All Forum Posts by: Ike Stephens

Just to clarify, the reason most lenders stop at 10 properties isn't because of DTI ratios it's because Fannie Mae and Freddie Mac won't back the loans after that point and the banks aren't able to sell them. If you find a bank or institution that holds their own notes and doesn't sell them (portfolio lenders) then they don't mind giving you as many mortgages as makes sense for them.

 
I found that out the hard way with my other business. We're an LLC and have an EIN etc. I opened up the Capital One account in the business name using the business EIN. Still went to my personal credit report.

AmEx and Chase Ink Preffered are the ones that we use the most and both of those are tied to the LLC/EIN. If you want to get miles, the Chase is awesome.

PenFed does them. Up to 80% LTV on non-owner occupied. Rates are prime + 1%.

When calculating cash flow it's a lot more than just rental income minus your mortgage payment. You'll need to account for capital expenditures (roof, HVAC, water heater, furnace etc), repairs (little stuff that breaks like a sink, toilet, light fixtures etc), turnover expenses (when your tenants move out you'll probably have to paint or make other small repairs to get it rent ready), vacancy (if it takes a month or two to find a new tenant) and possibly utilities.

You might make $500/month for a year or so but when a renter moves out and you need to paint and replace carpet before you can rent again, that "cash flow" dwindles. It can evaporate completely when you factor in the cost of a new roof or other major CapEx's that will eventually come up.

BP has a really helpful calculator to help you run all the numbers. https://www.biggerpockets.com/buy-and-hold-calculator/new  

Check it out and see what you come up with. Make sure you have property taxes and insurance accounted for if you haven't already. It may make you money in the short term but if the rents aren't enough to cover the true expenses of the property, it could have a negative cash flow.

First Meridian Title has a cool app that you can use to estimate closing costs. I'm not sure how accurate it is but I should know soon since I'm about to close on a duplex with them. It may be worth checking out in the future.

https://www.titlecapture.com/app-new/account/form/quick-quote?c=fm-title

If she violated the lease agreement you just repaint and take it out of the deposit. That's the exact reason why there's a deposit required.

Based on the information at hand I'd say go for it as long as she meets your other criteria. The higher deposit is a good idea and she's being honest with you. The previous landlord confirmed that and that issue should have been fixed immediately. Normally past evictions are a no go for me but this sounds like a different sort of circumstances.

I would probably call the landlord again and try to find out more details like how bad the mold actually was and any other information about the circumstances. 

Based on the information you provided it sounds like the landlord was unreasonable. Yes the rent is due no matter what but mold remediation should be a concern for the landlord and something he'd want to fix right away.

There's always 3 sides to every story. Hopefully you can uncover the truth. My inclination is to side with the tennant and lease to her.

PenFed is great if you're on 3 titles or less. They'll do 80% LTV with interest only payments for 10 years on non-owner occupied homes. I think the interest rate is usually prime + 1%.

They lend in FL too.

You probably won't be able to get a HELOC in your name unless you're on the title. What you could do is have the owners (your parents and brother) take out a HELOC and loan you the money (Private Money). It'd be best to draw up an agreement with them as far as interest rate, terms of payment etc. You (well, they) can probably get 85-90% LTV and interest only payments depending on where they're at.

If you're brand new to REI I'd be very cautious of asking family to take that much risk on me. It'd be best to cut all the expenses you can and save up enough cash so you have significant "skin in the game" or even fund the deal yourself.

It also depends on what type of deal you're going to do. If you're planning on a traditional mortgage with 20-25% down, the lender will want to source the funds and a gift or borrowed funds won't suffice.

If you plan to house hack, you can get an FHA with 3.5% down and the funds can be gifted.

If you're paying all cash for a property it won't be an issue but make sure you're going to have a high enough ARV and can accurately estimate repair costs to be able to pay back your family after you refinance or sell. If you plan to buy and hold, you'll also need to have a suitable DTI ratio and a high enough credit score to obtain a loan. Also, keep in mind that most banks have minimum mortgage amounts that they'll loan on so make sure the property will be worth enough.




Real estate investing takes money and lots of it. It's best to play with other peoples money as much as you can but you'll nearly always need to have a decent amount of your own in order to play.

How many markets are you looking in? To me it makes the most sense to pick a single market, become extremely knowledgable in that market and acquire a handful of properties before investing in others. Once you've found a market that fits your criteria start doing a lot of research online (there's a lot you can learn if you have the time) and once you have a general idea of the good, bad and the ugly, take a trip out there to drive around and confirm what your prior research has shown. You can rank the neighborhoods for yourself and reference that any time a deal comes across your desk and know pretty quickly what general class of neighborhood it's in. 


Ike