All Forum Posts by: David Wolber

@Alexander Reda that sounds like more of a buyer/broker agreement situation over a PM agreement.  Perhaps they don't separate these aspects within their company?  You should be able to get information that is basic for your market.  Anything else on top of that would make sense that they would want to enter into an agreement so they're compensated for their time.  You are right though, it seems a bit odd they won't do anything for you without a signed agreement. 

I'm not sure if it's a rule but we always reserve 3-10% of monthly income for both maintenance and Capex. This is not including lawn and snow removal. We do that based on the individual property. Some might be a bit rough and need more saved as we are expecting more things to break or need a new roof sooner or others we will drop them super low because we might have bought it and did a total gut reno and don't expect a lot of maintenance issues in the near future.

hi @Heather U.

Alright, breeeeatheeee... :) So i started the opposite and owned multis before SFH for investments but now own both. The thing about larger mutlis is you will have a common or "house" electric meter which you won't have (usually) with a SFH. Water / taxes / insurance / basically everything is that many times more expensive. So don't panic when you see utilities costs with a lot of numbers on them. You now will own that many more toilets, appliances ect...but i'm sure you get that. There is also that many more ways to SAVE money as well when you start looking at putting in efficient toilets and low flow shower heads ect...

as far as financing, 4 or less units is considered residential so it'll have all the same options as you would as a SFH. Even owner occupied house hacking. Unless you are buying in an LLC. Once you get to 5 and over than it's a commercial deal and everything is more expensive and down payments are min 20%. But the short answer to your questions is yes, yes you can still get a conventional loan with 20% down if you buy it in your name.

When it comes to calculations it's all a percentage of rental income right? So since your rental income is higher, so will your reserves and expected expenses. What ever you use for a CapEx percentage for a SFH, should pretty well hold true for a multi. With some variations such as a SFH may have the same size roof as a up/down two family.

Sorry, i'm really just rambling.... haha

I hope that helped a little.  Let me know if you have any other specific questions, I will be happy to answer.

-Dave

hi @Charlie Magnan !  Welcome to BP. Norwich has a Landlord meeting at Dime bank once a month and @Mat O'Grady heads up a BP investors meeting he coordinates once a month.  That's a great place to meet local investors.  As far as contractors, what type are you looking for?  I can help you with a list and I know Mat and the group created a vetted list of trusted folks for contractors in the area that would be a great start as well.

What are your goals? Why kinda of REI do you want to do?

@Willie Flint @Tina McDonald Hey there!

So, with the properties that still have a mortgage, MOST banks will want you to refinance into the LLCs name.  You could combine this action with say a cash out refi.

For properties that are 100% owned, a simple filing of a quitclaim deed with the town will transfer ownership.

Or that's more or less how it works here in CT.

Good luck.

@Jason Schwerin That's exactly how I started my PM company. I created MOXIE Management, LLC to be the company that managed all my properties, this way i could hide the fact that I was the owner. Although many have figured it out...

I then grew it once I had the Realtors license and could manage other properties as this is required in my state.  Well technically a Broker's license like you mentioned, however I found a broker that allows me to run with no interference. 

I think it does help stream line the finances because now MOXIE holds the SDs, not me.  MOXIE collects the rent and distributes the owner's payments, not me. It allowed us to create a great system at the start so when we add properties to our personal or management portfolio all the rental stuff goes through MOXIE's systems and is a clean turnover.  

I would VERY HIGHLY RECOMMEND to NEVER own anything in your management company LLC. As it is the most exposed of the businesses, it's the first to be blamed and called out in a lawsuit. We own very little assets in the companies' name for that reason. We'd be a very small target for a lawyer. If we do then we give them the little cash that's in the account and that's all they get really.

-Dave

I focus on SECT and as @William Conrad indicated, EB is creating quite the stir around here.  The multi-market is becoming very competitive in the Groton area (if you can even find something to buy!), but I'd say New London / Norwich has a good amount of rolling inventory.  However the rental class is pretty different between those two areas.

I've been looking at a lot of commercial properties as well in Groton, and right now there is a good amount of inventory and that inventory has been around a while.  It doesn't seem to be moving.  Groton City is really pushing the revitalization of the
Poquonock bridge area where there is a few things on the market.  Maybe not yet, but i'd say in 10 years that's gonna be a great place to own a property.  

As an investor and small business owner I find having a business card still gives off a good vibe.  When I talk up my business and bust out a card for potential clients, most people are impressed.  However, most people either take a pic of it or add it to the phone and discard the card, but the impression still holds.

@Angana Batki Hey there!

1) Well it depends on what the property is. State Farm has insured one of my SFH properties that I own in an LLC, but if it's 5 units or bigger and considered commercial, then you're going to have to find a commercial broker. Since an LLC is considered a legal entity, there should be no reason you should have any trouble finding insurance. Perhaps contacting your current policy holder and take out a new policy under the LLC and cancel the current one.

2) Is it every Easy? haha Once you turn over the property to an LLC, all loans, in my experience, will be in the commercial realm assuming your looking to do a basic HELOC and not some crazy collateral based loan.

We own all our properties in LLCs, not as crazy as every one in it's own LLC (too much paperwork and accounting) but everything is under the LLCs. We have no problem with financing, although we have only done' cash out refi and not HELOCs.

HAPPY BIRTHDAY@Lizbeth Castellano!!

To add to what @Jaysen Medhurst said, you can get a conventional loan with 5% down while still keeping the condo ONLY if you plan to make that your primary residence. At a purchase with less than 20% equity position, you will have to pay PMI in addition to the mortgage P&I. I have a duplex in New London I did exactly what you're describing and we paid the PMI so we kept the extra 15% for renovations. Now it's a cashflow beast and i'm still paying the PMI each month, but don't care because having the extra cash at the time was far more worth it than the extra $120 a month I pay.

Have you looked at what renting out your condo looks like? Something to remember about renting out a condo is the condo declaration documents may have a restriction on renting it out. Some is a residence requirement (live there for at least 2 years) and others have an overall community percentage (only up to 45% of condos can be non-owner occupied for example). Then again there may be non at all. As far as a rental goes, if the combination of mortgage, HOA and other standard holdings are covered by the rent, it's usually a great rental. In my experience with condos you get the easy of placement of a multifamily and the long term tenants like a SFH. Some, and I do mean SOME banks may even use a percentage of projected rent for the condo to counter your DTI.

Obtaining a personal loan for the down payment won't work as the bank will view that as financing the down payment.  They frown upon that.  However, if you have a 401(k) with your work, or a different retirement product that is allowed to borrow against, IRS allows up to $50k borrowed.  Most banks don't see this as a loan, they see it much like an equity line of credit.  

Speaking of equity, are you SURE you don't have any equity in the condo? Are you using something other than a Zillow estimate? Something like MLS based comps for other units in the complex for example. I mean no disrespect or insult of your intelligence, but often times people take that estimate as gospel who are just unaware.

Keep this drive!  It'll pay dividends on the back end for sure!!

-Dave