All Forum Posts by: Cory O'Dell

House hacking and doing an FHA loan on a 2-4 unit that with some value-add potential seems to incorporate many of the best wealth growing RE strategies...house hacking (someone else pay your mortgage), FHA loan (as little as 3.5% down payment), 2-4 unit (allows the house hack option and provides greater potential for cash flow compared to one unit SFR), and value-add (to force equity/appreciation). This option allows you to take your time while you fix up the units and save money while someone else pays your mortgage, all while forcing appreciation. After a year you can refinance out of the FHA loan into a conventional loan (to ditch the PMI) and repeat. It's basically a summary of the BRRRR strategy as well.

Thanks everyone for the responses. We've changed our process to make sure there's no ambiguity in the future. We've also added a front page to the application that the tenants need to verify/initial again before we'll even run the background and credit checks, so we're not wasting our time and their money.

Though even with the four checks we have run in total so far, I'm already surprised at what tenants are willing to try to hide/lie about on the application. Another prospective tenant had 3 evictions in the last 4 years. Still marked the "no evictions" box on the application form. *shrug*

Hi Michael, thanks for your response. 

To answer your question, we are denying them because she does not meet our credit standards and there were surprises on his criminal check...he was found guilty of aggravated menacing/concealment of a weapon and DUI from a single event a couple years ago. He also has two counts of GTA and a B&E, but those were from many years ago. We’re new landlords so just trying to make sure we’re doing things correctly. 

They also have a chapter 13 bankruptcy listed that dismissed and closed in 2012 (didn’t fulfill the bankruptcy conditions to have the debt discharged? I don’t know).  On the application they said they have had no bankruptcies in the last 7 years. They filed in 2010 and it closed in 2012, not sure if that fits the bill or not.  Either way, her credit had all sorts of reports of delinquencies  

Again we’re not experienced in the business yet, but the combination of all of these things doesn’t make us want them to be our tenants. And with our standards we applied in the beginning we feel this is justified. Your thoughts? 

Following!

It's something you can shop for so why not shop around if you'd like? A few good ones have been recommended in this thread, wouldn't hurt to give them a call.

Good luck to you!

Following. Hoping the Due on Sale clause isn't used seems like an unnecessary risk, especially when the purpose of the LLC is to mitigate risk. Curious what others are doing.

Agree with the others though, find a deal and the rest won't be an issue. When we got ours under contract our realtor gave us his recommendations and he's done that for a few things, not just title company. He's the one with experience closing deals all the time, so we took his recommendation. Didn't have any hang-ups with it.

Similarly, one of the houses needed an electrical panel replaced (we found out with the inspection) and once we said we wanted the cost covered by the sellers, he sent his electrician in to get a quote, and wrote it in the contract. The sellers accepted and now the electrician is going out closing day and he'll have a check in hand to do the work. We're out of country, about as "long distance" as it gets, and he set it up so the electrician can get in right after close despite us not being there.

Like David Green (and many others) have said, it's all about your core team.

We used Vantage Title in Vandalia for ours two properties there. We are also out of state investors...or more like out of country. No complaints here, but if Performance Title is the way to go we'll definitely check it out with the next one.

Good tenants, potential for extra income. Like Erik said, I wouldn't put too much weight on the length, but the military also doesn't deem it worthwhile to move someone every 6 months either. If they're good tenants that's worth it alone versus going through another application and hoping your new tenant is good as well. Add it to the lease pocket some extra income and call it a day.

Anyone using PayPal?