashflow and equity, that can later pay for kids to go to college).

@Steve Babiak great advice thank you. I will initiate with that conversation.

Agreed. She wants to stay and I want to make sure the right thing is done. Just want to make sure we take corrective action in a positive way. She is without criminal record and arrest, therefore she does have priority and there is no need to evict her. Just want to make sure I have the authority to evict in the means I mentioned above.

Let's imagine someone owns a rental in the state of Pennsylvania, which is inhabited by a couple (boyfriend and girlfriend) and the girl's child. Let's also imagine both the adults are on the lease. The male adult commits domestic abuse against the female, gets arrested, and she acquires a PFA and gives him back his belongings under the supervision of police. He would like to come back... Obviously asking her to leave... The lease states:

EARLY TERMINATION: The Tenant(s) may not be able to cancel this Agreement unless the Tenant is a victim of Domestic Violence, in such case, the Tenant may be able to cancel in accordance with any local, state, or federal laws.

COMPLIANCE WITH LAW: The Tenant(s) agrees that during the term of the Agreement, to promptly comply with any present and future laws, ordinances, orders, rules, regulations, and requirements of the Federal, State, County, City, and Municipal government or any of their departments, bureaus, boards, commissions and officials thereof with respect to the premises, or the use or occupancy thereof, whether said compliance shall be ordered or directed to or against the Tenant(s), the Landlord, or both.

I assume it would be safe to provide  notice to vacate to the male (domestic abuse offender) being that he has commited this crime in violation of his lease terms. From there, draw up a new lease including only the female and her child.

Let me know what you think! :)

Helpful responses. The concensus is to maintain the properties as two attached twins. I appreciate the feedback.

That is a good point. I wonder if the longterm ramifications of joining the two properties (if at all possible) would have a greater negative impact.

I am an investor in PA who owns two twin homes. Essentially it looks like a duplex. However it is not, as it is two separate parcels, each with their own taxes. Is it possible to Merge the properties into one duplex? I would like to do this for tax purposes. Similar homes that are true duplexes in the area, with similar sqaure footage, bathroom and BR numbers have half the tax burden. Thanks to anyone who can help provide some clarity or advice. 

My wife and I just used our HELOC to buy our first rental. It was very smooth. I factored in the HELOC repayment when it comes to charging the tenants. I also plan to pay back the HELOC with my own money and the rental income so I can get ready to use it for another deal. My bank does not do a penalty for paying it off too soon. You can pay it off whenever you want. When you get equity in your new asset, you could do a cash out refi and use the money for whatever you want... Like paying back your HELOC. However, refinancing has its own fees, so I would think it would be better to pay off/pay down the HELOC and use that over and over again, unless you are trying separate business from personal. I am not a pro... yet, so take my knowledge with a grain of salt. I´d love to hear what someone else has to say. Also, shop around for HELOCs, they are not all created equal.

Investment Info:

Single-family residence buy & hold investment in Pottstown.

Purchase price: $121,000
Cash invested: $2,000

Our first property was bought under our LLC with our HELOC. Tennants pay enough rent to cover all of our expenses (including HELOC repayment) and leaves us with some profit. We are currently working on purchasing the other half so we can call this a multifamily unit, rather than a single family. Commercial loan with 20% down from HELOC.

What made you interested in investing in this type of deal?

My wife and I have been interested in real estate investing for some time. We like this deal because it generates profit, we used OPM to buy it, and it is close enough to manage ourselves. We like the area, and believe it has more room for growth and improvement (although we are not depending on that).

How did you find this deal and how did you negotiate it?

Zillow... We negotiated via our realtor. Interest rates are low, we had renters lined up with a price already set, and rentals in the area were being bought up quick. We offered a little less than asking. We felt comfortable with this, because the property was move in ready.

How did you finance this deal?

We bought the deal using our HELOC and a commercial loan. Commercial requires 20% down, but because we bought it via our LLC, that is the route we went. Out of pocket, we spent about $2000 for the purchase, which was cash towards the deposit. We have the LLC to protect our life outside the business, in the case of legal issues.

How did you add value to the deal?

The rental was basically ready to go. We upgraded the bathroom and kitchen floors, put up newer cabinets in the kitchen, and replaced the washer and dryer with newer (used) ones.

What was the outcome?

We now have 3 tenants on a one year lease, paying 1300 total, and they pay all utilities except sewer and water (about $300 per quarter). Their rent covers all expenses (including HELOC repayment... principle and interest) and we walk home with some cash.

Lessons learned? Challenges?

I believe we could have charged more in rent, being that it is split between three tenants rooming together. There are improvements to be made, therefore I wish we did charge more, because I would like to beef up the CapEx savings. I´d also put sewer and water on the tenants.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I did. Reach out if you are local and interested in my realtor or lender.