All Forum Posts by: Cody Barna

@Brandon Pelfrey That's awesome man, congrats on the purchase! How much do you anticipate the ARV will be?

@Sianni Pineiro In my opinion the biggest consideration when looking for a mentor is finding someone who meshes well with your personality, considering you'll be spending a lot of time with this individual. The second thing I would look for is a track record, especially if you are paying for a mentor. In some situations you may have to make sacrifices in order to find a mentor that's willing to take time out of their day to teach you the ropes. I hope this helps, good luck with everything!

@Mathieu White It sounds like it has potential to be a great opportunity, the biggest question you need to ask yourself is whether you can realistically make the payment for a $170k mortgage. In additional to potential repairs, vacancy, and maintenance that will arise at some point. Not to mention often times the terms for owner financing can be less desirable than using a bank. Another possibility would be private money or a hard money lender to purchase the property then refinance once you have it fully rented. I would only do that if I was extremely confident with the ARV after checking with multiple PM and agents. Typically this would be an easy decision but considering you only got approved for a $110k FHA loan increases the risk quite a bit. I hope this helps, good luck with everything!

@Mike Morawski Thanks for the insight, I really appreciate the help!

I think it comes down to your local market, what's common in that area? If the majority of options are 1 bed units that rent for $2,500 per month (example). There's two ways you could go about it, first is offer a 1 bed unit that's significantly nicer then the comps for slightly below market rent. The second option is to offer a modern studio for half the cost of a 1 bedroom, this gives someone the option to rent a slightly smaller place for a fraction of the cost. If I were the potential renter I would much rather rent a smaller unit with the same amenities for less, even if I was making the same salary as the individual who rents the 1 bed unit.

Thanks @Sarah Brown

No worries @Mike Rodriguez, good luck with everything!

Hi Mike, the biggest benefit of using an FHA loan would be the ability to purchase a property with only 3.5% down so long as your credit score is above 580. That's a major positive for anyone with a sub pair credit score who is unable to qualify for a conventional loan. With the benefits also comes the downsides of an FHA loan, the first being PMI which stands for private mortgage insurance. Whenever you put less than 20% down on a loan the bank will require you to pay monthly mortgage insurance for the length of the loan. However there are some ways to get around this by refinancing once you have 20% equity in the property, but I recommend speaking with a lender for more details. Another potential downside is that an FHA loan requires you to live in the property for the first year of ownership. FHA loans are great if you plan on house hacking, especially if you hold onto the property long term. Typically you'll have less cash flow in the beginning as a result of the small downpayment. However that also means you have less money tied up in a single property giving you more funds to invest elsewhere.

Hi Dylan, you can start off by asking them if they personally own any rental properties or work with other investors on a regular basis. Besides that it's important to find someone who is honest and works well with your personality. At the end of the day if you're both on the same page and have a clear understand of each others goals it will allow you to be much more productive.

HI Everyone,

When creating a legally binding lease agreement for smaller multi-families (2-4 units) what are some of the key points you always include? What have you found to be the most effective lease length, in addition to the amount of money you require for a security deposit and any other initial fees? Do you use a generic state specific lease such as the ones found on Biggerpockets or do you pay an attorney to create one? 

Any and all feedback would be greatly appreciated, the more insight from experienced investors the better!