All Forum Posts by: Ian R.

@Nat C. If you're in Miami and your units are in Orlando & Phoenix, I'm assuming that you have a PM, or are you self-managing remotely?  I ask because if you have PMs, they apparently aren't doing their jobs and need to be replaced.  A good PM will "train" your tenants to expect a modest increase in rent with every new leasing period.  A good PM will track the local market rents and will adjust your rents to keep pace on every new lease and will help you to keep your property at maximum profitability.

I sincerely appreciate your giving nature...it really is rare these days.  And yes, life isn't about money.  However, keep in mind that you are running a business, not a charity.  Also, ask yourself, would the bank that held your note be as lenient with you?  Did they give you a below-market interest rate or waive a couple payments?

As another person commented, you've already lost over $10K in rents by not keeping your units at market rate.  That's not even including the opportunity costs from investments that you missed out on because you didn't have that money.  I would suggest coming up with a plan to gradually get your rents up to market rates as soon as possible.  Since you have long term tenants, it may take some time but delaying any longer is basically like flushing money down the drain.  I would start with a $50 increase and go from there.

@Zana Blue Are you sure you contacted the listing agent? Unless you pulled the contact info directly from the MLS, you may have the wrong agent. Many agents pay premiums to have their info highlighted on sites like Zillow/Trulia attached to listings that really aren't theirs. It's a lead generation technique. I would suggest having your buyer's agent get the answers you need. That's what they get paid for. If your agent isn't responsive enough or doesn't work on Sundays, fire them and get a new one. As someone mentioned above, real estate agents don't take weekends off, at least not good ones.

@David Grabiner I get your thought process on going straight to the listing agent when looking for deals.  However, I would counter with this:  the listing agent's fiduciary responsibility is to their client, the seller, not you.  And if they're disclosing information to you about their client's intentions, they're an unethical agent.  So, there's always inherent risk in working directly with the selling agent and not having anyone representing your best interests.  You may have had success with this in the past, but I would recommend treading lightly.  If you've had a bad experience with a buyer's agent in the past, I would suggest asking around for referrals for a GREAT (not just good) buyer's agent in your area that specializes in working with investors.  A great buyer's agent that knows how to work with investors can be an invaluable resource because they won't just help you find one deal, they will continually bring you off-market deals or pocket listings that will never make it to the MLS, which can help to grow your business.

What @Scott Hollister said.  I agree, you've pretty much already answered your own question and several other local investors have confirmed.

@Matthew Hamilton So, in my opinion, that timeline changes things a little bit. If you're not looking to make a switch for another 2-3 years then considering making your first investment now might be a good move. If you do an FHA loan, you'll have plenty of time to meet the time requirement for owner occupied status. And you'll still have time to work on building your cash reserves for your eventual move to SC. With that being said, you may want to consider sticking with your current job if you do want to make an investment now. Lenders are going to want to see a history of steady income. If you switch jobs now, even to another W2, getting a loan may be difficult, at least until you have time to establish a track record in the new job.

So the way I see things, you really need to figure out what your top priority is.  Is it getting out of LE and into a new career in RE?  Or is it buying your first investment property?  It may be very difficult to do both at the same time so you may need to decide which one is more important/urgent.

Also, just want to stress that these are just my opinions.  Ultimately, it's your life and you have to make a decision on what's best for you.  But I do wish you the best of luck in your endeavors!

@Matthew Hamilton ordinarily, I would say that househacking a duplex or triplex would be a great way to get started in RE investing.  I wish I had done it when I was young and single.  However, if you're serious about moving to a new state and changing careers within the next 12 months, I would advise you to save your cash.  You have no debt which is great but you can actually burn through $10K pretty quickly if you have no income.  So if you're going to stay put in NJ for at least a year or more, then consider buying your first property while you still have a W2 job.  But if you're looking to make a move within the next 12 months, I would recommend that you save the money you have and continue to save more so you can safely transition to your new location and career.

Hope this helps!

@Victor Ged no worries...glad to help! Would love to hear how things turn out if you do end up buying this property.

@Ron Tafoya

So when I saw your first post, my initial thought was to give the tenant privacy and the benefit of the doubt.  Most responsible people have savings to cover themselves in situations like this.

However, after the additional details you've provided about the tenant, I think it's pretty much a guarantee that they will not be able to pay the rent.  However, there's still not much you can do legally until that point.  I would suggest talking to your PM, giving them a heads up on the situation, and have them ready to initiate an eviction (when he does defualt).  According to your local laws of course.

Do not offer to reduce rent or make concessions.  It's obvious from his past behaviors that this tenant is irresponsible and doesn't deserve any favors.  You may have to deal with some expenses and lost income now to get him out but hopefully, once you do, you can get a quality tenant in place.

Good luck!

@Victor Ged

I know the property you're considering.  I actually did a drive-by on it a few months ago when it was previously on the market.  I didn't move forward because at the time, I needed my cash for other ventures.  @Rick Pozos is absolutely correct about the 1% rule.  However, I do believe that these 2 units are way under market rent.  This duplex is in a good area with good schools and on a quiet cul-de-sac if I remember correctly.  I concur that you should be able to get approx $900 a month IF the units are in good condition.  That would meet the 1% rule.  However, as Rick mentioned, raising the rent that much will most definitely mean losing your tenant so you would have to be prepared for that expense.  On the plus side, it would give you the opportunity to get into the unit and make any necessary updates.

Also, as @Adam Juodis mentioned, there is no conventional loan that will let you do a 5% down payment. But if you're a veteran, you can look at a VA loan and if not, you can try an FHA loan at 3.5%. But you'd still need some reserves to cover updates and the potential loss of income if the other tenant vacates. Talk to a lender if you haven't already done so and get pre-approved so you know exactly what your purchasing power is.

FYI - This property has actually been on the market for several months.  It was previously listed, went under contract, then fell out of contract, and now it's back on the market as a new listing (which it really isn't).  Moral of the story...the owner my be a little more open to negotiations.  If you can get him down on the price, and there are no major issues (roof, foundation, etc.), you may have something worth pursuing.

Good luck!

@Matthew Hamilton

So, for what it's worth, here's my $0.02.  If you were in your 30's or 40's and had a wife and a couple kids, I would say to stick with your job and grind it out.  However, you're in a great position (early 20's, unmarried, no kids) to be flexible and make a drastic change.  If you really hate your job and you know 100% that it's NOT what you want, I would say make the switch as soon as possible.  Life is too short to spend it doing things that make you miserable.

With that being said, I would still advise you to be smart about how you proceed.  Making a career switch while also moving to a new city could mean no income for a while so if I were you, I would make sure that I was 100% debt free (no CC debt, no car payment) and that I had significant reserves in the bank to cover my living expenses for at least 3-6 months.  This will give you time to get settled into your new city, get a job (whether RE agent, PM, etc), and get some steady income flowing.

As others have mentioned, not having W-2 income will make it nearly impossible to get a loan so you may have to delay your investment goals until you get established in your new career.  The rule of thumb for 1099 income (such as the commission-based income that RE agents make) is that lenders like to see 2 years of history before they'll lend to you.  But if you're ok with delaying your investment goals for the short term so that you can make a long term play, it can definitely be done.  Investing as an agent/PM will also be much easier for you and you'll come across much better deals since you'll be tied into the local RE network and will be among the first to know about off-market listings, pocket listings, reluctant and tired landlords etc.

And regarding being an RE agent, others have cautioned you that you probably won't make any money your first year and possibly very little in your second year.  While there is truth in that statement for the average person, I would say that it doesn't apply to everyone.  You, my friend, are not average.  If you were, you'd be content with your LE job, your steady pay and your benefits.  If you were average, you wouldn't be considering doing what your considering, and you wouldn't be on this message board.  You know yourself, your work ethic, and your level of commitment.  If you really want this and you're willing to grind 24/7 to get off to a fast start as an agent, it can be done.  My wife made over $100,000 in her first 9 months as an agent while she had classmates from her RE school that had to pick up 2nd jobs just to get by.  She succeeded where her classmates didn't because she put the work in and was committed.  She made herself available to her clients 24/7 and was appropriately compensated.  Being a great RE agent is NOT a part time gig.  Clients aren't willing to work around your full time job.  They expect you to work around theirs and to be available when they need you to be.  To be successful and to make a name for yourself, you have to be willing to hustle and hustle hard.  If you can do that, you'll be just fine.

I would advise you to start researching the market where you plan to move to.  Find out who the top agents in the area are (a simple google search will answer this).  Find out who the top RE teams are.  Reach out to those people, let them know your plans, ask for advice, and start networking.  Research the local economy.  Make sure it's an expanding market with lots of potential.  You don't want to move to a declining or stagnant market to be an RE agent because you'd just be setting yourself up for failure.  

I think @Brad Larsen also gave you some great advice about the benefits of a career in Property Management as well as advice on taking a gamble on yourself, the way he did.  I concur with him when he said to take action now.  Be smart and have a plan but if you know this is what you want, then go get it.  Fortune favors the bold my friend.

Good luck!

@Christopher Oliva

@Rick Pozos might be able to give you some good advice on what possibilities, if any, exist with this scenario.