All Forum Posts by: Dion McNeeley

Hi @Eric Lilly hopefully I can help. 

You are correct, most lenders will require two years of tax returns to prove income. On top of this rental income isn't counted in your debt to income ratio until it has been claimed on tax returns too. Once you have a couple years of tax returns showing rental income then it is possible that some lenders would consider the future rental income in your dti. (Rental income is considered at 75% of the total rental amount)

You may have better luck with non traditional lenders. Some call this hard money. But the rate is often higher and the loan will probably be an adjustable rate loan. But it is a way to get started. 

When buying properties there are two classifications. Single family house/small multifamily and multifamily. Anything with 4 units or less is considered a house by lenders. Like a duplex or fourplex. If a place has 5 or more units it is considered a commercial property. 

Commercial loans do not factor in your income. So one way to get started without proof of income or proof of rental income would be to get a commercial property first. The barrier to entry though is the much larger down payment. 

I would connect with some lender and see what you qualify for. Try credit unions or a company like fairway mortgage. 

Good luck.

Welcome. This is a great community with a lot of people who like to help out. 

Have you started thinking about how you want to invest? 

Flip/wholesale/brrrr/buy and hold/reits just to name a few. 

Once you have an idea where you want to go in a few years it is a lot easier to find a mentor and pick your information sources. 

Have a day full of marvelous. 

Sounds like a solid plan. Have you considered a small multifamily? Loans basically work the same as a single family house. You can live in one side, rent out the other. Rinse repeat every couple of years and the cash flow will start to add up. Then in the future you can get a sfh and your other rentals can pay for it. 

Some markets do not have a lot of small multifamily. So a house with an ADU ( some call this a mother in law house) works the same way.

I started out by moving into an apartment and renting out my house. I wanted to see if I could handle being a landlord, single parent with three kids and working full time. 

Once I decided I could handle it I purchased a duplex, moved into one side and rented out the other. It started slow, but every couple of years I got another place. 

Financial freedom happened at 7 units. I am at 11 now and hunting for the next deal. I still work because I love what I do but life is a lot more interesting since work became optional. 

I was tired of losing sources of income, after Desert Storm the Marines down sized, in 2008 the recession caused me to get laid off from the police department. I found BiggerPockets and decided rental income was the way for me to have control over my income. It took me 8 years to go from 89k in bad debt to bad debt free and financially independent. 

I post a lot in the Official BiggerPockets group on Facebook. I am still learning but love to share what I have figured out so far. 

It isn't always easy. My first tenant was a close friend who was the worst (and only bad) tenant I have ever had. I almost quit over it. Luckily the market was down and I couldn't give the house away. I tried to. 

If you are having a hard time, reach out to this community and you may be surprised how many of us are here who like to help. 

Sounds like you have a good plan. I have not done the brrrr method I am a buy and hold forever investor. 

However I hope I can offer some tips. 

Have you heard of the thumbtack app? I use it to find contractors, get quotes and read reviews. Very good time saver. 

It seems for now while prices are going up the brrrr method would be a little easier to do than when prices start to go down. Which they may at any time. So when looking at the brrrr method it seems like having more than one exit strategy would be helpful. 

Hope this helped. 

Hello, this sounds challenging. 

How can you verify they moved out? If they still have stuff there it creates more problems. Can you contact them again and get them to email you the date they moved out? Based on the wording in their message it doesn't seem like it hold a clear legal standard as to the final date of occupancy. 

The goal for me in this situation would be get the place fixed and rented to another party who meets my screening criteria. Getting paid for back rents would be a secondary consideration. You may even find it isn't worth pursuing. Covid is an excuse for a lot of things that it would be hard to verify or disprove. You can always send the debt to collections and see what happens. Small claims courts is an option too. But I find that it is easier to sleep at night if I just let it go. The only time ive dealt with something like this it was a good friend and I just wrote off the losses. 

Good luck with the next tenant. 

Hello, here are my thoughts. but each situation is totally different. 

I would work on getting credit score up. There are several ways to do this. I would try to pay down any debts over 5%. debts under that I would keep paying but save for the first property purchase. 

Is house hacking an option for you? This is usually the fastest way to increase saving rate or to have money to pay down debt. 

I did a blend. pay down bad debt and increase good debt. My goal was to cover living expenses with rental profit. This makes work optional. Do you know what your goals are? It is a lot easier to seek advice, find a mentor and target your sources of information if you know the outcome you want to work towards.

Welcome, this is a great community with a lot of people who like to share information. Do you know what you are going to be investing in? What your goals are? The real estate world is pretty diverse. Knowing what your end goals are will make it a lot easier to connect with people. I also have great luck on the official BiggerPockets FB page. 

My best deal (so far) is the one I am currently house hacking. 

I found a fourplex and it seems the seller did not know what they had. Similar places ion the area were selling for 150k more than this. There was one really bad picture that did not show what the listing had. Many fourplexes are big square boxes that look like apartments. 

This place was side by side units with a garage for each one. 2 bed 1.5 bath 1236 sqft units. Definitely room for a third bedroom.

Currently I am getting a 15% coc. My goal was 10% or better. When I add the third bedrooms rents will increase $500 per unit. I will be renting them to section 8 and already know what they pay based on bedrooms. I will do each unit as the current tenants move out. 

Looking at some of the other "best deals ever" I see my best deal is kind of boring. I can not wait for the next boring deal. =) 

Right now investors are avoiding the stock market while it is playing vertical pong. They need a place to keep cash. Investors are buying places that will have negative rental cash flow and do not care. It is better than losing 20-50% because Elon tweets that his company is overvalued again. 

Fear of the 1031 going away if we get a democrat president has man people selling now and taking advantage of the tax break. 

As people move out of cities because of covid allowing many to work from home. Avoiding large populations during a pandemic. Getting away from the riots. Prices in rural areas will continue to go up for several years. (That last one is just my opinion and not based on any real data) So a lot of investors must agree with me and are trying to get the properties now at 20% above appraised values instead of in three years when those values increase 50%