All Forum Posts by: Sam LLoyd

Thanks for all the comments to date.  Looks like Rentec is is about $15/month more than Landlord tracks, but the cost is less to the tenant for the online payments.... 50c instead of 2$... I know it's not always best to pinch pennies, but that's part of how I've gotten to where I am today... one time fees are one thing, but those monthly pennies add up over the long run.

I think I'll start the Rentec free trial and compare the user friendliness.

I looked into the Rentalutions.  I think this would be a great solution for someone with less than.... 4 units because the price/unit puts it over Rentec.... with less reviews, at least on BP.  Also, unless you pay for the pro account, you don't get a couple features that I think are required.  What I've done in the past is just wing it with my own memory, e-mail, and adding everything into a spreadsheet for my tax guy at the end of the year.  I'm looking forward to the structure this change is going to bring.  Any more input would be greatly appreciated before these trial periods run out.

I'm in the process of moving several rentals.. 9 units right now into an LLC and trying to separate personal and business finances/paperwork. Anticipating being up to 20 in the near future. I'm also trying to move everything over to electronic so I don't have to wade through stacks of home depot receipts in April or try to remember which sock drawer has the lease agreement with a signature. However, what I have been doing works (the sock thing is a joke... kind of), so I don't need to make a huge financial commitment. There are the systems that have made my list, and I would like opinions from those who use them. Specifically, I'd like to know 3 things. 1: Do they have hidden fees once you start rolling, 2: Are there any serious working issues that you've run into, and 3: Why you're happy with the one you're using.

LandLord Tracks:  This is my current top pick that I'm doing a free trial with

Onsite Property Manager,

Redsandz,

True Rent:  Having trouble starting free trial... probably not my fav now

 rentec direct,

123 landlord,

and Rentpost.

Thank you so much for your help.  Hopefully the answers here will help others as well.  Note:  There are several softwares that did not make my list due to cost, so please don't just tell me to use buildium.

First, are you using personal money from a friend or a hard money lender?  If it's from a friend or relative, which is my guess since 8% is a great deal from a hard money guy, they can't just give you the money.  The best thing to do is have a bank work up an escrow account with a lien against the property... that covers you and them. That is also visible to the banks when they check your credit, which answers your last question.

2nd is the one year mark.  If you are making a commitment to pay in full, I've heard of someone doing 13 months, but I would put it at 18 months minimum.  The reason is that some banks are going to want to see you own it for a year before refinancing, especially if you're using a new appraisal.... they are going to want to see either what you've done to warrant a higher price, or have enough time to buy to blame a higher price on appreciation.

As far as LTV. You might find a bank that will loan you 80%, but I've done all my refis at 75% the last couple years. However, if you're already into it for 20%,or 20k, as in your example, it might be best to save up 5k and refinance it at the same value instead of paying for a new appraisal and such. If you've done a lot of work though, pay for the appraisal.... say it come in for 120k. You're into it for 20, you have 20 in appreciation... Your into it for 33%. This should be easy to refi. If you refi it at 75% LTV, you might even pull out 10k to use... however, your rates will change if you're pulling cash out, and it might not be worth it for only 10k.

I've done 4 refis in the last 2 years, so if you have any more questions, feel free to ask.

The last bathroom I did I went with an in-stock pebbled glass window, so my first thought is to do the same thing... and yes, like other people mentioned, I would probably put in a 24" by 24", witch would only use the top half of the opening.

However, if this is going to be a long term hold, and if I understood correctly that the window is going to be inside the tiled surround.... I'd get rid of it.  The only time people would use it would be when they are in the shower and it's all fogged up.... one more thing to clean and maintain.

I'd say it depends on the student loan interest rate.  I locked in my student loans at 6.5% when rates were going up in 07.  Then, they kept sending me those nasty letters telling me my new rate was 2.4% (if I hadn't consolidated).  That being said, I wouldn't pay off the debt unless you couldn't qualify for any loan, or the interest rate was up around 7% or higher.  Look at it this way:  

You have 50k.  Your payments are 500/month, and your balance is 50k.  So, you pay off the loan and personal expense sheet shows a 500/month gain.

Now, put that 50k into a property with an 8CAP, maybe a 10% Cash on cash.  Your income will go up maybe $400/month.  Not as good as paying off the loan.  But look at the big picture:  over the next 9 years, your tenants will have paid down your mortgage maybe 15k, you'll have paid off the student loans, and you'll have a property that is probably worth another 15% or more minimum because of inflation.  So, if you can hang in there with your current budget, the money that you would have used to pay off student loans can double or triple by the time the loan is paid off.... and you'll still have an asset when it is. Rule of 72... If you're invested at 10%, you'll double your money in about 7 years.

Now, when I did consolidate, I also moved from a 10 year term to a 20, which lowered the payment.  And yes, I don't follow my own advice, I've been paying a little extra every month, but I wouldn't have if it was less than 5 or 6%.

That being said, if I knew more about your student loan situation, I might change my advice.  Keep me updated.

You can only have one FHA loan at a time, but you should still qualify for owner occupancy conventional financing which is about the same thing, and now's the time to do it with the great rates. If you intend to be a long-term investor, and this is not your dream house, make sure it is one that will rent well if/when you move again.

I would say, first be very sure of you ARV. I lost a lot of money long distance in upstate NY, and knowing the properties market value was part of it. So, if you could get it for 50, fix for 20, and ARV is 95...That's barely spread worth working for. The problem is, there are no margins in those numbers.... what if you have to sell for 10% less than expected? What if you go over repair budget by 10%.... poof, there goes your profit.

Repair budget?  I spent about 10k doing the interior of a tiny 1bd apartment a couple months ago, which included all new cabinets and such, so it's possible.  However, I did a lot of the work myself and/or supervised some young guys.  I also have some boys that helped carry windows, bathtubs, sweep, etc...  I also spent over 10k on flooring alone when flipping a larger house. So, assuming this is a very TINY 3bd house with a sound roof, foundation, and windows, and assuming you did all the material purchase yourself and found a great contractor that understood what you wanted perfectly, I think it could work.  I've never been involved with wall paper removal, so I don't know about that.  Since it's your mom living there right now, you should have no problem getting contractors to go through the place and give you a proper quote before moving forward.  There are variables like chimneys  and egress windows that might set you way behind for a resell.  

And always use the conservative ARV. I hope these ideas help.

From what I understand, the bank is not stupid, they know what their house is worth.  Also, even if the previous owner only owed 60k, you have to take into consideration the cost of foreclosing and the lost income if they hadn't been paying for months or years, not to mention any other costs of satisfying tax liens or maintenance issues that need to be resolved before sale.

So, speaking as someone who has bought only 3 foreclosed properties:  You make an offer that works for you, and depending on how anxious they are to sell it, and how much interest they've had, they will accept or reject.  If there's nothing wrong with the place, the bank probably has a price that they are willing to take as a percentage of the value.  For example, if the appraised value of the property is 190, they might be willing to take 75% in order to get it off their books.... so they won't touch an offer less than 142.5.... that's only an example... it never hurts to make an offer.

No. Unless your market is going up quickly. The refi price is going to be based upon your purchase appraisal or a new appraisal... and unless the appraised value goes up that 20%, you won't be able to keep the same LTV while pulling money out. In fact, it would have to go up a little more depending on how much principal you've put in because the mortgage origination will probably have fees rolled into the new loan balance.

For brain storming, I would start by looking for two things. First, you want a property that has decent returns... which it sounds like you do. Second, is you want to set a goal for your cash on cash returns. In my market, I'm shooting for 12% CoC, which is very very hard to find... and I only come close if I manage myself. So, set a CoC goal, and then go buy a good property that fits.

To get your money back out, here are the 2 ways I've done it.  The first one is time.  I put 10k down on a house 10 years ago.  Last year I pulled out about 32k as well as lowering the payment due to better interest rates and loan balance.  The second one is by forcing appreciation.  If you find an older 3 bd 2ba house with an office, and can tear down a walls and remodel into a 3bd 2ba with a swanky master suite, you might be able to force your value up 20% as well as have a more desirable property... this will take more money up front than the 20%, unless you have big credit cards and are willing to use them.... keep in mind, refinancing with a bank can take months.

I hope these thoughts help

Sounds like this could be an opportunity.... to make a money or loose money. Everything you've mentioned can be fixed, it's just a matter of numbers. You'll already be into the property for 35k by the time you pay off the debt and do the repairs.... round that up to 50k+ if those 2 units are too bad for him to show you. I'd give another healthy rounding to that number and say you'll be into it for 60k. Let's say your net income would be 1000, you calculate 200 for the cost of you managing, then you get 800 left as your return.... So That's almost a 10% return on your money using all cash if you pay 100k for the property (ARV). Less your money in, which is going to be 60ish.... make an offer for 40k with very solid contingencies for inspection, viewing the other 2 units, and the title being cleared up at closing (taxes paid....)

He wants an offer, and he probably doesn't have the 60k to do things right, so I think there's a good chance 40k might go.  The other thing, is that once you get an inspection that reveals a cost that you did not see up front, you can renegotiate.  Find out 2 units need to be rewired... offer drops.

That sounds very exciting.  I hope my brainstorming helps... keep us posted.