All Forum Posts by: David Barnett

@Joanne Tsai I'd likely ask the agent about the disconnect. I'm not saying this is the case, and I dislike people that are not honest. To me, it seems like the agent was not being truthful with the payment history of the tenant. I'd probably change the offer to take into account the new information about the payment history of the tenant. There's some risk that they won't pay and you'll need to go through eviction proceedings (when this opens back up in VA, if there is a moratorium).

First and foremost, congrats on the first sale/commission check. I'm going to defer part of your question to the folks on the forum that are more comfortable with HML and trading equity for co-signing. In general, I'm not as comfortable with these options, and am fairly risk adverse.

On the question about where to park the money.  I would recommend opening up a high interest savings account and parking the money there.  You won't get a huge return (even at 2%, you won't be making a huge bang for your buck).  I think that putting money in the stock market that you may want to pull out in the next 18-24 months is quite risky, given the current state of the economy.  I think there's a reasonable chance that the stock market comes down quite a bit when the fed stops pumping in additional unemployment, stimulus, etc.

I second the thought to check with your insurance company to see if they balk at that particular breed of dog.  I'm not familiar with that breed and if they balk at it, then your risk and liability goes up tremendously.  Since it was said that this is an aggressive breed, I would recommend trying to make sure you are able to get as much as possible to allow this renter to stay in your property.  I would charge a non-refundable pet fee and/or a monthly pet fee for the dog.  It sounds like they might have trouble finding a place, and there is risk that the dog might do a good amount of damage to your property (would want to make sure you are compensated for this additional risk).

@David Rodick I think the most important thing in choosing a bank is choosing a rock star banker.  If you have a creative banker at the institution, a banker that shares your vision and can be your advocate when going to the lending committee, I think that will serve you best.  I worked with a regional bank where the banker was coaching me along, keeping me abreast of changes within the bank (changing priorities, risk factors changing, etc.) and came up with creative solutions that worked for their banking standards and helped me come out of pocket with less than 100% of rehab funds.  A really good banker can be the key in an internal ally and can make a marginal bank great (in my opinion).  I would talk to the banker at the banks that you are considering and almost interview them to see if they are a fit of where you are going.  I think the relationship is more important than loan products (in general).

I think someone's running an illegal car wash!  Free car washes for everyone in the neighborhood!  

@Jeremy Mahan I'm likely in the minority here and am pretty anti borrowing from your 401k.  If something happens to your employment at your company (layoff, furlough, separation), the loan is due in full.  I just don't think it is a good idea to borrow against your 401k as a loan, and I also like the diversity of having two pots of money (401k funds and real estate investing assets).  

For others to weigh in, I would suggest putting some numbers into the scenario.  How much is your current cash flow?  What's your current loan balance?  How much is the rental worth?  What would be the new cash flow if you were able to do a cash out refinance?  

I would agree with @Brett Peters. I would work on your criteria and weave it into a smooth free flowing sentence or two about what you are looking for. I would think that a CRE agent that works in that space all of the time can tell who is serious and who isn't just by how this part of the conversation goes.

@Neil Masincupp When are you looking to retire?  Are you looking to retire early, or work until age 60-67?  I think that would play a lot into how I would handle this extra capital.  

If you were planning to retire early (say in the next 5-7 years), I would pay off the rentals and have pure cash flow that wouldn't be as up and down as the stock market could be.  Solely from my perspective, I wouldn't want to try to retire early with a biggish chunk of funding in the stock market and then get caught in a down swing when I needed to pull out the funding.  I like to have three distinct pots of money, rentals that cash flow, 401k and then an after tax brokerage account in the market.  I think it is very important to have asset diversity which allows one to choose which asset to draw from, depending on what is happening in the market.

@Paul Sandhu Your post was hilarious!  

@Adam Tafel I really like the idea of allowing pets in rentals.  I understand the hesitancy from some landlords to allow pets due to the potential for damage.  However, I think it is an under served segment and a lot of renters have pets.  The lack of supply of rentals that allow pets makes the length of stay longer for tenants with pets.  I think minimize turnover is priority number 1 in my units.

If you aren't able to have a vacant unit at close, make sure you have a credit on your closing statement for the security deposit that should be transferred over to you at closing!

I've purchased one property where I inherited a tenant.  I was very fortunate that she has been an absolute delight to deal with.  I would also recommend (if possible) to see if you can line up a walk through, inspection, or another legitimate reason to enter the unit when the tenant will be there.  I can usually tell pretty quickly if we are heading for a problem, or if they will be good to work with.