All Forum Posts by: Dave Kush

Get it under contract ASAP. 

Not sure about the other question. Interested to hear the responses from others on that.

Nothing wrong with that at all. I'm interested in doing the same thing and looked into this in the past.  It's all about making sure that you are conforming with the lender requirements.

I'm sure there are a variety of opinions on it, but buying property with less money down allows you to generally increase your cash on cash return. As long as the cash flow covers it, I would generally rather put down less. 

I can't really speak to number three.

For number one, I don't think you can do that, I believe it has to be a new purchase.

For the second one, that is also true technically. I have in the past quit claimed properties from myself to my company. This takes care of the legal part, but you're still on the hook for the mortgage. This is a risky strategy, because if the bank notices this, they could call in the loan. In my case they did not. If you have a 3% interest rate in this High interest rate market, they might be looking to call that one in. So this might not be something to mess around with. Perhaps the refi would work.

In case you are having any difficulties with a scheduled closing today, this may be why. It has delayed one of mine however it may still go on today.

https://www.realestatenews.com/2023/11/21/hack-at-nations-largest-title-company-stalls-closings#:~:text=Fidelity%20National%20Financial%2C%20parent%20company,it%20investigates%20a%20security%20breach.

Hey hey,

That sounds really fascinating. In addition to real estate I work in data analytics and app development. Would love to learn more.

 This is a really good post. I have been trying to get more into creative finance, and understand it conceptually, but I appreciate some of the nitty-gritty details here. Would love to get a copy of that spreadsheet as well. Thanks again!

Couple of things.

When you screen your tenants, don't just call their current landlord, call the one before that too. The current landlord may say anything to get rid of a bad tenant.

This is probably not totally above board, but after I hear what a reference has to say, I always ask what they can tell me "off the record." Sometimes the replies are night and day compared with what they originally said.

Form a property management company, and represent yourself to the as an employee of said company. That is factual. When things go right, you can take credit as the property manager. When things go wrong, it's the owner's fault. There's a little more nuance to this than I'm stating here, but I think you get the idea.

Never ever, ever, ever, ever let a tenant pay less than the stated rent on the lease, including if they absorb some kind of repair or do some work for you. My ironclad rule is that they pay the full rent, and then we reimburse the amount that was previously agreed to. Many tenants, often with good intent, are willing to do some work and knock it off the rent. That starts to open the door you probably don't want to go down, because eventually there will be a month where you get a light rent check and a note that they made some repairs for you.

Qualify buyers before wasting your time on showings. Have them complete the application. If possible, collect a small application fee from them, even if it's 5 or 10 dollars. Stack up all the showings at once. Get everybody there on Saturday from 1:00 to 2:00, or whatever.

This is more market specific. I have had my best luck with tenants placing small ads, flyers, or business cards in the locations where my tenants might frequently visit, such as local stores, laundromats, etc. I have found this far more fruitful and cost-effective than any other method, although I am happy to take suggestions that you or other people have on methods for finding good tenants. This one has been working for me in the meantime though.

In the long run, your time is better spent looking for more deals and closing them. To do that, you either need to get the property management down to a science that takes almost no time, which is totally possible, or eventually you will need to find someone to do it for you.

Increase your rent by a small amount frequently, like at least annually if not every 6 months. Tenants adjust to that better than a large increase further down the line even though technically it's in their best interest due to inflation.

keep it all business. They are not your friends. The relationships may be pleasant, cordial and you may even make some small talk, but never expect, even for a moment, that Goodwill that you show in one time frame will be recognized in another. The less they know about your personal life and all that stuff, the better. I have great relationships with my tenants, but they are business relationships.

Have them pay the rent electronically. It doesn't matter that you're 5 minutes from the house. You'll end up making 10 trips cuz someone's not home yet or whatever. It also sets up an expectation that they only have to pay the rent if you go get it. There are a variety of tools for this, and they are a beautiful thing because they timestamp everything.

Although I learned that this is getting banned in some places, I have always signed my lease is with an addendum that there is a $50 discount per month for on-time payment. When payment is not made on time, I can simply send another invoice for the $50 and say that this month did not qualify for the discount.  This is, in effect, restating the late fee in different terms.

Similarly, and I believe this is still legal, you can have an addendum where they receive some sort of credit for taking care of things like lawn, leaves, gutters, snow. This doubles is making sure the property is taken care of, and gives you leverage if they are not doing a very good job. Just make sure the credit for one month is enough to cover roughly one month of those expenses, otherwise you might find yourself in a losing situation.

good luck! Managing tenants has been tough from time to time but definitely doable, especially with systems.

Congrats! Buying the first is the hardest, but getting the second means the success is building. Question, do you have any plans to refinance out of the arm soon, or just waiting for rates to come down over the next 5 years?

Moderately aggressive. Trying to continue acquiring, but cash flow is harder to come by. No surprise there.

I'm doing everything I can to buy right under the current terms. It is my hope that rates come down over the next couple years a bit, but that's gravy, not something I'm betting on to stay afloat.

the thing I am struggling with the most right now in this regard is from a pure real estate perspective, I'm willing to sacrifice cash flow for a deal that is at least cash flow positive, especially if there is strong hopes for appreciation, increasing rents over time, and so on. With that said, there are non real estate investment opportunities that provide cash flow that's pretty competitive. For example, if you had $100,000 to invest, and you decided to put 25% down on a rental at these 8% interest rates, the cash flow is often so low would be better off buying t-bills or something like that. But in the long run, buying t-bills is not a good strategy compared with real estate investing. There's calculations you can do with expected returns on each, but without knowing what interest rates are, it can be difficult to make the real estate projections very accurate.

Thank you for your response, and my apologies for the lack of clarity. The property is already rented, so I will be inheriting two tenants and their leases. I was specifically referring to the paperwork completed at or prior to closing to make sure that the leases are assigned to me, the rents, and so on.