All Forum Posts by: Christina Greaves

Hi everyone!

I’m looking for a real estate layer who is familiar with creative financing, specifically subject to existing deed of trust contracts, how they work and how to overcome due on sale clause, in WA.

Context: I approached my partner’s mom to ask if she’d be willing to be a private lender to me on a seller finance deal I found, and she’s freaked out because she believes that transferring the title while the seller keeps the promissory note is “mortgage fraud”. She works selling title insurance so she’s in the industry but I don’t think she’s encountered people doing creative finance “the right way” and she’s afraid that I’m going to do something that would lose her money and get me into trouble.

So, I’m hoping to get on a conference call with a professional real estate lawyer that can explain to her this process and give her piece of mind.

Any recommendations would be greatly appreciated! - Thanks!!

Quote from @Sean Smith:

@Christina Greaves Congrats on getting started analyzing a deal! One thing I see... the utility expense is solely on the LTR tenant. Your STR guests will absolutely be using utilities and are not going to be paying the utilities. Your LTR tenant should not be responsible for the STR unit's bill. If the units are metered separately this makes utility tracking easier, however if both units are on the same meter you'll have to get creative with how you bill for utilities. Either way, definitely consider the heightened utility expense in your analysis.

Thank you Sean! That’s a great point! I learned yesterday it’s a single meter, so I’ll have to call the utilities companies and get the estimate usage for that area and project out what the cost might be, and then prorate it for the LTR and use the remainder in my analysis!

Quote from @Dave Skow:

@Christina Greaves- thanks ....I assume this is a rental property duplex purchase ...if so 1) your down payment min will be 25% of the purch price so approx 218,750 ....is this available on the HELOC ? 2) the rate and fee you note for a 30 yr fixed rental duplex are lower than present market 3) make sure you can qualify with the new HELOC payment + your present debt and the new loan terms

 Hey Dave, thanks for the feedback! To make sure I understand you correctly you’re saying that the interest rate of 7% is too low for my analysis? What ballpark interest rate would you recommend I use?

Hey everyone,

I did my first real exercise on analyzing a potential deal and I'd love your feedback on the assumptions I'm making for estimating revenue and expenses!

Context: This is for a Seattle property where the main is a 3 bed / 2 bath and has a secondary unit, also 3 bed / 2 bath. My intention would be to LTR the main, and STR the secondary.

Here are my assumtions: 

• Purchase Price: As listed $875k
• Closing Costs: (2% of Purchase price) + $12k for furnishing the second unit that would be used for STR = $29,500
• Loan details:
  • I'm assuming 0% down on the financing, because I'm thinking my down payment would likely be funded from my HELOC which has an interest rate of about 7%-10%. My plan in fact would be to pay down the HELOC asap as the Stock from my employer vests each month when RSU's mature past the 1 year mark.
  • 30 year loan term
  • 7% interest
• For income I'm using: $9,629/ month
  • This is assuming $3,625 as rent for the main unit, and $6,004 for the STR
  • • For the STR this assumes a daily rate of $329, and an occupancy rate of 60% over the course of the year, averaged to a monthly amount.
• Property Taxes: $534/month (took this from the redfin mortgage estimates)
• Insurance: $328/month (took from the redfin mortgage estimates, and prorated an extra amount to account for mortgage insurance for the first 5 years since I'd be putting down < 20% in the eyes of the lender)
• Repairs and maintenance: 5% (Maybe I should use a higher number given foot traffic on the STR? 
• Vacancy: 3% (saw on ipropertymanagement as the ballpark average for WA state)
• CapEx: 5%
• Management Fees: 0% (I'm planning to self manage for the time being, though I know I should consider adding here ~10% to make sure the deal still makes sense if I wanted to eventually give it to a PM)
• Electricity/Gas/Water/Sewer/Garbage: 0 --> Tenant pays
• HOA: 0 --> N/A
• Other: $100 --> As a buffer for having to pay Utilities during vacancies (Should I add more here to consider ongoing supplies for the STR? Like Coffee, or a Netflix account for it?)

Let me know what you all think of these assumptions, and whether some of the numbers seem too low or too high, and/or any resources you would recommend for me to cross-reference them in doing due diligence!

Thank you thank you!! :) 

Christina

Thank you everyone for your inputs! Incredibly helpful! -- I have some more homework to do! :) 

Also @Eric Yu it was great to meet you yesterday at the STR + House hacking meetup!

Thank you both!

Im already house hacking :) and me and my partner already own 2 investment properties, both SFH with long term renters. But these were not necessarily "intentional" purchases for RE investing, we just each owned a home before we met and decided to move in together buying a separate house in a new town where we moved due to proximity to my partner's work location.

So now for the first time I'm looking to make an intentional decision on which neighbors/strategy to hone in on. I just know that to start I'd rather stay local, but I'm still defining whether to stick to LTR versus venturing on STR for example. Hence my questions.

I’m really looking for more detailed beta from other investors that know the area well and differences between how investors think about neighborhoods depending on their investing strategy..

Hi everyone.

I’ve been trying to exercise doing neighborhood analysis as I work to refine my investing strategy. As the saying goes, in real estate it’s location location location! 

So to that end, I’d love to hear from those of you who invest in the Western Washington area. If you’re open to  answer these few questions:

1) what kind of investing do you focus on?

2) what are your target Zipcodes and why do you like them? 

3) which areas do you absolutely avoid and why?

4) Any resources you’d recommend for market/neighborhood analysis?

Thank you!!

Quick update! I got my money back! :D

turns out my tenant did call the utilities companies to set everything up but due to an issue on their end he was actually still getting charged utilities at his previous apartment, then in April he called to get it fixed and get the utilities backdated and that somehow didn’t happen…. Ugh, these companies!! 

Anyways he was happy to pay the prorated utilities amount and was super gracious about it!

thanks to everyone here for your encouragement and advice!! :)

Thanks everyone for your thoughts and advice!

As for the repairs I’ll just clarify, he’s approached it very responsibly asking me for permission first and keeping me in the loop of what’s going on. He’s a bit of a character, let’s say maybe a bit bougie! He likes things esthetically pleasing, tidy and organized.. And I got to see the indoor painting (the first thing he wanted to do to the property) and he actually did a really good job. So I’m not really worried that he’d do a poor job and pin me with re-work costs. He also is really open to communicate with me, and at least I perceive him to be an honest guy.

Anyway. Thank you again for all your advice!

Hey y'all I just had a really annoying experience and wondering what the community recommends I do. 

Here's the deal: I have a tenant who signed their lease in January, with start date February first. Back in January I sent them all the information on how to set up the utilities with Seattle City Lights. As you local landlords know, the Electricity account of the landlord closes as the tenant opens one theirs, whereas Water/Sewer/Garbage remains on the Landlords account and the Tenant is set up as a proxy resident. 

So, I do continue to receive emails from Seattle City Lights when bills are issues... but of course after February, I wasn't bothering to even open the bill emails since in my mind that was now my tenant's responsibility.... Well... I got a debt collection letter in the mail, for a Seattle City Lights bill that was issues in mid March. When I called in to figure out what is going on, I find out that my tenant didn't actually set up the Electricity account until April 1!! So the amount that was unpaid  which corresponds to usage from Mid-Jan through end of March is mostly the tenant's responsibility but it was billed to my account that unbeknown to me was still open. 

I'm annoyed that (1) He didn't set up the account promptly even though he was given the instructions immediately after signing the lease. (2) He didn't let me know that he was delayed in taking care of it (at least that would have given me a heads up to make sure my account was settled) and (3) Because of this I'm the one who got a debt collection that probably hits my credit score!!

I haven't reached out to my tenant yet. I went ahead and paid the debt because by the time I opened the snail mail notification the dispute period was already past due, but now I'm debating whether I should reach out to my tenant and have him pay me back for this, or at least the prorated amount corresponding to Feb 1 through end of March when the lease was already in effect. 

My tenant is otherwise wonderful. Always pays on time, doesn't really complain about anything, and he seems to be in it for the long haul, he repainted the interior, he contracted a company to re-do the landscaping in the front yard, he even asked me if I'd be ok if he contracted a friend of his that owed him a favor to re-finish the hardwood floors in the living room!

I'm basically wondering whether this $200 collection is worth is worth potentially creating a wedge with him... 

Any thoughts?