All Forum Posts by: Sam LLoyd

First though:  If you've got a mold report in an inspection report or some other document that's out there, it might be best to bite the bullet and pay a licensed professional to do the job so that you don't have any liability in the matter.

Second thought:  If you feel comfortable using a bleach solution and then following it up with Killz, by all means, do that and save a ton of money.  I'm under the impression that a lot of those remediation companies have very high bills because they are used to billing one's insurance and getting as much out of them as they can.

Since my environment is so different, and building styles probably, I don't think I can offer any better advice on finding the source of your 'substance'.

I know it can be done... finding out of state management, but my first investment was a 4plex in another state... and since I'm in Alaska, it would cost me over $1,000 to go check in on them, and probably time off work.  In the end, it cost me thousands in negative cash-flow, and then thousands at the table to sell the thing.  Summary:  Vet the managers well.  Even if you find a property manager that says your numbers look good, you need to have some other way to verify them.

I'm used to putting my own sweat into a flip.  In my opinion, to get anything out, you have to put something in... does he have hands-on skills where you can pay him by the hour for getting his hands dirty with the flip?  Maybe a flat rate for finding the deal?  I'd stick with something very quantifiable for this kind of collaboration.

Have you gone to several lenders or mortgage brokers and tried to get financing.  If your buddy does not have very many residential loans, he should be able to get financing (depending on his day job) with 25% down.  Also, the more he puts down, the more likely a lender will be willing to give better terms given his credit score.

Speaking from personal experience.... do not cosign on a loan unless you are willing to take over the administrative side such as finding insurance and inspectors... and willing to take over the practical work of fixing the place or finding contractors.

Sidenote:  Lenders usually take the worst credit... so if you are both signing, they are going to use his credit score anyway.

I think Aaron nailed it.  Getting them out of there and a replacement in is incredibly stressful, epecially when they are half-way done, but you can do it.  Just paying them and hoping that they get their act together will most likely not work in a decent time-frame.  Paying someone else to do it right (and clean up after the first guy) might seem more expensive, but it will save you $ in the long run.  Hang in there.

If you can get me a 4plex in my area that's turn-key with good tenants, I'd buy it in a hearbeat... for the right price.

I'm sure there will be buyers down the road... at the right price point.  When you rehab it, you're adding value, something people are willing to pay for.

1st... in my experience, some lenders calculate the way Justin R said, and some don't... so you have to shop around, or find a mortgage broker who works with investors... this is what has worked for me.

Seller finance? There are many properties, even on the MLS, where the owners have enough equity to finance it... but you have to ask... or even make an offer with earnest money before you'll find out what they are willing to do.

With current rates, I'd say pulling money out is a good idea.  Historically the cost of money has been much higher, and getting money to play with for 30 years barely above inflation seams like a good idea.  This is something I've been doing... cash-out refi on two properties gave me a downpayment on a 4plex that allowed me to borrow several hundred more at the good rates.

Tricky part is assigning that debt to something worth while. I know one person who took out a HELOC to reinvest, and ended up buying some big toys, paying for travel and other things, and now the house is underwater with no income to show for it. So.... as long as the income from future investments covers the cost of the new cash.... and as long as you have enough of an income margin to handle any market corrections.... I'd say go for it.

Note: It's probably less stressful to go the other route and pay things down as you move forward... so if that's important to you, go with that... some things are hard to value.

In my neighborhood this has been done many times.  There is one builder that would build a 5plex, but never finish the 5th unit.  That unit would be 'storage' until sometime down the road (after bank financing), when the owner wanted to finish out the kitchens, bath, etc... and get more rent.

My thought, is that if the plex needs a lot of work, there might be one kitchen that needs to be ripped out, at which point you can call the unit storage.  This probably wouldn't work if these are large units.  Also, zoning would be the first thing I'd look at.  The buildings where I've seen this done are unzoned.

Quick question:  Do you have local management in place already?  What kind of income and expenses do your managers project?  Finding the local manager is a must, of course, and they might have helpful advice about the numbers.