All Forum Posts by: Christian Hansen

@Dana Williams  Hi, Joshua has a lot of good info in his post. For tenant screening yes you need al the details but start with the a more big-picture approach. Enough Income? Credit? Evictions? The main three.  

Gather your data on the applicants and your impressions of them (do try and meet them) and the see if it passes the gut test. You want to find people who can AND want to pay the rent each month, and who seem like they would be able to take decent care of it. So, must have a have a job that pays(gross) at least 3X the rent. Verify that the job is real, I like to force them to prove it to me but also do your DD. One easy step is to call the company and ask for the tenant by name and see what happens. Credit score over 600 but that can be a misleading metric, people could have had medical issues that the bills were late and that might not make them bad tenants. So you want to ideally see the list of credit accounts they have and the payment histories. Last of the big 3 is evictions, NO evictions or eviction filings on record! It takes a while to get evicted so someone who went through that vs. moving out tells you something. 

One thing some DIY landlords forget is to make sure they are who they say they are, everyone over 18 has to show a valid drivers lic (picture) and make sure it's them! Thats why it's critical to meet them or at least do a video call with them. Also all people over 18 have to sign lease as a Tenant, only children as "permitted occupants". You don't want to show up 3 months later and find that only the Permitted Occupants live there and that the Tenants are long gone. Theres no one to evict? Obviously you can, but it drags things out. Call landlord references! 

Don't forget Pets are NOT a protected class, you can say yes to one persons dog but no to anothers cat/dog or whatever. Some of my best tenants have a dog(well behaved, loved, friendly) and there are no issues. Do collect a non-fundable pet fee though. Many people treat their pet(s) better than others treat their kids, and those tenants have a harder time finding rentals so often stay longer. I try to keep it to one or two animals, NO- Zoo's. No Fishtanks over 20gallons and I don't think its an issue since circa 1985 but no waterbeds.

It's not a one step process but its not rocket science either, use common sense and seal up the soft spot in your heart, don't fall for the "give me a chance" hard luck stories, let someone else take that on. This last one is probably the hardest part of being a landlord! I tell people LTR prop mgt is not really a Property business its a People business.

Good luck.

@Jenna Bamlet  Hi, congrats on finishing the house! It would be helpful to have some $ #'s. Mainly, what is the approximate retail value. So, if its over ~$85K you can probably do a loan with a traditional bank, Freddie/Fanny loan, and that would be the lowest rate since they are crazy low now. A low rate is what you want if you are going to hold it. I do think they would prefer to have a tenant in there with a lease because that will show some cash flow and may be a big determinant factor in what they will lend you. It sounds like you paid all cash for the house and the rehab is that correct?  BTW: The reason I ask about the value is that many banks won't deal with mortgages that are below $60K. I would advise finding a local mortgage broker, they have ties to multiple banks and can be very helpful. They are motivated to get you a loan because they get paid by the banks. Ask them if it would be better rented first.

Good luck

@Deepak Adithan Ravichandra Adithan  Hi, Clayton is a growing area so I agree it's a good area. I think your last question about price point and age of property really depends on how hands-on management wise that you plan to be. An older home may be a good idea and a great value but it may also need some repairs and upgrades, so you need to decide if handling that is something can/want to do. A newer home will not have as much work needed up front but the value will be a bit less appealing. However a remodel gone wrong can wind up costing a LOT in extra $ and lost rent so just consider the condition of the property.

Hi Dwayne, welcome! I am in the Triangle area of NC. Hope to hear some success stories of your RE investing adventures.

Hi, @Matthew Fermino it’s always hard to know when to pull the trigger. I moved from BOS(Brighton)to RTP in 2003, sold a small condo that had doubled in 2 years and bought our home down here. Until recently we didn’t have huge appreciation here, but cash flow was decent. Now with appreciation the cash flow is less. It’s “The flip side of the coin”. For me the appreciation has been better than cash flow but it’s so much harder to predict. I think cash flow is more reliable but you have to scale up into more units to get the impact. If you wanted to do that I think you would need to take the gains/equity and use it as the down payment to hopefully buy ~ $800k worth of multi-fam properties. Via 1031. the challenge is that the multi family market is tight in good areas but I still would be wary of areas that have seemingly great cash flow but are lower level/quality as I think they could be more severely impacted by an economic shift. 

I know this area(RTP) fairly well and would still feel comfortable buying here as the growth seems to be continuing, but great cash flow from the get go is not a certainty and usually requires some improvements to the asset. 

I would say, trust you gut. Do you think wherever your place is in BOS will keep appreciating? My guess is the equity is better used in a leveraged situation but you’d need to sell, it probably won’t work to borrow on it as then you’d likely have neg cash  flow.

BTW: I have used Dave Foster for 1031 and he does a great job.

Good luck!

@Robert Wright Hi, I would recommend just calling the NC Real Estate commission, I find sometimes it is just easier to talk to someone. They are quite helpful, that is really their purpose. The # is on the site ncrec.gov, cant post a tel # here (apparently).  If you are planning on coming to the Triangle area let me know, I'd be happy to share any info that might be helpful. 

Hello, Please note that I am not an attorney and this is not legal advice. First thing you need to understand is if the subject property is considered "covered" by the fed govt. That means if it has a loan that is backed by Freddie/Fannie Mae or if it's related to HUD or Sect 8 or connected to the fed/state govt in any way it's covered. Meaning you really cannot do anything for 120 days from March 27th. But if the property is owned outright or if the mortgage is through a private lender, which is not backed by Freddie/Fannie or a Big FDIC insured Bank then those rules don't apply. Now you might have some local rules, and I don't think the courts are open right now so that is your biggest hurdle in that 'non-covered' scenario. Please be careful, if the property is considered covered, you are NOT even supposed to send any kind of rent demand notice and definitely not charge or threaten late fees! Again, I am not a lawyer, if you are unsure I would absolutely consult one because there could be serious issues if you mess with the fed rules in place currently.

@Don Jackson  Sorry to hear about this. Note: I am a PM in NC, I am NOT an attorney and give only my opinion, not legal advice. 

I dealt with a similar situation recently but not Sect 8. First - for all, this is a great example of how when you file for eviction you put the matter into a new arena, the court system, and you have to understand the rules. When you sue, which is what an eviction is in NC, you give the tenant the opportunity to counter sue / appeal which pushes it to District court level and the you HAVE TO get attorney to represent you. If the situation can be handled out of court it's much better. Please don't listen to the comments that dismiss this, there are attorneys who make a living representing tenants who have no $, so how do you think they get paid, from the judgements that they get a piece of! So obviously they know how to get money. Each state/county/district whatever, has different laws so you need know them or get local professional legal help.

In this example, your PM screwed up and should get their attorney to try and broker a deal with the tenant that takes you off the hook and reaches a resolution. I also would advise you to get your own knowledgeable attorney to give you some advice. What county is this property in? If it is Wake County or close by, I can recommend an excellent attorney who can give you some good advice.  

Final thought, don't take any more actions or let your PM take any more actions without some legal advice first. Also, sorry to say but you will likely not get out of this without someone paying some money to the tenant, I think it should probably be at least partially your PM.

Good luck and make sure you get all the details and information you can during the process, its painful but its an excellent learning opportunity!

@Shirley Roberson I am not a lender. However, if the property is paid off you would just go and mortgage it probably at 75% LTV with any bank out there. Don't ask for a HELOC, banks don't give those on investment properties, only owner-occupied primary residences and usually those are a 2nd mortgage/loan. But you can do a "Cash out refinance", which yes is essentially the same thing but they don't use the term HELOC for investment props. You should be able to do a 30yr fixed if you don't have more than 10 other conventional loans on properties.

I would personally seek out a smaller local bank to build that relationship for the future, dealing with large national banks wont help you later. Where are you in NC? I may be able to recommend a lender.

@Victor Pedro Are you a full time employee? If so, I think their main concern would be your time and energies going towards something other than the job they hired you for. I also would second Eamonn's response above.