All Forum Posts by: Daniel Gonzalez

@Corbin Jones

1. When I was searching for a property to househack, I looked at 2-4 unit properties. The lender will do a self-sustainability test to see if the rents from the other units would cover the note. Keep in mind this only applies to triplexes and fourplexes. The appraiser they send to do this test, in my experience, had no local knowledge and just looked at the first comps they found. They don't take into account any reno you might do. If the property is occupied they use the current rents. 

2. As others have mentioned speak to a lender. They can get some financial info from you and give you a general idea without having to run your credit. 

3. Use BP to find a realtor you want to work with, the realtor I used to close on my property is great and I highly recommend him. @Vaughn Smith If you're serious about finding an investment property he is awesome. 

4. Use BP, go to REI meetings, or ask a realtor. Even though jersey isn't the biggest it does vary in different parts of the state. Of course, that's my experience when I was analyzing properties. Cap rates can be everywhere. I focused more on cash flow and ROI as my main metrics.

Good luck 

Hi All,

I will be closing on my first deal in the coming weeks. I'm closing on a duplex in NJ which I intend to househack. From everything I've read and heard, having the proper systems set up when first starting out is key. I know I can't have everything set up and most likely things will change as I grow my portfolio, but I want to be as best prepared as possible. 

What bank should I put the security deposit it away in, big name or small community bank? Are there any pros cons to each. My thought is to go with a community bank to try and develop a relationship with them in the hopes of using them for refis and loans down the road. 

Should my operating account be in the same bank as the security deposit? If not any bank in particular?

Any thoughts on opening a business credit card to keep personal and business expense separate? I have some money saved for repairs and reno but somethings will need to be put on credit. From my research a business credit card does not impact your personal credit should I have a high credit utilization rate. 

Lastly, are there any technologies I should implement starting out such as Quickbooks. I want to make everything as smooth and seamless come tax time. I also just want to get started the right way, even if it is overkill for a one property portfolio. 

If there is any other advice that can be offered I'll be more than happy to hear it. I know I asked a lot but I appreciate any and all feedback from the BP community. Thanks

@Lashawn McCauley I thought of sending a letter 60 days prior but I read that wouldn't guarantee anything. I could be wrong but they aren't forced to leave. I thought about having them sign a new lease since they are month to month stating that they had to leave at the end of the new lease or something to that effect. 

@Patti Robertson  I've never heard of tortuous interference, nor was it a thought. Thanks for the heads up. I did think about offering cash for keys but was worried about doing it before I closed on the property. I'll see what can possibly be drafted to protect me in case my offer isn't accepted.

@Max T. I thought about starting to renovate the vacant unit and on the start of the renovation ask the tenant to leave. I was hoping that the renovation would make them want to leave so they wouldn't have to live through that. 

Thanks for all the input, these are great ideas. I will reach out to my attorney and try to run some of these ideas by him.

@Charles Joshua Stallings thanks for the input. Yes, I will be occupying the residence for at least a year since it is a 203k loan that I'll be using. The 3 main reasons I would like to remove them are: their rent is way below fair market, they are very filthy/hoarders, and I want to renovate the entire property. When walking through their unit there was a clear rodent/pest problem and junk everywhere. 

If I was going to self-perform the work I wouldn't be so quick to want them removed as I would have some more time to possibly work something out with them. After speaking to my underwriter I was told I have 30 days to start and then 6 months to finish a 203k project.  

Hello,

I recently put an offer on a REO 2 family. One unit is vacant but the other is occupied by a section 8 tenant. My plan is to use a 203k loan to fix the property and rent one unit at market while I live in the other.

My concern is removing the section 8 tenant. How do I have them leave so I can fully rehab this property? The tenant is on a month to month lease which I think would be beneficial in this situation. I already asked the bank if it could be delivered vacant but from how they responded I think they want to avoid that headache. I would like to avoid an eviction as well since that could take months and with the 203k I have a finite time to finish the rehab.

If anyone has some thoughts or advice I'm all ears. 

thanks 

@Chris MasonThe deal is dead now. It is all a learning curve, I didn't know of the income cap or that link you shared (thanks). Going forward I will reference that as well. I knew FHA had an appraisal but I didn't realize it had to cover all the mortgage expense since I will be an owner occupant.

@Rick Momsen thanks for sharing. I will check them out. Never heard of Newfi. 

@Shawn Mcenteer I have spoken to the lender about using a low money down mortgage, it was a 5% down product. Unfortunately there is an income cap to that loan product which applies to the area that the property is located in.

@Mike McKeown what other way would there be to get this to work if the FHA appraisal doesn't come in high enough?

@L. Brown

Have you considered shopping around for a better interest rate. 4.75% is a tad high. I am surprisaed you can't get higher rents for a 2/2 duplex. Have you looked at rental comps? I also saw no mention of PMI. Does your loan not come with a PMI and that's why the interest rate is a tad higher?

Current Situation: I have identified a 3 family in New Jersey where I have planned to use an FHA loan I am pre-approved for. After speaking with my lender, I learned it likely won't pass underwriting because current rents do not support requirements set by FHA. FHA needs 75% of the rent to cover the mortgage. One unit is currently vacant. The second unit has a section 8 tenant and is currently below market. This tenant is month to month and can be given 60 days notice to leave so we receive it vacant (double checked to make sure and it's legal). The third unit has just started an eviction process and is also renting below market. Even asking for all units to be vacant won't work with the underwriter as I understand they only look at the property based on the current situation.

I explored the Freddy Mac 5% loan product but it won't work as I make too much money. The standard Fanny 20% down is not an option; not enough money.

Does anyone have any advice on other options we can explore or other ways to work this deal? I would love to grab this one but struggling to see how I can make it work. 

@L. Brown I am currently working with a very good realtor. He is an investor himself and understands that it isn't just a pretty house with a nice bathroom that we are looking for. He is very responsive so reach out to @Vaughn Smith

good luck