All Forum Posts by: Hank Walter

Zillow bought the house across the alley from my rental for $241,800, held it for 2.5 months and lowered the price several times, finally selling it for $249,900... not exactly a winning strategy. $8,100 isn't an outrageous return.   

@Tim Compton

I wouldn’t mind taking a look, albeit, I like small multi-family in the area, if you have any of those. I’ll shoot you over a PM.

@Kade Matthews

I've got cash of $45K+, Equity in rental of $65k, looking for a loan to acquire something up to $250K. Hoping to get stretch the LTV to 80 - 85, I know that's pushing it.

@Chris Parsons

Thanks Chris, I’ll give him a ring tomorrow!

I'm trying to acquire some small multi-family on the west side of Cleveland and some spots in Akron, I've been trying to get in contact with a couple banks in the area... First Federal Lakewood, Buckeye Bank, and a few more. Thus far, no solid movement, despite having sent all the documentation requested via portal or directly to the individual at the bank. 

Getting my first rental mortgage and second property through private money was not nearly as annoying as this process has been so far. 

The main issues I'm running into are: Too high of a D-to-I ratio and being out-of-state. I have a current rental property that is leased up but I live in the remaining small portion of the home which lenders still consider in the in the D-to-I ratio even though I don't pay anything, it runs at a 1.32 DSCR. The mortgage payment is the only bill I have monthly, I bike everywhere so I don't have to worry about car notes. Based out of Minneapolis, MN and searching in Cleveland, OH I had some lenders say they are hesitant to lend since I won't have direct oversight from a couple of states away, even though we have completed our vetting processes in the area and made what we think are strong selections for our team.

I've got two paths to go down, both of which have many pros and cons. 

1. Obtain financing as a individual; 

2. Obtain financing as a new LLC; LLC is 25% ownership split four ways, all four members are gainfully employed outside of the LLC.

Anyone work with an investor friendly lender in the area or faced similar issues and figured out a resolve to them or have a recommendation for best course of action? 

@Colleen Sivets

Cool to see another Minneapolis investor getting into OKC!

What was your draw toward OKC?

Did you lender locally (OKC) or from a national lender?

What's your strategy with this SFH?

@Jason Goretzki

If possible, could I get that list as well? I’m traveling there in Late November and would like to start interviewing.

Gary, 

Section 8 Tenants are usually solid options as long as you screen well, like mentioned above. I've talked with several other investors in the Minneapolis Area whom have Section 8 and Market tenants. I currently have market tenants myself but actively pursuing some Section 8 opportunities. Their Section 8 tenants have had no complaints and are low maintenance where as the market rate tenant has complained constantly about the property, paid late, and cannot be evicted right now. It pays to screen as well as you can. 

Taking a look at some of my other markets such as Akron, OH and Oklahoma City, OK. I've noticed in Akron, OH many Single Family Rentals are getting leased up at below market rate to fill the vacancy when they could be leasing up a Section 8 tenants and receiving a stronger Cash Flow. The Akron example was leased at $795/month to a market tenant when they could be getting 90-110% of $1,069 (3 bedroom), which is how Fair Market Rent is calculate by the HUD.

As for Oklahoma City, refer to Kiera's post above as she and her team gave us an amazing tour, provided in-depth knowledge, and discussed what methods they have developed, in terms of leasing up properties. 

A common theme I've picked up on for Section 8 is to make the property a little more sexy than usual, some tenants with vouchers have never had granite looking counter tops or stainless steel appliances and would love to stay there long term now that they have had it. The catch .22 to that is not to make toooo sexy and over it improve it. If you really like them after having screened and doing a home visit, lock them into a 2 year lease. 

@Kyle Steiner

One of the things you should have nailed down as an out of state investor is a database of project costs or materials costs for your local area, prepared by or your team. It’s helpful to see what a rough cost is and compare it with a bid to see if they are shooting a fair or crazy price and can help limit always having to get three bids.

That being said, look at what you can band aid for 6 months, for example if it’s summer and you know the heater needs work, budget for it during the summer and fix in fall before the winter rather than fixing right away.

Roofs can be patched, depending on the severity, and work for another couple of years.

@Shay Levy Check out the Table Investment Team, they really know the areas, active investors themselves, and have great insight!