All Forum Posts by: Jeff Bridges

 What exactly is the purpose of your website with your tenants or anyone else for that matter? investor reputation? online application? You realize that even hand picking your tenant applicants and providing them access, they can see your entire portfolio during the application process. Cozy lets you send online application without showing your entire portfolio as does other online applications. Why cant you just send them a cozy application URL via email when they are ready to apply and it goes inactive when not advertised. While big multifamily buildings need to advertise all year long; you only need to advertise during your vacancies so your public exposure only needs to be a minimum. think anonymous and not link any properties together on the interwebs unless necessary. Only your bank needs to know your portfolio. You get even more anonymity by advertising through a property management company where renters dont interact with the owner at all. That only applies if thats part of your model. I have a mix of PM managed and self managed, but I'm going to all PM managed for new acquisitions as a grow my portfolio for more passive approach since I have a full time job and live farther than 1 hr away from those properties.

I dont know what your concern is with the credit card? umbrella covers liability claims against you as a person and your rental business. Your credit card has zero bearing on that exposure. its just a payment vehicle. no one even looks at whats embossed on it or what your signature is for that matter.

Not a lawyer caveat- insurance companies want their clients to be low profile. For example if you drive an expensive exotic car, you're a target for someone looking to make an accident claim or liability claim since they see you might have deep pockets. If a tenant sees your business or googles your address, they see a company with multiple properties and deep pockets for a possible insert "BS" liability claim that occurred on your property. In your case, I don't see the benefit of having a business and all of your personally owned properties listed on a website for tenants/ attorneys to easily find and aggregate the total value of your assets. You just made their job super easy. Granted, attorneys can find all of your assets very easily with their database searches if they are looking to research your assets so I'm not saying you're hidden to begin with. You can however make it harder for tenants to get any ideas about a slip and fall claim leading to a big payout after hiring an attorney. Your fake business just leads to your very real personally owned properties and if someone has malicious intent, they will go after you and your assets personally. You want your tenants to ideally see you drive a vanilla car and think you are a small time landlord with few assets. Try googling your property addresses, your business website will likely pop up. See how easy it is for folks to connect the dots publicly. Consider changing that.

have you asked the motivated seller if he will take short term loan such as 12 months seller financing on these? tell him you need to rehab the places up and get solid tenants before refinancing. You can even negotiate deferred first payment/interest for 2 months while you rehab and place tenants in that vacant unit. You can even offer up a nice interest rate that makes it worth his while for holding the short term paper: 6-8%, 10% maybe? show him how his income might even be similar to that he earned in cashflow without the tenant headache. thats being creative.

 Transunion smart move won't necessarily catch civil court cases or even completed eviction judgments unless it specifically states that they check for eviction history or have a separate service dedicated to checking that. I would only utilize that service for tracking criminal history checks and credit checks to vet those aspects of the tenant. I would always continue to follow up like you have been by checking local court website to verify eviction history and filings of each applicant. That's the only way you can confirm that you are getting all of the court filing history on the tenant.

What are you considering for your due diligence? Rental? flip? 

My first due diligence is financial! What are all of the costs associated with owning the property. gather and verify all figures. pull up tax bill, get insurance quotes from insurer. what interest rates should I expect, what loan products will I use on the property. what down payment will i need. Due extensive research on rent rates and validate apples to apples comparison. plug these into a known calculator and if it meets my criteria for cashflow and cash on cash return. If it passes muster, I move on to analyze other factors. If not, I move on to the next deal. No emotions needed. Avoid fudging the numbers to make it look like a deal if its not with your original figures.

what are vacancy rates, neighborhood, tenant applicant types, school quality etc. Does it still work? keep going.

Visit property, do walkthrough and verify the MLS listing features are what they said they were. maybe there is a bonus bedroom agent didnt know about (like the last unit I bought) or maybe one bedroom cant really be a legal bedroom. Take a list of all obvious repairs. try to determine an estimate for total repairs or have or pay someone like a con tractor to help you estimate those repairs. Can the repairs be done quickly or do they represent a major reno (if so avoid major projects for your first renovation and start with low-complexity projects). If flip, can you get the property for at least 70% after repair value - required repairs? for rental, does the cashflow divided by intial up front investment return make it worth it to you?

If so, I proceed to make an offer.

Then I make an offer with inspection contingency. Get it professionally inspected, re-verify all repair costs, get bids to make repairs, re-check all of my financial due diligence, close, execute my plan. Good luck!

HOA, utilities, maintenance and all living costs appear to be living expenses you incurred while you were living there so they were just that and not anything impacting rental analysis nor do they add to your equity or future cashflow. for initial investment, I would calculate your down payment and all big renovations made to the unit as your up-front investment cost to help inform your cash on cash return. The remainder would be your expected costs while its in rental use. definitely do the analysis with your 15 year mortgage and the 30 year mortgage to compare for your awareness. Feel free to share the figures on BP for feedback. If they dont look spectacular, sometimes its better to sell than to become a landlord for not much return. hope that helps.

I just want to note that insurers look at loss history of an individual when making claims. So your coverage could be affected for future policies that you take out on other properties either with premium or not being covered. What is your deductible and what is the total cost to make repairs? If that amount is $xxxx, is that amount worth affecting your insurability for future properties? Would you be seriously financially burdened if you didnt make a claim or do you just want to money because you have insurance and want to be made whole no matter if its your first or 3rd claim? Not trying to be judgemental. Is the seller buying it as-is or are you expected to restore the damage to pre-vandalized state? That would be another factor with deciding what to do with insurance on whether repairs become your problem or the sellers problem. If seller takes responsibility, let them deal with it and allow you to avoid making further claims.

on another note, wow. Electrical wiring theft? twice? Thats cold.. 

Focus on improving your credit score and lowering your overall debt and even possibly saving up to have the reserves or down payment needed for future financing. Right now you have low credit score which limits your options with lenders. Your HELOC was lowered because the bank knows your last reported income, and your debt to income is high, so they know you wouldnt be able to pay off a higher HELOC balance (they are not accounting future possible income streams from rentals). Reduce debt, increase savings. Also, you are getting furniture loans which might be red flags for banks. Finally, use anything besides wells fargo for financing in the future. go to any nearby credit union who will give you a better experience with less hassle. They were a nightmare when I took out a mortgage with them. Leverage is good, but leverage with no cash on hand and high debt to income is what banks consider very high risk, which is why they are lowering your existing lines of credit. Show them that you can save up for rainy days and be responsible with your existing credit accounts and pay those off on time and in full. Use punctuation next time, your paragraph was a giant mess of words. Your lender would read that same text and be worried about lack of education and job stability. good luck.

Are you prepared to handle 50-60k in immediate repairs to address the repair list you provided? (this is just a ballpark figure from someone whose done only 6 rehabs) does 120 plus 50k in repairs (170-180 initial investment) still make the deal worthwhile to you? Will it appraise for 180 or higher so you can be in a position to refinance to get back 80% or more of your initial investment? What does the cashflow look like when refinanced after repairs for 170k or 127k (75% LTV). sounds like there is alot of deferred maintenance and the deal is being sold based on its current net cashflow and not factoring the deferred maintenance. Further, the interiors are already rehabbed, so your potential rent upside following the repairs will be limited. This sounds like a really old property if it has knob and tube. Multifamily is really overvalued in the DC metro area and usually not a good opportunity given how few there are to begin with.

 Sorry for your issue. It might not have addressed your past issues, but I now put $10 battery water alarms next to the washing machine, water heater and under the sink. It will alert your  tenants potentially faster upon an initial leak to shut off the source before the appliance dumps its entire contents onto the floor. This actually helped me out recently when the condensate line got clogged in the HVAC closet and the water puddled and set off the water alarm. I actually put it there in case of a water heater leak, but it ended up bringing immediate attention to a clogged condensate line much faster than they otherwise would have noticed with a slow overflow leak.

You have several claims in the past few years; I would definitely avoid making any more claims unless they are catastrophic and you can't afford to pay for current repairs or you risk getting dropped. 4 claims in 2 years would defintely put you in the high loss history category and insurers might think twice about keeping your policy.