All Forum Posts by: David Socia

The more units you can achieve under one roof the better off your are. In my experience in both SFR and Duplexes construction, there is significant time and cost savings when building a duplex. Plus you have the benefit of having 2 rentals in the same location.

Hey thanks Ben. We have done several deals with both traditional and private lenders, but have never explored using an ARM. This is great advise and totally makes sense, but I still have a few questions regarding the ARM:

When trying to lay things out, what would you fight for regarding rate, amortization, the index that the rate is tied to (Prime or other?)

If a 3/1 ARM is available would it be preferable? if so why?

Roy, 

good info on the guarantor I have not thought of things that way. Financially it seems that we would be much more safe this way but I'm still skeptical regarding tenants living in a space that they do not actually pay for and what the mentality would be regarding how they take care of the place. Leasing to students is uncharted territory for me and still seems to be a bit risky in comparison to our young professional market.

Thomas,

I think your're right and appreciate the reassurance. We have pretty high standards and run many test with our applicants. The screening process is brutal for both myself an the applicants. When we find the applicant we are typically looking for, they tend to stay, renew, and take care of the place as if it were their own. I know there is a market to capture being so close (3 blocks) from the school and I'm torn between low maintenance and higher revenue stream.

We own several rentals in an area of our town called Midtown Revitalization District. this district is sandwiched between 2 major hospitals and a junior college. All of our rentals are new construction duplexes and our target market is medical professionals "educated with and income". Every time one of our units turns over we have both medical professionals and college students as applicants. to qualify we require the tenants income to be at lease 3x the rent. College students do not meet this qualification and often times ask if their parents can co-sign. The last time we denied a tenant and did not accept a parent co-signer, the mother of the applicant got pretty ugly about it. My thought is that not only do I want to be paid on time for rent each month, but I also want the place to be taken care of. Its been my experience in life that when you don't have any skin in the game you are more likely not to care as much. Am I missing out on a different demographic of renters by disqualifying these colleges students. We typically find the medical professional we are looking for but it may take up to 2 months. Thoughts?

***Disclosure- I am not looking for financing***

We are developing a small condo community of 15 Doors. We plan to hold for an extended period of time but may sell in 2-5 yrs if the price is right. We have been given 2 different options regarding financing from lenders - 5/1 ARM or 5 yr Balloon. From a cash flow perspective we may be able to amortize the balloon over 25 yrs. Which one is best? And does short term hold VS. long term hold make a difference in what we should choose?

Again, I am not advertising nor looking for financing.