All Forum Posts by: Dean Klein

I have a rent collection bank account that is only used to collect rents. I give the account number to my tenants, and it is up to them to deposit the full rent before the 3rd of the month to avoid late fees. I've been using this system of doing my rent collection for about 2 years now and it's been working very well. It puts rent collection on autopilot for me.

@Bridget Y. Just a conventional loan with 15% down for a duplex.

@Bridget Y. That's what I was thinking but if I completed the 1 year of owner occupancy, I would think that I would be free to obtain another one if I wanted to move, regardless of the reason but that must not be how it works even though I'm putting down 15% and not using a special loan program where I'm putting super low down payments such as 3.5% or 5%.

Hi All,

I've currently got 4 properties including my primary residence. I would like to acquire the next 3-4 properties using owner occupied financing where I will live at the property for 1 year, then convert it into a full rental, and buy another property to live in, and repeat that a few times.  The properties will all be in the same city though. Will banks give push back for doing this? Has anybody else built or added to their portfolio's using this strategy? I'm wanting to do it for the 15% vs 25% down payment and also the better interest rates. All of my properties will be duplexes. Any insight is appreciated!

Dean

Back story: Wife and I divorced June 2018, at the time, we had 6 properties and she received 2 in the divorce subject to the mortgages on the properties. Ex wife has a drug problem and has not been responsible with the properties as far as managing tenants, and making sure the mortgages got paid. I had to step in before my credit took a hit, over a year of back and forth in court, she has been ordered to sell both places to relieve my liability.

One of the properties is a duplex with good numbers, I used to own the property and a good amount of money was spent rehabbing it at that time. My ex has been coming up with excuses in court to delay listing the property however I believe the numbers are good even at the current fair market value and finding duplexes at reasonable prices in my area is not easy. I'm planning to use the FHA loan to owner occupy the property for one year before I move back to the house I am in now. Would this be something you would do given the drama surrounding it, or would you pass? Just looking for opinions, to me it's just a business transaction, plus it will end a year long stress.

UPDATE:

I sent the tenant a rent increase from $625 to $750 and he moved at the end of July. I re-rented the unit for $825 a month. It was a win win!

@Jim K. It is more about respect than money really. I feel that the relationship is strained to a point where he feels it necessary to call me and complain about things that are not hurting the property at all, temporary things like me leaving building materials (old windows) next to the house out of site to the street to haul to the dump in a week or so. If he feels it necessary to complain about simple things like that at $625 a month, I can only see the problem getting worse with a higher rent, he will feel even more entitled because he's paying more. His wife is a nice gal who never bothers me and I don't think really cares about the issues that he brings up to me, if he was more like his wife, I would not be considering terminating his tenancy, and I have talked to him in the past about his behavior, told him I would not tolerate it and that if he didn't like the way I did things, he could move and it did get better... for awhile until it recently started again.

@Bob B. Nothing wrong with his age, just with me being in my mid 20s, he thinks he can tell me what I can or can't do type of thing. 

I have some thinking to do on this one, all good points. He's the only tenant I have left that I inherited and the only one I have any real complaints about. He told my handyman a few weeks ago that he was looking around at other places so I think he has a foot out the door anyway. I have over 1000 sq ft of vinyl plank flooring I got a few years ago sitting in my garage taking up a good amount of space, and was intended for this apartment on a turnover. The apartment doesn't really need much, they have a rottweiler also, dog hasn't done any damage but it barks like crazy all the time when it sees someone outside. 

I purchased an upper lower duplex Nov of 17 and inherited both tenants, recently the upstairs guy left and I rented the apartment for over $100 more than he was paying. The downstairs has a tenant who has been there since 2013, it's a married couple with no kids, they take care of the place but the guy is a pain, he is in his 50s and constantly complains about stuff and thinks he owns the place basically. My new upstairs tenant moved in yesterday and he is already complaining about my new tenants stuff sitting next to the garage (stuff going to the dump) because he then "can't mow there". He's got a problem keeping out of other people's business. This guy is paying $625, and market rent for his unit is around $750-800, my first thought was to just raise rent but I know that will likely cause an issue, he already complains and I don't want to deal with that. Should I just give him notice and turn the unit? He works for the city that the property is located in and constantly keeps watch on the place throughout the day which is definitely annoying considering if I'm there doing something outside, he has to stop and ask what I'm doing...

@Melvin List

I read somewhere that for that program, I couldn't own any other property. I currently own 4 total properties.