All Forum Posts by: Sam LLoyd

Thoughts from someone not familiar with your market at all..... If multi's are flying off the shelf, won't the market prices reflect the demand? Is a duplex the best investment? Would house hacking in a duplex bring more cashflow then if you bought a SFR and kept renting (it has for me... I'm just asking, markets can be very different.)

I really agree with Greg S too. The house I'm in now is supposed to be SFR only, but the basement apartment pays the mortgage. You can try looking for a house with a mother-in-law apartment, and then you can live in the apartment while getting more cash flow from the house... that was a strategy I spent years trying to do before we had kids.

Back to your multi... do you have a 90% letter from a bank ready to go?  If you do, then it really is just a matter of time before you find the right one... and make sure you make an offer right then.  Also, if you are very confident in your ability to secure financing, you can make an offer that is not contingent on obtaining financing.  It won't really make a difference, but the offer will look better.

I think that's all I can add since I know so little about your area.

Time for my 2c: Points to consider: Don't give up low interest long term debt. Unless you can get very similar terms, I'd be wary about selling or refinancing, especially since you don't have PMI.

Have you researched what condo 2 would rent for?  If you could have significant cash flow from that I would look into moving.  Moving is work, but it's work that pays, with all the benefits of owner occupancy.  I'd move again myself, but there aren't any houses better than mine out there.

So... if you can get cash flow, move and rent out condo 2.  Buy your next property with investing in mind... a great deal... a fixer upper... a multi-unit with income (my 2000sqft 6bd house with an indoor climbing wall has the mortgage covered by the 1000sqft apartment in the basement).

I would also sit down and brainstorm with a mortgage broker who understands investing.  Maybe he can get you great rates on a cash out refi (mine did).  If he can't, then don't take the cash out.  Remember, any cash you take out.... the cost of that money has to be covered by new property.  If you take out cash, buy a property, and then both of them are cash flowing.... are they cash flowing more than if you had left the equity where it was?

I also second everyone's opinion on on working on your personal budget and making sure that you're making available the most money every month to reinvest.  No, I would NOT agree with the idea of selling the performing asset to pay off debt and refinance your house.

It's been many years since I've worked a 9-5.  Right now I'm working a 5-4 with 2 hours of commuting and just finished rent-reading 3 run down apartments.... getting the real estate machine rolling takes that added amount of hustle, at least for most of us.

No, you are not obligated to pay her the rent back.  I do walk throughs before the end of the lease term all the time.  I've even had tenants be flexible with getting repairs and improvements started before the end of the term as long as it is not an inconvenience to them.

If there was something in writing (which is sounds like there is not), saying that you were willing to cut the lease short, then she's got something.  If you go rent a car for the day and return it the same day, they are not going to give you have a day's rate back.  When a tenant pays rent for the month, they don't have to use the whole month, that's just the increment that it comes in.

When I would pro-rate rent:  If a tenant is out early, weather the lease is up in 5 days or 5 months, it's my job to fill it as soon as possible.  If I have another tenant that moves in before the lease is up, I will give the tenant rent back... For example, if you had another tenant that really wanted to start moving in on the 28th.. then I'd give her 4 days back.  OR:  If I wanted her out so that I could start work or sell it or something.  If it helps me for her not to be there right up till midnight on the 31st, then I would have them sign an end of lease statement and give the rent back.

That said, if you're worried about being taken to court over a few dollars, give her the money (with receipt), so you don't have to think about it again or loose sleep.

Ah... the voice of experience.  My first investment property was a nothing down deal out of state that cost me about 60k in the end.  Looking back, it's amazing how my wife and I did it.  We had just rehabbed our first duplex.... owner occupied, so not really anything down on that one either.  We had loads of credit card debt left over from the rehab, and about $1000 negative cash-flow from our other investment, but we ate that ramen and worked overtime when we could, and pushed through that time.  We couldn't have done it without both incomes.  

So... please bounce any investment ideas off this forum.  There are many opportunities that can turn out to be financial traps.  However... if you look at both RR and my experience, you see that a bad investment, lost sleep, losing lots of money.... they can be overcome and be the building blocks of a successful real estate portfolio.... it just would have been nice to avoid that expense.

Biggest problem I see is the LTV. I could get 80% on the total value, which in this case would only be 4k as someone pointed out... so run the scenario putting 4k down against principal and do that over and over.

Next problem... I haven't found a bank that will give me a HELOC because I have too many investment properties.

Refinance the house at 85% since you live there, lower your payment even further because you're putting it out 30 years, pull out 10k and put that down on another investment that pays half your mortgage out of cash-flow... with some one else's after tax dollars.

My experience says that the size of the bill doesn't factor as strongly in a tenants mind as it would for us number crunchers.  For a tenant, they pull up craigslist, put in their budget, and if it comes up it comes up... only after they've found one in their price range do they care about the other numbers.

That being said... if 6k for HVAC is going to affect the profitability of the deal.... run away!!!  Maybe it's different for you, but I wouldn't take on a project where I couldn't throw 6k at it without blinking because I know I'm making money in the end.

Second the thought.  Doubt the seller's numbers.  I'm working on a deal right now where the seller's numbers look great, but once I do some digging, there are inconsistencies, and now I'm back to starting from scratch with my own numbers just because I don't know where other misrepresentations would be.  You've heard "Trust but verify".  When it comes to information from sellers, I think I'd say "Doubt but verify".

With projects like that it's so sad that the price alone affects the bottom line only a little.. However, it never hurts to give an honest offer with enough cushion that you won't regret the deal even if there are surprises.

Greg,

Happy 4th.  I've got a similar deal for a similar price... except backward.  It's fully rented, but there is no room for any repair/improvement.  If fact, I think the rents are a little high, so I'm trying to figure out what to offer since I can't cover myself against any market correction or bad numbers by improving the property.

Since you're only a few miles away, maybe we should get together and look at each other's numbers.  I'm pretty familiar with market rents and such in the area.  And yes 45k/unit does seam high, but that depends on how much work you need to do.  Around here, if you can redo each unit for 10k... putting you around 55.. that's close to market I'd say.... not a 'deal'... but I'd need to know a lot more.

I know one landlord in my area with dozens of units. I don't remember what he does exactly... I think it's a code box on the door handle... but he never shows a unit.  He is local, and meets face-to-face with hand-signed documents, but the showing is one things he does not do.  It works for him, but I don't think I'm going to do it.

I'm in the same shoes. Been at it 10 years, and just set up the first LLC. For me (unless I'm wrong), putting the property in it is as simple as a $25 quit claim dead at the title company. I've been told that I need to confirm with the lender that they are ok with the title change.

The property that I'm trying to buy at the moment, the lender says I have to close in my own name, and then transfer it to the LLC. I might get the title company to do that for free, since I think I can do it at the same time. Any way, it doesn't affect the rate, since the loan is in my name.

Getting a loan as the LLC and not with your own name? I'd like to know too.