All Forum Posts by: Michael Jones

Do you have equity in your home that you currently live in? If so you can do a cash out refi and use the money for the down payment.

My two cents worth is if you are not willing to come up with the 25% that banks require to purchase a rental property through saving the money or pulling equity out of your house then you dont want to get into the rental business bad enough.

If it was easy to just walk into the bank and say "I want a loan on rental property" and it happen there would be alot more people in this business.

27 out of 28 have paid and the one that has yet to pay is a lady on disability income that always pays on the fifth. We are expecting 100% collection.

Cash for Keys is not a last resort. It is the quickest way to solve you problem and most likely the lowest cost to sovle the problem as well.

For example, $600.00 for a months rent...it will take at least two months to get an eviction if they force you to court. That is $1,200 lost rent. Then the court cost added to the $1,200. Damage to the unit because they are pissed off that you are throwing them in the streets.

I can go on with a sympathetic judge saying due to Covit and the economy they will have an extra month to find a new place, then cost of the sherif if you have to do a set out.

Or you can put emotions and principle aside and realize that it is business the same as if you had a bad hot water heater. I need a water heater and it cost xxx to replace this and fix my problem. When can the plumber begin work.

You have a business problem: You have a tenant that isnt paying rent on a house you want to flip and due to this you were able to save several thousand dollars on the deal. Now lose one of those thousands and wave it figuratively in the face of the tenant and if by say one week from today a walkthough is done and the tenant is moved out you will hand them the $1,000 and you can get to work you will be rewarding yourself.

Its business. its never personal and sometimes we have to pay to fix the issue.

Sounds like the perfect spot for a few ricks of firewood to be stored to dry out for the winter.

You state that you would "Like to buy." 

Meaning you do not own or have made an offer on the proerty.

Make your offer include the current owner sending the rent increase notice to the tenant. Have the work doen before you close and without you doing anything.

For a fourplex or smaller they are considered residential loans and you can get a 30 year fixed on each of the two buildings. 

Most local banks will have a higher interest rate as well as a shorter term such as 20 years.

I have used Huntington Bank, fifth third and us bank and was able to get a 30 year note under 5% from all three banks.

This type of loan will increase cash flow versus a 20 year note.

I am sure there are folks on here that will roast me for what I am about to say and tell me it was a mistake but a person armed with experience is not at the mercy of a person armed with an opinion in a debate.

I cashed out my 401k and took a total of 30% hit when I did it. Remember that you will pay the 10% penalty, taxes when you cash out and also will have to show the cash out as income when you file taxes. It will be over a 30% hit easily.

That was in April of 2015 and it is now April of 2019. That is four years when i count it on my left hand or my right hand.

I cashed out for one reason. I wanted to use the funds to buy rental property. 

I used the remainign two/thirds that was left of my 401k and begin to purchase four plex apartments.

They were affordable and I could gain a residential loan on them with a 30 year fixed.

I only had enough for the down payment for two of these buildings when I first cashed out.

Now I own 6 buildings and 28 units. Four years later.

My annual profit on these 28 units (Profit being what I get to keep after all bills, mortgages, taxes, repairs....everything is paid) is greater than the total amount that I had in my 401 k before I took the penalty.

Yes, that is correct. 20 years of saving into a 401k and four years later i make more per year than I had accumulated in my total 401k.

But here is the catch, if you are good at property management and buying the right properties to make a profit it will be a good decision. If you suck at buying the right properties, can not deal with people or being successful at collecting rents, placing the right tenants into the property etc..... you will cash out and just waist your money away just like investing in Enron or any other bad investment.

This is why we never return the deposit at the walk through and always mail to their forwarding address.

If you have not returned the deposit then simply deduct the cost of a new lock from the deposit. It is perfectly legal and morally the right thing to do because you should not put a new tenant into a unit that has a key floating out there.

Terminate the lease immediately and evict if needed. 

I know that sounds extreme but they lied to you and signed a contract with you for the largest bill they have each month. This will not end well so I would want it to end on my terms, not when they decided to lie again.

I am as male as they come and although there are some challenges you face as female dealing with a male contractor, I can assure you there are plenty that will try to rip a male off just as much as they would a female. It is just that some contractors have a preconceived notion that a female does not have as much knowledge about construction so they can talk in riddles and quote whatever price they want and also add in all of the fear factor talking points.

Lets use the example of replacing a roof as a job for contractors. 

I will get five bids and no less than five bids.

At least one will be so high that I know they are over charging.

At least one will be so low that there has to be something wrong such as shoddy work, no insurance, going to find all kinds of issues once they start the job that will cost more dollars, will take a deposit and never return etc.

It is the middle three that usually make some sort of pattern or sense to their quotes. I almost always pick from the original middle three.

Some other pointers that have worked for me:

Never hire a contractor by the hour. They should quote the job and put it in writing.

Make sure they have insurance and ask for a copy of it so if there is an issue your insurance company can handle it directly with their insurance provider.

Let every contractor know that you are getting multiple bids. I promise you this will save you money. You will also have a contractor say I understand that and there are probably guys that will out bid me. This person may not be overcharging but may be doing the job right by using quality materials, quality tools, actually has the knowledge and the business license and insurance to back it up. These contractors are usually the most straight forward and comfortable with their bid. They know what the job is going to cost them, how long it will take and how much they need to make.

If there is a contractor that is putting pressure on you to pay them on the spot for materials or sign a contract right then do not do it. Sleep on it. The pushy ones are usually pushy because they are starving for work and no contractor today should be hurting for work if they know what they are doing.

Ask them to sign a back ground/credit check. It is no different than running a credit check on a tenant. You might change your mind if you saw they had two sexual assault convictions and 11 pending lawsuits from homeowners that are suing them for work not performed.

And once you have gathered quotes do all of the reading on line that you can about that specific job or work that you are hiring.